Health insurance menu design for large employers

Kate Ho, Robin S. Lee

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


We provide a framework for large employers designing a menu of health plan offerings that differ on both financial and nonfinancial dimensions. Using administrative data from Harvard University, we estimate a model of plan choice and utilization, and evaluate the benefits of cost sharing and plan variety. For this population of consumers, and a single plan with a generous out-of-pocket maximum and zero deductible, modest cost sharing of approximately 30% maximizes average employee surplus. Gains from offering choice are meaningful only if financial differentiation is paired with differentiation along other dimensions where consumer preferences are correlated with efficient coverage levels.

Original languageEnglish (US)
Pages (from-to)598-637
Number of pages40
JournalRAND Journal of Economics
Issue number4
StatePublished - Dec 1 2023

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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