Premiums, benefits, and employee choice of health insurance options.

Determinants of health insurance choices are estimated from a logit model and data from the National Medical Care Expenditure Survey. Employees offered a choice between traditional health insurance plans chose the high option and the low option in roughly equal numbers. About a quarter of the employees who were offered enrollment in an HMO selected the HMO in preference to a traditional plan. Prices figured significantly in both types of decisions, with the choice between traditional plans about twice as sensitive to prices as the decision to enroll in an HMO. Comprehensive hospital benefits and superior catastrophic protection also appeared to be important factors in the choice of health insurance plans.