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Carrier Selection on Private Exchanges: Understanding the Impact of Price and Incumbency in a Multi-Carrier Exchange Environment (PDF)
Liazon Oct. 22, 2015
12 pages. "Incumbency (the carrier was the previous provider of health insurance for the company's employees in the year prior to using the exchange) plays a major role in a carrier's ability to gain market share over non-incumbents. If prices were equal, and there was no incumbent, chance would ascribe 25% market share to each provider, assuming a choice of four providers. If, however, one is the incumbent carrier, it would have, on average, an advantage of 37 percentage points in market share over non-incumbents.... If a carrier's annual price is 1% higher than the average price, it can expect to lose, on average, 3.5 percentage points in market share, demonstrating the highly elastic nature of demand in response to price."
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