Why Do Employee Keep Choosing the High-Premium Health Care Plan? An Investigation of the Financial Consequences and Logic of Employee Health Care Plan Selections
MetadataShow full item record
Sturman, Michael C.; Boudreau, John W.; Corcoran, Richard J.
In 1991, Dannon employees had the choice to stay with their current health care plan or switch to a new plan which offered a lower premium and less hospital cost coverage that better fit the needs of most employees. Both plans were the same in all other respects. Only 25% of employees chose the new lower-premium plan over the old plan. This article reports a collaborative effort between The Dannon Company and Cornell University's Center for Advanced HR Studies to identify the patterns of employee choices, and the effects of those choices on the actual costs that employees incurred. The actual decisions of 287 Dannon employees were examined, and the out-of-pocket costs that they actually incurred in the two years after the plan was introduced were calculated.
group health care plan; employee benefits; Dannon Company; employee choice
Required Publisher Statement: © Wiley. Final version published as: Sturman, M. C., Boudreau, J. W., Corcoran, R. J. (1996). Why do employees keep choosing the high-premium health care plan? An investigation of the financial consequences and logic of employee health care plan selections. Human Resource Management, 35(3), 317-342. Reprinted with permission. All rights reserved.