"How Could I Choose My Health Insurance Plan?" Determinants of Employer-Sponsored Health Insurance Plan Selection

In 2001, several start-up insurance companies began offering new products that featured a high-deductible health plan (HDP) paired with a health savings account that was funded by the employer. By 2004, this plan were included in the product portfolios of almost all major insurance companies. Employers started to provide multiple choices for employees, not only the traditional PPO, HMO plan, but also the newer HDP (HAS and HRA) plan. Selecting the appropriate, reasonable, and affordable health insurance plan becomes a very important question to solve for both employers and employees. Our research tries to locate the factors determining private sector health insurance plan enrollment decision, and also provides a guideline to both private companies and employees on health insurance plan selection strategies. By using 2017 Kaiser Family Foundation Employer Health Benefits Survey data (KFF EHBS), we applies different machine learning techniques including logistic regression, gradient boosting tree, random forest, and neural network, to study the determinants of employees health insurance selection, as well as to compare the prediction accuracy among different methodologies. The preliminary results indicate as follow: (1) premium, employer contribution, and deductibles are highly significant on affecting the selection of PPO or HDP; (2) employees tend to enroll the plan with higher employer contribution and lower employee contribution; (3) Employees working for larger employer and low-income employees tend to select PPO instead of HDP. Our research will continue discover employer and employee characteristics to contribute to suggesting the most suitable insurance plan for both employer and employee selections.