Does Consumer Satisfaction Information Matter? Evidence on Member Retention in FEHBP Plans

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Abstract
Taking advantage of a natural experiment, this study explores the crucial link between consumer satisfaction, distribution of consumer satisfaction information, and member retention at open enrollment. Multiple data sources, panel data regression analysis, and instrumental variable techniques inform how retention is affected by consumer satisfaction, before and after free distribution of report card information, controlling for market structure, consumer characteristics, premiums, benefits, and other plan attributes in about 250 Federal Employee Health Benefit Program (FEHBP) plans nationwide. Study results suggest that consumer satisfaction boosts member retention. Free distribution of consumer satisfaction information to federal employees during open enrollment is associated with lower member retention, which may suggest that consumers might have used this newly distributed information and then decided to withdraw from their previous plans.