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Health plan choice and information about out-of-pocket costs: an experimental analysis
M Schoenbaum1, M Spranca, M Elliott
1Center for Health Policy Research, Pennsylvania State University, USA.
Summary
Providing consumers with health plan cost information encourages them to accept more financial risk. This suggests that many working-age individuals may be over-insuring for medical care.
Area of Science:
- Health Economics
- Consumer Behavior
- Insurance Markets
Background:
- Employer-sponsored health insurance offers multiple plan choices.
- Competition among plans aims to balance healthcare costs and quality.
- Consumers often lack sufficient information for informed health plan selection.
Purpose of the Study:
- To evaluate the impact of decision-support materials on health plan choice.
- To assess how information on expected costs influences consumer decisions.
- To determine if consumers make optimal risk-bearing choices.
Main Methods:
- Experimental design testing the effect of supplemental decision-support materials.
- Focus on informing consumers about expected health plan costs.
- Analysis of health plan choices based on provided information.
Main Results:
- Supplemental cost information leads consumers to choose plans with higher risk.
- Individuals in better health are more likely to bear increased risk.
- Informed consumers shift towards plans with potentially lower premiums but higher out-of-pocket costs.
Conclusions:
- Consumers may not be adequately equipped to balance risk and cost in health insurance.
- Current health insurance choices might lead to over-insurance among the privately insured.
- Policy interventions could improve consumer decision-making in health plan selection.