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Comparing The Effects Of Nudges And Automatic Plan Switching On Choice Errors Among Low-Income Marketplace Enrollees
Emory Wolf1, Andrew Feher2, Katie Ravel3
1Emory Wolf (Emory.Wolf@covered.ca.gov), Covered California, Sacramento, California.
Health Affairs (Project Hope)
|July 5, 2023
Summary
Automatic plan enrollment significantly boosted uptake of better Affordable Care Act (ACA) Marketplace plans for low-income households. Nudges had a smaller effect, highlighting the impact of simplifying choices in health insurance.
Area of Science:
- Health Policy
- Health Economics
- Behavioral Economics
Background:
- Affordable Care Act (ACA) Marketplaces facilitate health insurance purchasing.
- Low-income households often face complex choices, leading to suboptimal plan selection.
- Cost-sharing Reduction (CSR) silver plans offer enhanced benefits for eligible individuals.
Purpose of the Study:
- To evaluate interventions aimed at reducing choice errors in ACA Marketplace plan selection.
- To compare the effectiveness of a nudge intervention versus automatic enrollment for low-income households.
- To increase enrollment in zero-premium CSR silver plans.
Main Methods:
- A randomized controlled trial (RCT) tested a nudge intervention (reminders via letter/email).
- A quasi-experimental crosswalk intervention automatically enrolled eligible individuals into CSR silver plans.
- The study focused on low-income households in California's 2022 ACA Marketplace open enrollment.
Main Results:
- The nudge intervention increased CSR silver plan take-up by 2.3 percentage points (26%), but most remained in non-silver plans.
- Automatic enrollment significantly increased CSR silver plan take-up by 83.0 percentage points (822%).
- Over 90% of households in the automatic enrollment group selected CSR silver plans.
Conclusions:
- Automatic enrollment is highly effective in increasing uptake of beneficial health insurance plans among low-income populations.
- Nudge interventions show a modest impact compared to automatic enrollment in simplifying complex health insurance choices.
- Findings inform strategies for improving health insurance access and equity within ACA Marketplaces.
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