How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

Kairies-Schwarz, Nadja; Kokot, Johanna; Vomhof, Markus; Weßling, Jens

doi:10.2139/ssrn.2579733

Cited by 5 publications

(4 citation statements)

References 48 publications

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“…Low-cognitive reflection (Szrek & Bundorf, 2011) 3. Low-income (Szrek & Bundorf, 2011) Choice overload (19) Larger choice set size leads to high information processing costs for consumers, which in turn would negatively affect their purchase decision (Baicker et al, 2012;McWilliams et al, 2011;Szrek & Bundorf, 2014), switching decision (Frank & Lamiraud, 2008;Wuppermann et al, 2014), and ability to select plans that meet their needs (Hanoch & Rice, 2006;Hanoch et al, 2009;Kairies-Schwarz et al, 2014;Wood et al, 2011).…”

Section: Characteristics Of the Studies Focusing On Behavioral Factorsmentioning

confidence: 99%

“…To further illustrate, we take the case of choice overload. Extant research from the field showed that choice overload can lead to consumers selecting dominated plans (Hanoch & Rice, 2006; Hanoch et al, 2009; Kairies‐Schwarz et al, 2014; Rice & Cummings, 2010; Rice et al, 2010; Wood et al, 2011). However, when we view this evidence after setting aside the assumption that behavioral economics makes about optimal choice, the plan selected by a consumer per se, may actually be optimal for him/her.…”

Section: Limitationsmentioning

confidence: 99%

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Insights from behavioral economics for policymakers of choice‐based health insurance markets: A scoping review

Iyer

SMR

2022

Risk Manage Insurance Review

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This article uses the systematic scoping review method to summarize literature at the interface of behavioral economics and health insurance. We aim to offer policymakers of choice‐based health insurance markets an understanding of (a) behavioral factors that affect consumer decision‐making in health insurance markets and (b) behavioral interventions that can be used to help consumers make better health insurance decisions. In the process, we reviewed 80 studies from extant literature and found that 18 behavioral factors negatively impact three major aspects of consumer decision‐making: that is, purchasing, quality of plan choice, and switching. We also identify 17 behavioral interventions that policymakers could use to help consumers make better health insurance decisions. However, while using the findings of the field, policymakers must keep in mind that there are limitations to the generalizability of the findings coupled with limitations that behavioral economics comes along with. Based on this study, future research could focus on identifying the segments of the populous that are more likely to be affected by the behavioral factors, and what behavioral interventions can be used to help them. Future research is also needed in settings other than WEIRD (Western, Educated, Industrialized, Rich, and Democratic) nations for the benefit of policymakers of non‐WEIRD nations.

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Section: Characteristics Of the Studies Focusing On Behavioral Factorsmentioning

confidence: 99%

Section: Limitationsmentioning

confidence: 99%

Insights from behavioral economics for policymakers of choice‐based health insurance markets: A scoping review

Iyer

SMR

2022

Risk Manage Insurance Review

View full text Add to dashboard Cite

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“…Geruso ( 40 ) reveals that the demand for health insurance differs between younger and elder consumers, and between men and women considering their difference in the potential medical expenditure. Other scholars experiment on the effect of risk attitude on the behavior of people for selecting health insurance ( 41 ). They find that the demand for health insurance of people is also affected by their risk attitude, and people are more likely to transfer their potential risk through insurance as risk awareness increase.…”

Section: Discussionmentioning

confidence: 99%

Effects of SO2 Pollution on Household Insurance Purchasing in China: A Cross-Sectional Study

Ren

Zhang

Tang

et al. 2021

Front. Public Health

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There have been considerable concerns regarding the effects of air pollution on health and economy over the past decades across the world. As insurance coverage has been closely related to household welfare, we aim to investigate the influence of air pollution, in particular, the sulfur dioxide (SO2) pollution on household purchases of commercial health insurance using data from the 2017 China Household Financial Survey (CHFS). The results show that the rise in SO2 emission has a significant positive association with tendency of residents to participate in commercial health insurance. The possibility of household commercial health insurance purchasing increases by 4% per 1,000 tons of SO2 emission. In addition, the proportion of commercial health insurance expenditure in household annual income increases by 29% per 1,000 tons of SO2 emission. The effects are also found to differ among resident groups. Residents in eastern parts of China are more likely to buy commercial health insurance facing SO2 pollution compared to those in western parts of China; people with higher income are more likely to be affected compared to those with lower income; families with the household head being female are more likely to be affected compared to those with the household head being male. This research provides baseline information on the formulation and implementation of future operation strategy in commercial health insurance companies of China.

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“…4 A second set of studies demonstrated that the problem of inefficient choice extends beyond the elderly and Medicare by analyzing the hypothetical plan choices of experimental subjects. [9][10][11] The research showed that people frequently choose plans that are not optimal given their expected health needs and appetite for financial risk, even when incentivized to make efficient decisions. In one study, Eric J. Johnson and his colleagues presented experimental subjects with a scenario in which they were asked to choose a family health plan from a small menu of options after being provided with detailed information about the family's anticipated medical needs.…”

Section: Insights From Prior Studies Of Health Insurance Choicesmentioning

confidence: 99%

The Costs of Poor Health (Plan Choices) & Prescriptions for Reform

Bhargava,

Loewenstein,

Benartzi

2017

Behavioral Science & Policy

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Evidence suggests that when confronted with a large menu of health plan choices, consumers may not select the most efficient (that is, the most cost-effective) option. In anticipation of such problems, the exchanges set up by the Affordable Care Act (ACA) were designed to help consumers navigate the complexity of plan choices. Yet little is known about the actual efficiency with which ACA enrollees select plans. We present an analysis of projected health spending and a series of hypothetical plan choice experiments to explore the financial consequences of inefficient choices among potential ACA enrollees, the likelihood of such inefficient choices, and the potential for improving efficiency with a more behaviorally informed choice architecture. Our findings indicate that choosing a plan incommensurate with one's expected health care needs would lead to significant overspending relative to the most cost-effective plan and that, despite attempts to design the exchanges so that they facilitate decisionmaking, a significant share of ACA enrollees may have made inefficient decisions. More promisingly, we find that although the metal labels used in the exchanges to organize plans (for example, Bronze and Silver) encourage choices that are no more efficient than those associated with generic plan labels (such as Plan A and Plan B), labels that more sensibly reflect the factors consumers ought to consider—for instance, labels that emphasize gradations in the need for health care—do lead to significant improvements in the efficiency of plan choices.

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How Do Consumers Choose Health Insurance? An Experiment on Heterogeneity in Attribute Tastes and Risk Preferences

Cited by 5 publications

References 48 publications

Insights from behavioral economics for policymakers of choice‐based health insurance markets: A scoping review

Insights from behavioral economics for policymakers of choice‐based health insurance markets: A scoping review

Effects of SO2 Pollution on Household Insurance Purchasing in China: A Cross-Sectional Study

The Costs of Poor Health (Plan Choices) & Prescriptions for Reform

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