Right now, many consumers are signing up for healthcare via the new health insurance exchanges set up by the federal and state governments. Using simulated exchanges modeled on the design of the actual exchanges, alarming new research from Columbia Business School suggests that more than 80% of consumers may be unable to make a clear–eyed estimate of their needs and will unknowingly choose a higher cost plan than needed.
"Consumers' failure to identify the most appropriate plan has considerable consequences on both their pocketbooks as well as the cost of the overall system," says Professor Eric Johnson, co–author of the report and co–director of Columbia Business School's Center for Decision Sciences. "If consumers can't identify the most cost–efficient plan for their needs, the exchanges will fail to produce competitive pressures on healthcare providers and bring down costs across the board, one of the main advantages of relying upon choice and markets."
Johnson, a noted expert in the area of consumer behavior and how it applies to public policy, has spent the last year advising several state health exchange systems on their designs and structure as a member of an advisory board run by Pacific Business Group on Health.
The research, published in PLOS ONE and titled Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture, conducted six experiments asking people of varying education levels to choose the most cost–effective policy using websites modeled on the current exchanges.
The results lead to some startling conclusions, including:
•The average consumer stands to lose on average $611 — roughly half a week's salary for a family making $42,000 per year — by failing to choose the most cost-effective option for their needs.
•Because the federal government will subsidize many policies, American taxpayers could pay an additional $9 billion for consumer's mistakes in choosing more costly plans.
•Surprisingly, providing monetary incentives alone did not improve outcomes. Participants were offered $1 for every correct answer and entrance into a lottery that pays one winner $200, yet 79% of participants still chose the wrong plan, inadvertently adding $419 to the cost of their health insurance.
Johnson cautioned against misuse of the research: "Amid the political heat around the healthcare law, there's going to be a great propensity for some politicians to jump on this study and misinterpret these results. This research presents no empirical evidence that in any way is an argument for or against the Affordable Care Act itself. Instead, this is research about the difficulties and complexities in creating the actual delivery systems, which is being done in both blue and red states."Prescriptions to Improve Outcomes
•Limit the number of choices: Exchanges that limit their amount of choices in healthcare plans will help to avoid confusion among consumers (Utah offers 99 healthcare options for participants).
"Designers of the exchanges should take heart and know that they can significantly improve consumer performance by implementing some easy, straightforward tools such as just–in–time education, smart defaults, and cost calculators."
The paper, Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture, was authored by Eric J. Johnson, The Norman Eig Professor of Business Marketing at Columbia Business School; Ran Hassin, Hebrew University of Jerusalem; Tom Baker, University of Pennsylvania Law School; Allison T. Bajger, Columbia University; and Galen Treuer, University of Miami. Download the full report at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291598.About Columbia Business School
Karen Paff | EurekAlert!
Drought hits rivers first and more strongly than agriculture
06.09.2018 | Max-Planck-Institut für Biogeochemie
Landslides triggered by human activity on the rise
23.08.2018 | European Geosciences Union
Scientists at the Max Planck Institute for Polymer Research (MPI-P) in Mainz (Germany) together with scientists from Dresden, Leipzig, Sofia (Bulgaria) and Madrid (Spain) have now developed and characterized a novel, metal-organic material which displays electrical properties mimicking those of highly crystalline silicon. The material which can easily be fabricated at room temperature could serve as a replacement for expensive conventional inorganic materials used in optoelectronics.
Silicon, a so called semiconductor, is currently widely employed for the development of components such as solar cells, LEDs or computer chips. High purity...
Augsburg chemists present a new technology for compressing, storing and transporting highly volatile gases in porous frameworks/New prospects for gas-powered vehicles
Storage of highly volatile gases has always been a major technological challenge, not least for use in the automotive sector, for, for example, methane or...
When we put water in a freezer, water molecules crystallize and form ice. This change from one phase of matter to another is called a phase transition. While this transition, and countless others that occur in nature, typically takes place at the same fixed conditions, such as the freezing point, one can ask how it can be influenced in a controlled way.
We are all familiar with such control of the freezing transition, as it is an essential ingredient in the art of making a sorbet or a slushy. To make a cold...
Thin organic layers provide machines and equipment with new functions. They enable, for example, tiny energy recuperators. In future, these will be installed...
Das Zusammenspiel aus Struktur und Dynamik bestimmt die Funktion von Proteinen, den molekularen Werkzeugen der Zelle. Durch Fortschritte in der...
17.10.2018 | Event News
16.10.2018 | Event News
02.10.2018 | Event News
17.10.2018 | Trade Fair News
17.10.2018 | Life Sciences
17.10.2018 | Agricultural and Forestry Science