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Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People Get It Right?

Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People Get It Right? <p>ABSTRACT:</p><p>Understanding how consumers choose health insurance and the quality of those choices is crucial information for policymakers. This paper uses a choice experiment to evaluate choice quality and how this interacts with an important form of complexity—product bundling. The results indicate that consumers are likely to make choices that violate expected utility theory, use heuristic decision strategies, and overinsure relative to minimizing outofpocket costs. Product bundling is found to exacerbate all of these tendencies. The experimental approach used overcomes some limitations of revealed preference research in this area, such as the endogeneity of choosing bundled insurance.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Human Resources University of Wisconsin Press

Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People Get It Right?

Kettlewell, Nathan
Journal of Human Resources , Volume 55 (2) – Apr 17, 2020
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Publisher
University of Wisconsin Press
Copyright
Copyright © Board of Regents of the University of Wisconsin System
ISSN
1548-8004

Abstract

<p>ABSTRACT:</p><p>Understanding how consumers choose health insurance and the quality of those choices is crucial information for policymakers. This paper uses a choice experiment to evaluate choice quality and how this interacts with an important form of complexity—product bundling. The results indicate that consumers are likely to make choices that violate expected utility theory, use heuristic decision strategies, and overinsure relative to minimizing outofpocket costs. Product bundling is found to exacerbate all of these tendencies. The experimental approach used overcomes some limitations of revealed preference research in this area, such as the endogeneity of choosing bundled insurance.</p>

Journal

Journal of Human Resources – University of Wisconsin Press

Published: Apr 17, 2020

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