A new study has found that consumers are consistently unable to choose health insurance plans that are the most cost effective on mock websites similar to HealthCare.gov. Without consumer competence creating market pressure, health care costs under Obamacare are unlikely to decrease.
The study gave research subjects “health insurance websites that mirror the exchanges set up by the Affordable Care Act and asked them to pick a plan.” When consumers were given four options, they chose “the most cost-effective plan only 42 percent of the time. When given eight options, the success rate plummeted to 21 percent,” which is a rate the researchers said was “indistinguishable from random assignments.”
Even with “cost calculators,” an in-website tool designed to simplify their calculations, consumers “picked the most cost-effective option only 47 percent of the time, typically choosing plans that would cost them an extra $364.”
Only students enrolled in M.B.A. consumer finance classes were more likely to choose the cost-effective plans, doing so 73 percent of the time.
“If consumers can’t identify the most cost-efficient plan for their needs, the exchanges will fail to produce competitive pressures on health care providers and bring down costs across the board, one of the main advantages of relying upon choice and markets,” Eric Johnson, a Columbia University business school professor who coauthored the study, told National Journal.
The researchers ultimately concluded that consumers, more than having poor math skills, tended to “to overweigh the importance of premiums and underestimate the costs from deductibles and out-of-pocket contributions.” Therefore the study was suggestive both of inability to calculate and short-sightedness in the way consumers think about expenses. The study was conducted by researchers from “Columbia’s psychology department, the University of Pennsylvania, the Hebrew University of Jerusalem, and the University of Miami.”