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How product standardization affects choice: Evidence from the Massachusetts Health Insurance Exchange

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  • Ericson, Keith M. Marzilli
  • Starc, Amanda

Abstract

This paper examines the effect of choice architecture on Massachusetts' Health Insurance Exchange. A policy change standardized cost-sharing parameters of plans across insurers and altered information presentation. Post-change, consumers chose more generous plans and different brands, but were not more price-sensitive. We use a discrete choice model that allows the policy to affect how attributes are valued to decompose the policy's effects into a valuation effect and a product availability effect. The brand shifts are largely explained by the availability effect and the generosity shift by the valuation effect. A hypothetical choice experiment replicates our results and explores alternative counterfactuals.

Suggested Citation

  • Ericson, Keith M. Marzilli & Starc, Amanda, 2016. "How product standardization affects choice: Evidence from the Massachusetts Health Insurance Exchange," Journal of Health Economics, Elsevier, vol. 50(C), pages 71-85.
    • Handle: RePEc:eee:jhecon:v:50:y:2016:i:c:p:71-85
    DOI: 10.1016/j.jhealeco.2016.09.005
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    More about this item

    Keywords

    Health insurance; Standardization; Framing; Consumer choice;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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