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Consumers’ misunderstanding of health insurance

Author

Listed:
  • Loewenstein, George
  • Friedman, Joelle Y.
  • McGill, Barbara
  • Ahmad, Sarah
  • Linck, Suzanne
  • Sinkula, Stacey
  • Beshears, John
  • Choi, James J.
  • Kolstad, Jonathan
  • Laibson, David
  • Madrian, Brigitte C.
  • List, John A.
  • Volpp, Kevin G.

Abstract

We report results from two surveys of representative samples of Americans with private health insurance. The first examines how well Americans understand, and believe they understand, traditional health insurance coverage. The second examines whether those insured under a simplified all-copay insurance plan will be more likely to engage in cost-reducing behaviors relative to those insured under a traditional plan with deductibles and coinsurance, and measures consumer preferences between the two plans. The surveys provide strong evidence that consumers do not understand traditional plans and would better understand a simplified plan, but weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.

Suggested Citation

  • Loewenstein, George & Friedman, Joelle Y. & McGill, Barbara & Ahmad, Sarah & Linck, Suzanne & Sinkula, Stacey & Beshears, John & Choi, James J. & Kolstad, Jonathan & Laibson, David & Madrian, Brigitte, 2013. "Consumers’ misunderstanding of health insurance," Journal of Health Economics, Elsevier, vol. 32(5), pages 850-862.
  • Handle: RePEc:eee:jhecon:v:32:y:2013:i:5:p:850-862
    DOI: 10.1016/j.jhealeco.2013.04.004
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    References listed on IDEAS

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    Cited by:

    1. Jennings, Nicholas B. & Eng, Howard J., 2017. "Assessment of cost sharing in the Pima County Marketplace," Health Policy, Elsevier, vol. 121(1), pages 50-57.
    2. Anell, Anders & Dietrichson, Jens & Ellegård, Lina Maria & Kjellsson, Gustav, 2017. "Information, Switching Costs, and Consumer Choice: Evidence from Two Randomized Field Experiments in Swedish Primary Health Care," Working Papers 2017:7, Lund University, Department of Economics, revised 27 Jun 2018.
    3. Cornel Kaufmann, Tobias Mueller, Andreas Hefti, Stefan Boes, 2018. "Does personalized information improve health plan choices when individuals are distracted?," Diskussionsschriften dp1808, Universitaet Bern, Departement Volkswirtschaft.
    4. repec:eee:jeborg:v:149:y:2018:i:c:p:197-214 is not listed on IDEAS
    5. Jesús Clemente López & Pedro García Castrillo & María A. González Alvarez & Marcos Sanso Frago, 2014. "Una evaluación de la efectividad de la formación ocupacional para desempleados antes y después de la crisis económica: el caso de Aragón," Hacienda Pública Española, IEF, vol. 208(1), pages 77-106, March.
    6. Waleska Sigüernza & Petr Mariel, 2013. "Valoración económica de los servicios sanitarios en la Comunidad Autónoma del País Vasco," Hacienda Pública Española, IEF, vol. 207(4), pages 71-99, December.
    7. Suzanne Bartholomae & Mia B. Russell & Bonnie Braun & Teresa McCoy, 2016. "Building Health Insurance Literacy: Evidence from the Smart Choice Health Insurance™ Program," Journal of Family and Economic Issues, Springer, vol. 37(2), pages 140-155, June.
    8. Nathan Kettlewell, 2016. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People get it Right?," Discussion Papers 2016-16, School of Economics, The University of New South Wales.

    More about this item

    Keywords

    Insurance; Behavioral economics; Simplification;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • I1 - Health, Education, and Welfare - - Health

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