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

Author

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  • Nathan Kettlewell

Abstract

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 out-of-pocket 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.

Suggested Citation

  • Nathan Kettlewell, 2020. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People Get It Right?," Journal of Human Resources, University of Wisconsin Press, vol. 55(2), pages 566-610.
    • Handle: RePEc:uwp:jhriss:v:55:y:2020:i:2:p:566-610
    Note: DOI: 10.3368/jhr.55.2.0417-8689R1
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    File URL: http://jhr.uwpress.org/cgi/reprint/55/2/566
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    Cited by:

    1. Liu, Xiao & Burge, Gregory S., 2024. "The effect of the new cooperative medical scheme on rural labor supply in China," China Economic Review, Elsevier, vol. 85(C).
    2. Alessio Gaggero & Joan Gil & Dolores Jiménez-Rubio & Eugenio Zucchelli, 2023. "Sick and depressed? The causal impact of a diabetes diagnosis on depression," Health Economics Review, Springer, vol. 13(1), pages 1-13, December.
    3. Nathan Kettlewell, 2019. "Utilization and Selection in an Ancillaries Health Insurance Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 86(4), pages 989-1017, December.
    4. Gaggero, Alessio & Gil, Joan & Jiménez-Rubio, Dolores & Zucchelli, Eugenio, 2022. "Does health information affect lifestyle behaviours? The impact of a diabetes diagnosis," Social Science & Medicine, Elsevier, vol. 314(C).
    5. Kettlewell, Nathan, 2020. "Subjective Expectations for Health Service Use and Consequences for Health Insurance Behavior," IZA Discussion Papers 13445, IZA Network @ LISER.
    6. Arni, Patrick & Dragone, Davide & Goette, Lorenz & Ziebarth, Nicolas R., 2021. "Biased health perceptions and risky health behaviors—Theory and evidence," Journal of Health Economics, Elsevier, vol. 76(C).
    7. Buchmueller, Thomas C. & Cheng, Terence C. & Pham, Ngoc T.A. & Staub, Kevin E., 2021. "The effect of income-based mandates on the demand for private hospital insurance and its dynamics," Journal of Health Economics, Elsevier, vol. 75(C).

    More about this item

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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