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

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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.

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  • 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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    Cited by:

    1. 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.
    2. Kettlewell, Nathan, 2020. "Subjective Expectations for Health Service Use and Consequences for Health Insurance Behavior," IZA Discussion Papers 13445, Institute of Labor Economics (IZA).

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    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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