[ad_1]
The research brief is a short take on interesting academic work.
The big idea
Nearly a quarter of employees faced with choosing two employer-sponsored health plans chose the one that left them in the worst financial situation, even though they offered the same non-financial benefits, new research finds unpublished that we conducted. Using data from a large Midwestern university that offered to subsidize one of two health care plans, we wanted to see how difficult it is for people to make the best choice when they have only two options. The plans were identical in all respects other than their costs. One plan had much higher premiums, but less personal expenses such as deductibles and co-payments for the employee.
Our analysis revealed that 97% of the 2,300 employees would have been better off with the alternative plan, which provided lower premiums but higher cost sharing. Yet 23% still chose the higher premium plan. The average cost per year of choosing the wrong plan was over $ 2,000, according to our article, which we plan to submit for publication shortly.
Why is this important
Nearly 180 million Americans use employer-sponsored health insurance to help pay for medical care. The average covered worker spent more than $ 5,500 on health insurance premiums in 2020, while average Americans use up more than 8% of their total health care spending.
Most workers have a choice of at least two health care plans. In its simplest form, the decision comes down to how much care the worker expects to need in the coming year and how much risk he or she wishes to take. Ignoring the risk factor, a person who expects to use a small number of healthcare services would optimally choose to pay a relatively low monthly insurance premium and higher additional charges at the time of service.
But there’s plenty of research showing that consumers routinely make bad choices when given too many options. Some economists suggest that poor health insurance decisions could be the result of an overload of choice – they simply have too many options to choose from.
Our research results suggest, however, that choice overload is not the main reason people struggle to choose the best health care plan for them.
What is still not known
We still don’t know how to help individuals make better health insurance choices.
Policymakers and healthcare professionals have been trying to do this for years – for example, using algorithms to give consumers a “smart default” option that best suits their needs – but with little luck.
Ultimately, our research shows that simplifying the choice an individual has to make on their own will not eradicate consumer mistakes when choosing insurance plans. We believe that a better, though still unproven, opportunity to improve choice is to provide better research and analysis tools to employees so that they can more easily make a more informed decision.
Helping people see that they could save maybe over $ 2,000 a year seems like a good way to help them make a more informed choice.
[ad_2]
Source link