Study by Keith Ericson finds that “nudges” help combat consumers’ health insurance inertia.
The Affordable Care Act provided health insurance to tens of millions of new people. But that doesn’t mean that they’re always getting the best deal. Because many people fail to shop around during re-enrollment periods and instead automatically renew their old plans, they may fail to get the lower costs and better care for which they’re eligible.
But there may be ways to fix the problem. Keith Ericson, assistant professor at Boston University Questrom School of Business, recently co-authored a study published in Health Affairs showing that a simple nudge can significantly increase the percentage of people who choose to shop around for insurance. “Our goal was to see if we could get people to shop for plans by bringing it to their attention,” explains Ericson. The answer to that was an unqualified yes. However, the results also show that simply increasing awareness may not lead consumers to choose better plans.
To study the issue, Ericson and his coauthors sent out emails and letters to more than 15,000 households in Colorado that were scheduled to be re-enrolled in their ACA Marketplace plan for 2016. Some received generic letters reminding them that they could save money by switching plans during re-enrollment. Others received more personalized notes that included specific savings numbers based on their current plans.
Both types of messaging moved consumers to take action: About 31 percent of those receiving generic or personalized messages shopped for a plan, while just 25 percent of people from a control group shopped for a new plan.
Within that good news, there was also an unexpected surprise: across the board, nudges didn’t seem to increase the percentage of people who switched plans. About 10 percent of each group switched, even though far more people receiving the nudges actually shopped for plans. The reasons behind the low number merit further investigation, says Ericson. “It could be that people were happy with their plan. Or, it could be that they couldn’t figure out what plan would be better for them or they didn’t follow through on their intention to switch,” he says.
In the end, says Ericson, the results suggest nudges may be an essential piece of helping consumers get better health care deals, but they’re just a starting point. “Our results show that potentially leaving money on the table isn’t simply a result of inattention, because even when we were able to get more people to go shopping, they didn’t change their plans,” he says. “The next step is to tease out the reasons they’re not changing.”