Moving Beyond Blind Men and Elephants: Providing Total Estimated Annual Costs Improves Health Insurance Decision Making

Abstract

Health insurance is among the most important financial and health-related decisions that people make. Choosing a health insurance plan that offers sufficient risk protection is difficult, in part because total expected health care costs are not transparent. This study examines the effect of providing total costs estimates on health insurance decisions using a series of hypothetical choice experiments given to 7,648 individuals responding to the fall 2015 Health Reform Monitoring Survey. Participants were given two health scenarios presented in random order asking which of three insurance plans would best meet their needs. Half received total estimated costs, which increased the probability of choosing a cost-minimizing plan by 3.0 to 10.6 percentage points, depending on the scenario (p < .01). With many consumers choosing or failing to switch out of plans that offer insufficient coverage, incorporating insights on consumer decision making with personalized information to estimate costs can improve the quality of health insurance choices.