NCPA - National Center for Policy Analysis

Psychological Hurdles of Using ObamaCare Exchanges

October 1, 2013

Enrollment in health care exchanges begins today, October 1, and for the first time, many customers will face a menu of dozens of plans. Proponents of the system say it will give consumers easy access to new information and insurance options. But some principles of behavioral economics suggest that even if the exchanges have a flawless rollout, consumers could have a bumpy road to choosing their insurance, says U.S. News & World Report.

  • In part, that's because the new bevy of choices could overwhelm consumers, forcing them into bad insurance choices -- or even no insurance at all, says one expert.
  • According to the Department of Health and Human Services, users of the exchanges will have on average 53 plan choices.

"Now people have options that they've never had before," says Douglas Hough, an associate scientist at Johns Hopkins School of Public Health. "Now instead of having two choices they have 25 choices. Individuals could just throw up their hands and say, 'I don't know which one to pick, and I'll probably pick the wrong one, so I'll just pick the name that I know, or I'll just pick the first one, or the cheapest one,'" says Hough. "Or they'll just throw up their hands and say, 'I won't pick any.'"

One of the biggest choices that consumers will have to make is their level of coverage. Plans are separated into platinum, gold, silver and bronze levels, in descending order of premium cost. Younger customers may also have the option of purchasing a less expensive "catastrophic" plan.

  • But this is another area in which consumers could make a massive misjudgment: people are often bad at assessing risk.
  • In other words, consumers might underestimate their likelihood of getting a chronic condition that requires long-term care, even while they overestimate their likelihood of being hit by a car.

Still, when patients finally do choose a plan, they will face one more major psychological hurdle, says Hough: paying the bills.

  • People who get health insurance through their employers often never see the money that they use to pay for it; it simply is drawn from their paychecks.
  • In the exchanges, however, many customers will more actively spend their money, which may trigger them to question why they're buying in the first place.

Source: Danielle Kurtzleben, "The Psychological Problems of Using Health Care Exchanges," U.S. News & World Report, September 26, 2013.


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