Professor Peter Ubel studies how consumers choose health insurance
New research shows the presentation of options on health insurance websites can heavily influence consumers, and designers of the federal and state exchanges may have more power over customer choice than they realize.
"Design matters," said Duke University Fuqua School of Business Professor Peter Ubel. "Our behavior is heavily influenced by the design we encounter when we make choices in the world. Without even knowing it, you can change what people do by how you present them with their choices."
The state and federal health insurance exchanges mandated by the Affordable Care Act opened in 2013. Ubel, along with colleagues David Comerford at the University of Stirling and Eric Johnson of Columbia Business School, studied how consumer choice can be influenced by how options are presented. Their findings, "Healthcare.gov 3.0 - Behavioral Economics and Insurance Exchanges," are published in the New England Journal of Medicine.
The group found a popular way to present health insurance plans is in a tiered system of gold, silver and bronze. Typically the gold plan has the highest monthly premium but the most comprehensive coverage. Bronze customers have the lowest monthly premium but pay more out of pocket when they need care.
"It just struck me that those words, bronze, silver and gold, have so many other connotations, and I wondered if those were influencing choice," Ubel said.
Ubel and his colleagues handed one-page surveys to more than 100 passengers on buses and asked them to choose between gold, silver and bronze health plans.
"Gold won out, even when we changed gold from the high monthly premium, low out-of-pocket and flipped it," Ubel said. "People relied on the signal of the name of the plan to tell them what they ought to look at first rather than the description of what the plan really was."
The gold standard is not the only problem Ubel sees in website design.
"When the first thing people see is plans ranked from lowest monthly premium to highest monthly premium, that's a signal to start from the top and work your way down and decide what you want," Ubel said. "Potentially you're not even going to get to the bottom of that list and so that influences choice. And monthly premium is definitely not all that matters when it comes to picking health insurance plans."
Ubel suggests a tailored approach rather than offering upfront options.
"If I'm choosing a plan, I want to know first which plans cover the hospitals and doctors I most want to be able to go to," he said. "That is often really hard to find with some of these websites. Second thing I would want to know is how much I'm most likely to pay over a year for my health needs, based on what's most likely to happen, and a worst case scenario if someone in the family gets really sick. Once I've got those pieces of information I can choose which plan is the best balance of those things. None of those things are easy to do the way it is designed right now."
Ubel said using basic biographical information plus some medical history could better match customers with plans.
"I think you need to take these things to the next level where you find out something about that person and then see what the different plans mean for them," he said. "From that you can give them estimates: Here's what these plans would mean for you, and the annual estimated cost."
Ubel said the findings matter regardless of the fate of the Affordable Care Act, which is facing multiple legal challenges.
"Whatever you think of Obamacare, whether you want it to stay or go, in the meantime you probably want Americans who are getting health insurance to get the right health insurance," he said. "As long as we've got this law, we should make sure it serves the American people as best it can."