Consumers' Misunderstanding of Health Insurance

George   Loewenstein; Joelle Y. Friedman; Barbara  McGill; Sarah  Ahmad; Suzanne  Linck; Stacey  Sinkula; John  Beshears; James J. Choi; Jonathan  Kolstad; David  Laibson; Brigitte C. Madrian; John A. List; Kevin G. Volpp

Article | Journal of Health Economics

Consumers' Misunderstanding of Health Insurance

by George Loewenstein, Joelle Y. Friedman, Barbara McGill, Sarah Ahmad, Suzanne Linck, Stacey Sinkula, John Beshears, James J. Choi, Jonathan Kolstad, David Laibson, Brigitte C. Madrian, John A. List and Kevin G. Volpp

Abstract

We report results from two surveys of representative samples of Americans with private health insurance. The first examines how well Americans understand, and believe they understand, traditional health insurance coverage. The second examines whether those insured under a simplified all-copay insurance plan will be more likely to engage in cost reducing behaviors relative to those insured under a traditional plan with deductibles and coinsurance and measures consumer preferences between the two plans. The surveys provide strong evidence that consumers do not understand traditional plans and would better understand a simplified plan, but weaker evidence that a simplified plan would have strong appeal to consumers or change their healthcare choices.

Keywords: Insurance; Behavioral economics; Simplification; Insurance; Consumer Behavior; Health Care and Treatment; Cognition and Thinking; Insurance Industry; Health Industry; United States;

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Citation:

Loewenstein, George, Joelle Y. Friedman, Barbara McGill, Sarah Ahmad, Suzanne Linck, Stacey Sinkula, John Beshears, James J. Choi, Jonathan Kolstad, David Laibson, Brigitte C. Madrian, John A. List, and Kevin G. Volpp. "Consumers' Misunderstanding of Health Insurance." Journal of Health Economics 32, no. 5 (September 2013): 850–862.

In 2016, members of the U.S. Women's National Soccer Team (WNT) took steps to fight for equal pay relative to the U.S. Men's National Soccer Team. Their legal representative declared that the memorandum of understanding governing the relationship between the players and the U.S. Soccer Federation (USSF) was terminable at will. If a court agreed with this position, the players could threaten to strike in advance of the upcoming Olympics. In addition, five of the top WNT players filed a wage-discrimination complaint against the USSF with the Equal Employment Opportunity Commission. This case describes the history of the WNT and the USSF leading up to these events.

In 2016, members of the U.S. Women's National Soccer Team (WNT) took steps to fight for equal pay relative to the U.S. Men's National Soccer Team. Their legal representative declared that the memorandum of understanding governing the relationship between the players and the U.S. Soccer Federation (USSF) was terminable at will. If a court agreed with this position, the players could threaten to strike in advance of the upcoming Olympics. In addition, five of the top WNT players filed a wage-discrimination complaint against the USSF with the Equal Employment Opportunity Commission. This case describes the events following from the actions of the WNT players.

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Consumers' Misunderstanding of Health Insurance

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