![]() This will help individuals make better product choices. Policy Proposal: Policy-makers and employers can take a number of steps to improve the environment where individuals select insurance plans. Improving individuals’ choices over insurance plans can lower their premiums (choosing equally good plans with lower premiums), lower their out-of-pocket costs (choosing plans best suited to their future spending), and increase competition in insurance markets (by making it harder for poor-quality plans to persist). This past literature is broadly critical of unfettered choice across insurance options but offers some important lessons for how to structure that choice. A number of studies illustrate that consumers don’t appear to choose plans that are best for them financially-in the extreme, even making “dominated choices” that would be worse no matter what their medical spending turns out to be. ![]() Foremost among them is the question of whether consumers can adequately choose from a variety of complicated health insurance options. This expansion of choice raises a number of issues. ![]() Individuals face a choice over plans in commercial health insurance markets, as well as over whether or not to enroll in Medicare Advantage, across Medicare Advantage plans and Medicare Part D plans, and across Medicaid managed care plans. Issue Summary: Insurance product choice is a central feature of health insurance markets in the United States. Authors: Jason Abaluck, Yale University Jonathan Gruber, Massachusetts Institute of Technology ![]()
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