Information and Consumer Choice: The Value of Publicized Health Plan Ratings / Ginger Zhe Jin, Alan T. Sorensen.

Format:

Book

Author/Creator:

Jin, Ginger Zhe.

Contributor:

National Bureau of Economic Research.

Sorensen, Alan T.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11514.

NBER working paper series no. w11514

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Information and Consumer Choice

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

We use data on the enrollment decisions of federal annuitants to estimate the influence of publicized

ratings on health plan choice. We focus on the impact of ratings disseminated by the National

Committee for Quality Assurance (NCQA), and use our estimates to calculate the value of the

information. Our approach exploits a novel feature of the data--the availability of nonpublic plan

ratings--to correct for a source of bias that is inherent in studies of consumer responsiveness to

information on product quality: since publicized ratings are correlated with other quality signals

known to consumers (but unobserved by researchers), the estimated influence of ratings is likely to

be overstated. We control for this bias by comparing the estimated impact of publicized ratings to

the estimated impact of ratings that were never disclosed. The results indicate that NCQA's plan

ratings had a meaningful influence on individuals' choices, particularly for individuals choosing a

plan for the first time. Although we estimate that a very small fraction of individual decisions were

materially affected by the information, for those that were affected the implied utility gains are

substantial.

Notes:

Print version record

August 2005.