The Role of Behavioral Frictions in Health Insurance Marketplace Enrollment and Risk: Evidence from a Field Experiment / Richard Domurat, Isaac Menashe, Wesley Yin.

Format:

Book

Author/Creator:

Domurat, Richard.

Contributor:

National Bureau of Economic Research.

Menashe, Isaac.

Yin, Wesley.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26153.

NBER working paper series no. w26153

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Role of Behavioral Frictions in Health Insurance Marketplace Enrollment and Risk

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We experimentally varied information mailed to 87,000 households in California's health insurance marketplace to study the role of frictions in insurance take-up. Reminders about the enrollment deadline raised enrollment by 1.3 pp (16 percent), in this typically low take-up population. Heterogeneous effects of personalized subsidy information indicate systematic misperceptions about program benefits. Consistent with an adverse selection model with frictional enrollment costs, the intervention lowered average spending risk by 5.1 percent, implying that marginal respondents were 37 percent less costly than inframarginal consumers. We observe the largest positive selection among low income consumers, who exhibit the largest frictions in enrollment. Finally, the intervention raised average consumer WTP for insurance by $25 to $54 per month. These results suggest that frictions may partially explain low measured WTP for marketplace insurance, and that interventions reducing them can improve enrollment and market risk in exchanges.

Notes:

Print version record

August 2019.