BlueSky Thinking Summary

A Kellogg Insight article evaluates how too many choices of consumer health insurance plans can actually be bad for consumers' benefit.

In this research, the study looks at how multiple plans presented by the insurers end up confusing customers, that lead to non-informed choices.

This happens because the assessment and comparison of plans are not easy, resulting in the possibility of non-optimal choices that will bring losses to consumers.

It examines behavioral economic principles, such as decision overload and information asymmetry that interplay with the preceding factors to further aggravate these issues.

These factors underscore the need for policy interventions or insurer strategies that would allow simplification in plan options and guide consumer decisionmaking.

Putting forward these many issues, this paper endeavors to raise an understanding of how the market dynamics of health care impact consumer outcomes and subsequent policy implications for improving consumer welfare within insurance markets.