PRESS-NEWS.org - Press Release Distribution
PRESS RELEASES DISTRIBUTION

New study shows that more than half of consumers will choose a health-care plan that costs too much

New research from Columbia Business School warns that consumers will make mistakes totaling $9 billion; offers prescriptions to help improve consumer experience using new state health-care exchanges

2013-12-20
(Press-News.org) Contact information: Karen Paff
karen.paff@columbia.edu
212-854-2747
Columbia Business School
New study shows that more than half of consumers will choose a health-care plan that costs too much New research from Columbia Business School warns that consumers will make mistakes totaling $9 billion; offers prescriptions to help improve consumer experience using new state health-care exchanges NEW YORK —Right now, many consumers are signing up for healthcare via the new health insurance exchanges set up by the federal and state governments. Using simulated exchanges modeled on the design of the actual exchanges, alarming new research from Columbia Business School suggests that more than 80% of consumers may be unable to make a clear–eyed estimate of their needs and will unknowingly choose a higher cost plan than needed.

"Consumers' failure to identify the most appropriate plan has considerable consequences on both their pocketbooks as well as the cost of the overall system," says Professor Eric Johnson, co–author of the report and co–director of Columbia Business School's Center for Decision Sciences. "If consumers can't identify the most cost–efficient plan for their needs, the exchanges will fail to produce competitive pressures on healthcare providers and bring down costs across the board, one of the main advantages of relying upon choice and markets."

Johnson, a noted expert in the area of consumer behavior and how it applies to public policy, has spent the last year advising several state health exchange systems on their designs and structure as a member of an advisory board run by Pacific Business Group on Health.

The research, published in PLOS ONE and titled Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture, conducted six experiments asking people of varying education levels to choose the most cost–effective policy using websites modeled on the current exchanges. The results lead to some startling conclusions, including:

The average consumer stands to lose on average $611 — roughly half a week's salary for a family making $42,000 per year — by failing to choose the most cost-effective option for their needs. Because the federal government will subsidize many policies, American taxpayers could pay an additional $9 billion for consumer's mistakes in choosing more costly plans. Surprisingly, providing monetary incentives alone did not improve outcomes. Participants were offered $1 for every correct answer and entrance into a lottery that pays one winner $200, yet 79% of participants still chose the wrong plan, inadvertently adding $419 to the cost of their health insurance.

Johnson cautioned against misuse of the research: "Amid the political heat around the healthcare law, there's going to be a great propensity for some politicians to jump on this study and misinterpret these results. This research presents no empirical evidence that in any way is an argument for or against the Affordable Care Act itself. Instead, this is research about the difficulties and complexities in creating the actual delivery systems, which is being done in both blue and red states."

Prescriptions to Improve Outcomes

Through the research, Johnson and his colleagues identified several mechanisms that significantly improved outcomes for the consumer. These include:

Estimate First; Peruse the Plans Second: Estimating your medical services before choosing a plan increases your chances of choosing the best plan. Educate: Including the use of 'just-in-time' education: tutorial links and pop-ups that explain basic terms like "deductibles" that might not be known to new buyers, increase your chances of choosing the best plan. Implement smart tools: Adding a calculator to the process improves your chances of choosing the right plan and reduces the size of errors by over $216. Implement other "smart defaults": Including a tool that defaults to the most cost-effective plan drastically improves a participant's chances at selecting the most cost-effective plan by 20%. Together, calculators and defaults reduce the average mistake saving consumers and the government $453. Limit the number of choices: Exchanges that limit their amount of choices in healthcare plans will help to avoid confusion among consumers (Utah offers 99 healthcare options for participants).

"Designers of the exchanges should take heart and know that they can significantly improve consumer performance by implementing some easy, straightforward tools such as just–in–time education, smart defaults, and cost calculators."

###

The paper, Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture, was authored by Eric J. Johnson, The Norman Eig Professor of Business Marketing at Columbia Business School; Ran Hassin, Hebrew University of Jerusalem; Tom Baker, University of Pennsylvania Law School; Allison T. Bajger, Columbia University; and Galen Treuer, University of Miami. Download the full report at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291598.

About Columbia Business School

Led by Dean Glenn Hubbard, the Russell L. Carson Professor of Finance and Economics, Columbia Business School is at the forefront of management education. The School's cutting-edge curriculum bridges academic theory and practice, equipping students with an entrepreneurial mindset to recognize, capture, and create opportunity in a competitive business environment. Beyond academic rigor and teaching excellence, the School offers programs that are designed to give students practical experience making decisions in real-world environments. The school offers MBA, Masters, and PhD degrees, as well as non-degree Executive Education programs. For more information, visit http://www.gsb.columbia.edu.

END



ELSE PRESS RELEASES FROM THIS DATE:

In addiction, meditation is helpful when coupled with drug and cognitive therapies

2013-12-20
In addiction, meditation is helpful when coupled with drug and cognitive therapies A new paper suggests that rehabilitation strategies coupling meditation-like practices with drug and behavior therapies are more helpful than drug-plus-talk therapy ...

Mating is the kiss of death for certain female worms

2013-12-20
Mating is the kiss of death for certain female worms The presence of male sperm and seminal fluid causes female worms to shrivel and die after giving birth, Princeton University researchers reported this week in the journal Science. The demise of the female appears ...

Landscape architecture study places value on Klyde Warren Park, other urban spaces

2013-12-20
Landscape architecture study places value on Klyde Warren Park, other urban spaces New research area tells entities what public projects are worth A UT Arlington landscape architect and his graduate students have published three case studies for the 2013 Case ...

Telecoupling science shows China's forest sustainability packs global impact

2013-12-20
Telecoupling science shows China's forest sustainability packs global impact As China increases its forests, a Michigan State University (MSU) sustainability scholar proposes a new way to answer the question: if a tree doesn't fall in China, can you hear it elsewhere ...

New ways to promote fitness for urban girls proposed by Rutgers-Camden nursing professor

2013-12-20
New ways to promote fitness for urban girls proposed by Rutgers-Camden nursing professor Most people know that one of the keys to reducing or preventing health problems is to get more exercise, but determining how to best integrate physical activity into their ...

Disabled shoppers confront holiday shopping barriers

2013-12-20
Disabled shoppers confront holiday shopping barriers Before chestnuts roast on the fire and sugarplums dance in the dreams of youngsters, the holiday season elicits visions of crowded parking lots and malls overrun by shoppers while retailers try to keep up with ...

Bullying in academia more prevalent than thought, says Rutgers-Camden scholar

2013-12-20
Bullying in academia more prevalent than thought, says Rutgers-Camden scholar CAMDEN — Bullying isn't only a problem that occurs in schools or online among young people. It can happen anywhere to anyone, and a Rutgers–Camden nursing scholar is shedding some ...

CCNY chemists use sugar-based gelators to solidify vegetable oils

2013-12-20
CCNY chemists use sugar-based gelators to solidify vegetable oils Mannitol and sorbitol dioctanoates could provide alternatives to trans fats linked to obesity, coronary artery disease and diabetes Researchers at The City College of New York have reported the ...

Oh, the places you'll go -- if you're an Atlantic slipper shell

2013-12-20
Oh, the places you'll go -- if you're an Atlantic slipper shell New research reveals the biomechanics of how marine snails swim Walk the beach or peer into a tidepool anywhere along the northeastern U.S. coast, and you'll find shells stacked on top of one another. ...

Saving fertility not priority at most cancer centers

2013-12-20
Saving fertility not priority at most cancer centers Lack of policies to protect cancer patients' fertility at top cancer centers CHICAGO --- Infertility is consistently listed as one of the most distressing long-term side effects of cancer treatment for adolescents ...

LAST 30 PRESS RELEASES:

Millions of men could benefit from faster scan to diagnose prostate cancer

Simulations solve centuries-old cosmic mystery – and discover new class of ancient star systems

MIT study explains how a rare gene variant contributes to Alzheimer’s disease

Race, ethnicity, insurance payer, and pediatric cardiac arrest survival

High-intensity exercise and hippocampal integrity in adults with cannabis use disorder

“Brain dial” for consumption found in mice

Lung cancer rewires immune cells in the bone marrow to weaken body’s defenses

Researchers find key to Antarctic ice loss blowing in the north wind

Ten years after the discovery, gravitational waves verify Stephen Hawking's Black Hole Area Theorem

Researchers uncover potential biosignatures on Mars

Built to learn: how early brain structure primes the brain to learn efficiently

Cells use electricity to eliminate their ‘weakest’ neighbours to maintain healthy protective barriers

New motion-compensation approach delivers sharper single-pixel imaging for dynamic scenes

Journal of Psychiatry and Neuroscience now officially part of the Canadian Science Publishing portfolio

What motivates runners? Focusing on the “how” rather than the “why”

Researchers capture new antibiotic resistance mechanisms with trace amounts of DNA

New research in JNCCN offers a simplified way to identify harmful medications in older adults with cancer

State school finance reforms increased racial and ethnic funding inequities, new study finds

Endocrine Society honors endocrinology field’s leaders with 2026 Laureate Awards    

Decoding high-grade endometrial cancer: a molecular-histologic integration using the Cancer Genome Atlas framework

An exploding black hole could reveal the foundations of the universe

Childhood traumatic events and transgender identity are strongly associated with suicidal thoughts and behaviors in university students

UVA to test if MRI can reveal undetected brain injuries in soldiers

Mount Sinai Morningside unveils new, state-of-the-art facility for patients who need inpatient rehabilitation

BD² announces new funding opportunities focused on biology of bipolar disorder

“Want to, but can’t”: A new model to explain the gap in waste separation behavior

Highly sensitive, next-generation wearable pressure sensors inspired by cat whiskers

Breaking the code of sperm motion: Two proteins found to be vital for male fertility

UC Irvine poll: Californians support stricter tech regulations for children

Study finds critically endangered sharks being sold as food in U.S. grocery stores

[Press-News.org] New study shows that more than half of consumers will choose a health-care plan that costs too much
New research from Columbia Business School warns that consumers will make mistakes totaling $9 billion; offers prescriptions to help improve consumer experience using new state health-care exchanges