Evaluating health insurance plans can be daunting and confusing, and most people don’t get much guidance, research shows.
The New York Times, November 1, 2015
by Austin Frakt THE NEW HEALTH CARE
It’s open enrollment season for almost every kind of health insurance in America. Millions of Americans using Medicare plans, employer-sponsored health insurance or Affordable Care Act marketplaces select health plans each fall. Many consumers face numerous options, and research shows that they make many mistakes, often paying more than they need to.
Some err by selecting deductibles that are too low. Lower deductibles can be a fine choice for some consumers, but trying to save money with a lower deductible can be a poor choice if a person pays even more in premiums. For instance, at one large American company in 2010, employees could reduce their deductible by $250 — to $750 from $1,000 — by paying $500 more in premiums. Trading $500 for $250 is clearly a bad deal for the consumer.
Yet a majority of the firm’s workers made bad deals like this, according to a study by Saurabh Bhargava, a Carnegie Mellon economist, and his colleagues. Workers were offered a choice of 48 plans that were identical except in cost sharing and premiums. Though no plan would have been optimal for every employee, a $1,000 deductible plan would have been better for many and at least a no-worse choice for 97 percent of employees who chose a lower deductible.