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I.VW Research Seminar – Chenyuan Liu, Tsinghua University

Health Plan Choice and Menu Complexity: Evidence from the US ACA Silver Loading Policy

Health insurance markets in the United States often give customers a wide range of plan options. To what extent do the numbers of options and the complexities of the attribute differences between plans affect the ability of consumers to make informed choices? We examine this issue using data from the U.S. private health insurance exchanges. We leverage an exogenous policy shock that occurred in 2018 when the federal government stopped funding special generous-coverage plans for lower-income consumers. In response to this reduction in funding, some states encouraged insurers to raise prices for one particular level of coverage (so called “Silver-tier” plans). As a result, a subset of consumers had a strong financial incentive starting in 2018 to avoid these Silver plans.  We find that overall consumers responded strongly to the premium changes: a one standard deviation increase in the Silver premium relative to other plans decreases the enrollment in Silver by about 40%. We then explore the heterogenous responses across regions with different menu complexity. In counties that had lower numbers of available plans per insurer and counties that had standardized plan options that used a fixed set of cost-sharing rule there was a bigger shift away from Silver plans in response to the policy shock. These results suggest that more complex menus and plan attributes may limit customers’ ability to make informed choices. We also find evidence that counties in which an insurer exited the market from the prior year also showed greater responsiveness to the price shocks, consistent with the notion that inertia and auto-enrollment tends to limit consumers’ responsiveness to market changes.

If you have questions please contact
Prof. Dr. Anastasia Kartasheva
Tel.: +41 71 224 79 95
E-Mail:

1. December 2022

Location: Online via Zoom

Date: 01.12.2022, 16:00 bis 17:00