A Simple Nudge Increases the Percentage of People Who Shop Around for Health Insurance

A study co-authored by Columbia University Mailman School of Public Health assistant professor Adam Sacarny, PhD, examined how personalized letters and emails might encourage enrollees in the ACA Marketplaces to shop for health insurance plans that save them money and better meet their needs. The study was a randomized trial. Messaging included personalized information about the savings on insurance premiums that residents of Colorado could realize from switching plans as well as generic communications that simply emphasized the possibility of saving. While both personalized and generic messages increased shopping on the Marketplace’s website, they did not necessarily lead consumers to change their plans. The findings are published online in the journal Health Affairs.

The Affordable Care Act provided health insurance to tens of millions of new people yet consumers are not always getting the best deal. Many people fail to shop during re-enrollment periods and instead automatically renew their old plans. Therefore, they may miss out on plans with lower premiums and similar levels of coverage.

Sacarny and colleagues at Harvard Medical School and Boston University’s School of Public Health and Questrom School of Business showed that a simple push can significantly increase the percentage of people who choose to shop around for insurance.  “Our goal was to encourage people to shop for plans and help them look for options that better met their needs,” said Sacarny in the Department of Health Policy and Management. “While we can say with confidence that the messages encouraged people to shop, the results also show that simply increasing awareness may not lead consumers to change plans.”

The study was a randomized controlled trial involving more than 15,000 households in Colorado that were scheduled to be re-enrolled in their ACA Marketplace plan for 2016. A third of these households received generic letters reminding them that they could save money by switching plans during re-enrollment. A second group of households received more personalized notes that included specific savings numbers based on their current plans. The remaining households were the control group and did not receive messages through the study.

Both types of messaging moved consumers to take action: about 31 percent of those receiving generic or personalized messages shopped for a plan, while just 25 percent of people from a control group shopped for a new plan. However, in all cases, nudges did not seem to increase the percentage of people who switched plans. About 10 percent of each group switched, even though significantly more people receiving the nudges actually shopped for plans. There may be several reasons behind the low number according to the investigators. “They may have been satisfied with their original choice, or they might have found it difficult to shop for an alternative,” says Sacarny. “The next step is understanding why they didn’t switch plans.”

He noted that these results could be a starting point for ongoing research and policy. According to Sacarny, “finding the most helpful information to communicate to consumers and the best way to assist them as they shop will be a major task for the marketplaces going forward.”