Association for Public Policy Analysis & Management

The Affordable Care Act dramatically expanded the use of regulated marketplaces to provide individuals with health insurance coverage. The efficiency of these marketplaces depends on the ability of consumers to choose plans that reflect their preferences, but inattention and information frictions may inhibit optimal choices. In this project, we conduct a randomized intervention to test the effect personalized information about the amount a household could save by switching to a lower cost plan with a similar level of cost sharing on enrollee shopping behavior and their eventual choice of plan. We provide information about these characteristics to a random subset of re-enrolling individuals in Colorado's health insurance marketplace, Connect for Health Colorado, via letters and e-mails. We test whether the letters and emails affect the probability that a household returns to the marketplace website to "shop" for a new health plan for 2016, the probability that the household switches plans for 2016, and the price of the plan the household chooses for 2016. The results of this study shed light on behavioral frictions in health insurance and economic parameters central to market design.