Research has revealed new insight into how the choices are made regarding the policies that are purchased.
Policymakers in the insurance industry are always tweaking and altering the plans that are available in order to help to make them more appealing for people to purchase, without providing an option that will be overly costly to the company when compared to the revenue it generates.
This includes the concept of the “moral hazard”, in which people change their behaviors because they are covered.
For instance, the insurance industry has observed – and this is a concept supported by a randomized Medicaid study performed by Amy Finkelstein, an economist from MIT – that the more health coverage people have, the more they will obtain medical care. It is for precisely this reason that insurers find “consumer-directed medical care” quite appealing.
The insurance industry likes coverage that doesn’t change people’s behaviors to the point that costs rise.
In the case of consumer-directed medical care, consumers are required to pay a larger percentage of their medical expenses out of their own pockets. This comes in the form of higher co-payments or deductibles, for example. What the insurance industry has found is that the more an individual must pay for the services out of their own pockets, the less likely they are to seek covered medical care for health issues that they consider to be relatively minor.
However, Finkelstein has now co-authored another paper which has suggested that the predicted lower spending that is connected with these high deductible plans will require a much more meticulous approach in order to take into account the way that people respond to healthcare market incentives.
This latest insurance industry research has now suggested that consumers will choose their policies based on several factors and not only on their level of wellness – that is, people who are less well would choose more coverage – but will also factor in the behavioral change that they expect from themselves due to the coverage that they are purchasing. The study suggests that consumers are aware of the “moral hazard” and are taking it into account when they buy their plans.
