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The Role of Behavioral Frictions in Health Insurance Marketplace Enrollment and Risk: Evidence from a Field Experiment

Richard Domurat, Isaac Menashe and Wesley Yin

No 26153, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We experimentally varied information mailed to 87,000 households in California's health insurance marketplace to study the role of frictions in insurance take-up. Reminders about the enrollment deadline raised enrollment by 1.3 pp (16 percent), in this typically low take-up population. Heterogeneous effects of personalized subsidy information indicate systematic misperceptions about program benefits. Consistent with an adverse selection model with frictional enrollment costs, the intervention lowered average spending risk by 5.1 percent, implying that marginal respondents were 37 percent less costly than inframarginal consumers. We observe the largest positive selection among low income consumers, who exhibit the largest frictions in enrollment. Finally, the intervention raised average consumer WTP for insurance by $25 to $54 per month. These results suggest that frictions may partially explain low measured WTP for marketplace insurance, and that interventions reducing them can improve enrollment and market risk in exchanges.

JEL-codes: D03 I11 I13 (search for similar items in EconPapers)
Date: 2019-08
New Economics Papers: this item is included in nep-agr, nep-exp, nep-hea and nep-ias
Note: EH
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published as Richard Domurat & Isaac Menashe & Wesley Yin, 2021. "The Role of Behavioral Frictions in Health Insurance Marketplace Enrollment and Risk: Evidence from a Field Experiment," American Economic Review, vol 111(5), pages 1549-1574.

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