• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

“Can i answer the question? No you can not!”

Imperialist aggressors must be defeated, or the whole world loses.

I did not have this on my fuck 2022 bingo card.

The republican caucus is already covering themselves with something, and it’s not glory.

We’ll be taking my thoughts and prayers to the ballot box.

When someone says they “love freedom”, rest assured they don’t mean yours.

Cole is on a roll !

Optimism opens the door to great things.

An almost top 10,000 blog!

Joe Lieberman disappointingly reemerged to remind us that he’s still alive.

Innocent people don’t delay justice.

If you are in line to indict donald trump, stay in line.

No one could have predicted…

Take your GOP plan out of the witness protection program.

A democracy can’t function when people can’t distinguish facts from lies.

Following reporting rules is only for the little people, apparently.

“Everybody’s entitled to be an idiot.”

Putin must be throwing ketchup at the walls.

Do not shrug your shoulders and accept the normalization of untruths.

Not all heroes wear capes.

I’d like to think you all would remain faithful to me if i ever tried to have some of you killed.

No offense, but this thread hasn’t been about you for quite a while.

Let there be snark.

I wonder if trump will be tried as an adult.

Mobile Menu

  • Winnable House Races
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • Balloon Juice 2023 Pet Calendar (coming soon)
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • War in Ukraine
  • Garden Chats
  • On The Road
  • 2021-22 Fundraising!
You are here: Home / Anderson On Health Insurance / Inertia and the importance of the first choice

Inertia and the importance of the first choice

by David Anderson|  August 4, 20218:52 am| 4 Comments

This post is in: Anderson On Health Insurance

FacebookTweetEmail

The ACA markets rely on choice.  The ACA markets are highly inertial.  People who make a first choice are not too likely to make a second choice beyond a stay or go decision on a regular basis.  This means that the first choice is quite important as it has significant and long lasting impact.

A new working paper by Saltzman, Swanson and Poltzky lay out some empirical evidence on how much effort it takes to get someone to change their mind from their initial choice.

We estimate high inertia costs, equal to 44% of average premiums. Although eliminating inertia exacerbates adverse selection, it significantly reduces market power such that
average premiums decrease 13.2% and annual per-capita welfare increases $902. These effects are substantially smaller in settings without market power and/or risk adjustment

As a side note, they are measuring the cost of inertia as a function of average PRE-SUBSIDY premiums. It is quite plausible that the cost of inertia for many individuals is greater than the net of subsidy premium that they pay.

Figure 1 of their paper blew me away as it is a great representation of the stickiness of the market for people who stayed enrolled. The first image is movement by metal band between Year 1 and Year 2. The bottom image is movement between insurers from Year 1 to Year 2.

Movement between metals Year 0 to Year 1 on Covered California

I have a couple of concerns with this paper. The biggest one is that the data set is only from 2014-2018. 2014-2017 had one pricing regime. 2018 had a very distinctly different pricing regime due to silverloading. We know from Rasmussen et al that there was in-plan and intra-plan movement and our recent work shows that 2018 got a lot more movement. Silverloading is a massive price and attention shock. The extra attention only did so much as a lot of people still stayed in dominated plans, but there was a lot of movement occurring. We’re also experiencing a huge price and attention shock right now from the combination of the passage of the American Rescue Plan and the ongoing pandemic. But this is a modest concern as pretty much every other researcher, myself and my co-authors included, who are trying to use Covered California data hits a data limit sometime in 2018. I assume they, along with everyone else, is in the process of getting new data.

The important thing from this paper is that the first choice is a long lasting choice for many people. What that tells me is that we should encourage high quality first choices by improving the choice environment, minimizing extraneous junk and providing the needed assistance in a seamless and aggressively unobtrusively manner as possible.

FacebookTweetEmail
Previous Post: « Wednesday Morning Open Thread: Working for the Biscuits
Next Post: HinTN Wants to Match Your Four Directions GA Donations! »

Reader Interactions

4Comments

  1. 1.

    Ohio Mom

    August 4, 2021 at 9:36 am

    Well isn’t that how most of us grocery shop? I figured out the cheapest paper towels and that is it. I can’t be doing all that calculating every week.

    Now sometimes the store is out of my chosen brand or the company that makes the brand stops manufacturing it or changes it in undesirable ways. Then I have to adjust.

    I admit that this is the approach I took to renewing my Medicare plans. Though in the back of my head I remember that if my prescriptions change I will have to reevaluate my Part D.

  2. 2.

    guachi

    August 4, 2021 at 9:45 am

    Highlights the importance of having good choices up front. In the Navy, the default investment option in our 401k (called TSP) was the G fund, which is low rate of return Government securities. That was a bad choice and they finally changed it a few years ago.

  3. 3.

    Elizabelle

    August 4, 2021 at 9:47 am

    This is so true.  Inertia is powerful, actually.  Watch out for it.

  4. 4.

    Meyerman

    August 4, 2021 at 9:58 am

    Who else, besides the insured, has the incentives to help the insured make the right choice? Other than policy researchers like yourself, is there anyone invested in getting people the best value for their money. Most of what I read adresses coverage and only coverage. High covered percent equals success regardless of whether the insured is receiving the best value. Maybe this is out there but I am just missing it.

Comments are closed.

Primary Sidebar

Political Action

Postcard Writing Information

Recent Comments

  • Roger Moore on Open Thread: Victory in Alabama? (Sep 26, 2023 @ 3:24pm)
  • Jay on Open Thread: Victory in Alabama? (Sep 26, 2023 @ 3:24pm)
  • FastEdD on Biden on the Picket Line (Sep 26, 2023 @ 3:23pm)
  • Alison Rose on Biden on the Picket Line (Sep 26, 2023 @ 3:22pm)
  • catclub on Biden on the Picket Line (Sep 26, 2023 @ 3:22pm)

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
We All Need A Little Kindness
What Has Biden Done for You Lately?

Balloon Juice Meetups!

All Meetups
Talk of Meetups – Meetup Planning

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Mailing List Signup
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)

Twitter / Spoutible

Balloon Juice (Spoutible)
WaterGirl (Spoutible)
TaMara (Spoutible)
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
TaMara
David Anderson
Major Major Major Major
ActualCitizensUnited

Join the Fight!

Join the Fight Signup Form
All Join the Fight Posts

Balloon Juice for Ukraine

Donate

Cole & Friends Learn Español

Introductory Post
Cole & Friends Learn Español

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2023 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!