Transfer complexity to the state

In this month’s Health Affairs, the Covered California team published some new research on how likely people who were automatically moved from strictly dominated plans to superior options were likely to stay in their new, better option:

Before the start of the 2022 renewal period, in September 2021, we queried the Covered California database and identified 4,911 households with incomes of 138–150 percent of poverty enrolled in bronze plans but eligible for zero-premium CSR silver 94 plans with their current health insurers and provider networks. In the first week of October 2021, through an automated batch process, these households were crosswalked to zero-premium CSR silver 94 plans with the same insurers and provider networks….

On average, 93.11 percent of households with incomes of 138–150 percent of poverty, and thus in the crosswalk, were enrolled in CSR silver plans at the end of open enrollment, compared with an average of 10.06 percent of households with incomes of 150–160 percent of poverty, who were in the control group. It is possible that this difference, which rounds to 83.1 percentage points, was upwardly biased as a result of some of the underlying differences between the households in the treatment and control groups in the crosswalk intervention.

 
This is INTERESTING!

First about 7% of enrollees opted out of the CSR-94 plan. We can’t assess if they went to a strictly dominated plan or moved to a different insurer and perhaps metal level because they preferred network over cost-sharing or premium. If that is the case, this is a reasonable trade-off in some situations.

More interestingly, the paper also examined a nudge intervention. The nudge target was slightly different so it is not apples to apples but the outcome was the same — what percentage of folks chose a CSR plan.

At the end of the 2022 open enrollment period, 8.8 percent of the control group in the nudge intervention had switched to CSR silver plans. This low rate of plan switching is consistent with prior research that documents inertia in the ACA Marketplaces.8,9 Assignment to the letter and email treatment group caused a statistically significant 2.3-percentage-point increase in CSR silver 94 plan enrollment

The nudge had statitistically signficant results. About 26% higher CSR-94 uptake than the folks who never got new information. Nudges are soft, they are subtle, and they are effective but limited. The automatic re-enrollment experiment had an 800% change in behavior relative to a non-randomized but plausible control on the other side of the CSR richness discontinuity.

In the first experiment, California took on the burden of moving people out of objectively bad choices. Once they did that, very few people took an action that went against the new default. The state had the ability to identify the likely target population. They had the ability to identify strict domination. They had the ability to make a switch. And they made it easy. And people took easy.

In the nudge, the state had the ability to identify likely better targets and switches. They provided information to individuals. But the individuals had to do something (sign-in and change plans) which made the nudge effective but only modest in its effects. The state did not take on the administrative burden.

I’ve been leery of nudges as they always seem effective small ball when cross-checking state data bases and taking on the burden of complexity can create new and better defaults in at least the most obvious cases. I think this article reinforces this prior.