Consumer health plan choice: current knowledge and future directions

Abstract

A keystone of the competitive strategy in health insurance markets is the assumption that "consumers" can make informed choices based on the costs and quality of competing health plans, and that selection effects are not large. However, little is known about how individuals use information other than price in the decision making process. This review summarizes the state of knowledge about how individuals make choices among health plans and outlines an agenda for future research. We find that the existing literature on health plan choice is no longer sufficient given the widespread growth and acceptance of managed care, and the increased proportion of consumers' income now going toward the purchase of health plans. Instead, today's environment of health plan choice requires better understanding of how plan attributes other than price influence plan choice, how other variables such as health status interact with plan attributes in the decision making process, and how specific populations differ from one another in terms of the sensitivity of their health plan choices to these different types of variables.