Consumer Decision Making in the Individual Health Insurance Market

This paper summarizes the results from a study of consumer decision making in California's individual health insurance market. The authors conclude that price subsidies will have only modest effects on participation and that efforts to reduce nonprice barriers might be just as effective. They also find that there is substantial pooling in the individual market and that it increases over time because people who become sick can continue coverage without new underwriting. Finally, the authors show that people prefer more-generous benefits and that it is difficult to induce people in poor health to enroll in high-deductible health plans.