It’s Not Just You: Picking a Health Insurance Plan Is Really Hard

“People want advice, they want guidance,” Mr. Lang said. “And it’s pretty hard.”

The people most likely to make bad choices appear to be those least able to afford it. A recent study in the Netherlands, which offers insurance to everyone through an Obamacare-like marketplace, found that only 5 percent of Dutch customers did a better job at choosing an ideal plan than they would have by choosing a plan at random. And the people in that top 5 percent tended to be have college degrees and jobs in technical fields. People with less education and income, who tend to be in worse health, were very likely to choose a plan that cost them more to cover their health care — a situation that might leave them skimping on needed medicine or procedures.

But even highly educated Dutch professionals struggled. People who worked in the insurance industry and had advanced degrees made a good choice about 30 percent of the time. And only about 40 percent of trained statisticians — the group with the best performance — chose good plans for their needs.

In the United States, a working paper has found that many professionals who help people select health insurance are also bad at picking plans, performing substantially worse than a computer algorithm.

“These people who are supposed to make the market work can’t do it at all,” said Jonathan Kolstad, an associate professor of economics at the University of California, Berkeley, who was a co-author on both studies. Professor Kolstad said the work had made him reconsider why we value markets for health insurance so highly when they are so hard to use.

Picking a plan is hard, but some simple guidelines can help a little. It’s helpful to know whether a given plan covers the doctors and hospitals you use, for example. And if you’re willing to take more financial risk, you may prefer a higher-deductible plan with lower premiums, while if you value more predictable expenses, a lower-deductible plan may work better. But people’s actual health care needs and insurance fine print vary enough that those guides can lead you astray. The literature shows that it’s not uncommon for people to choose a plan that costs them $1,000 more than the best plan, over the course of the year.

Most of the research on plan choice looks at the financial design of the plan. Researchers can look at the options, then see which health services people end up using, and can tally total costs for various choices. That approach leaves out some other elements of health plans, like the choice of doctors, or whether the company offers good customer service. The study on brokers found that people whose plan selection was aided by the computer program were less likely to switch plans the next year than those who took the unassisted advice of the broker, a sign that they were happier with the overall package.

But what is the alternative to choice? Amanda Starc, an associate professor of management at Northwestern University, said there was evidence that people really did want different things from health insurance. About a third of people 65 and older are currently enrolled in private Medicare Advantage plans, a share that is large enough to suggest that many would be less happy with only the choice of government Medicare.

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