Ben Handel

It's kind of in the middle.

The way I would describe it is that the premium, which is how much you're being charged for the whole year, for example, just to be in this health plan, that's something people understand well.

Because it's a fixed price.

You can figure it out.

Yeah, exactly.

The more complicated part that consumers often struggle with is all the stuff that happens after that.

So what's the deductible?

What's the cost sharing?

What's the co-insurance rate?

In fact, my co-authors and I, we've run surveys and tied it to the choices people make.

And I mean, just to be honest, people basically like don't understand these terms.

One nice example, we're studying a firm that offers two health plans.

So it's simple, just two options.

One of the options is labeled as more generous and one is labeled as less generous.

And that's true for these options financially.

However, both options give access to exactly the same doctors.

OK, so we ask consumers, hey, do you think that the more generous option gives you access to more doctors?

About 40 percent of people say yes, but

And what we find using the actual purchase data is that conditional on health risks or how healthy they are, those people who think that the more generous plan gives them access to more doctors are willing to pay $2,000 more per year for that plan.

That gives you a sense of this uncertainty, right?