Employment perk is common employment quandary
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Almost a quarter of employees choose the wrong health insurance, according to an unpublished study by economists at the University of Dayton in Dayton, Ohio.
University professors Trevor Collier and Marlon L. Williams, posting on MarketWatch on Tuesday, wrote that when workers are faced with the choice of two employer-sponsored health-care plans, they picked the one that left them worse off financially, even though they offered the same non-cost benefits — and that choosing the wrong plan cost them an average of $2,000 in money they could have saved.
Using data from a large university in the Midwest that offered to subsidize one of two health-care plans, the researchers said they wanted to understand “how hard it is for people to make the better choice when given only two options. The plans were identical in every respect other than their costs. One plan had much higher premiums but lower out-of-pocket expenses such as deductibles and co-payments for the employee,” according to the report.
“Our analysis found that 97% of the 2,300 employees would have been better off with the other plan, which had lower premiums but higher cost-sharing. Yet 23% chose the higher-premium plan anyway.”
The problem? Two could be too many choices, they wrote. “Some economists suggest that poor health insurance decisions could be the result of choice overload – they simply have too many options to choose from.”
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