HCP’s Richard Frank, PhD, and colleague Richard J. Zeckhauser, PhD, recently published a Perspective article in the New England Journal of Medicine. Their column entitled “Health Insurance Exchanges—Making the Markets Work” provides insight into the overwhelming numbers of health insurance providers. They explain that, “most people’s understanding of health plans is based on anecdotal information from friends and relatives. Vast amounts of information are lost.”

To combat issues of lost information, Frank and Zeckhauser recommend better insurance exchanges such as those offered by the Massachusetts Health Insurance Connector, established in 1997. The Massachusetts Health Insurance Connector disseminates information to consumers about competing health care plans and provides guidance on the plans that best suit their needs. When consumers are offered too many choices and no assistance, they undergo the phenomenon of “inertia due to numbers.” This phenomenon was discovered among Swiss consumers who were offered choices of large numbers of insurance carriers. Researchers investigating this market deduced that “people who were offered more alternatives were less likely to switch plans” and “left money on the table.” Therefore, consumers need proper support to avoid this daunting scenario.

Frank and Zeckhauser believe that consumers are entitled to as much information as possible. Internet-based methods, such as the travel rating site Tripadvisor.com, would provide quick ways to gather information from a wide range of people. They believe that if plans competed more rigorously against each other, “prices would be lower and quality higher.” Healthy competition among health care providers could actually lead to healthier consumers, and that is a goal Frank and Zeckhauser are promoting. For more information, read their Perspective in full on the NEJM website.