Active versus Passive Choice: Evidence from a Public Health Care Redesign

Abstract

This research examines how people choose among different public health insurance plans and assesses the factors that influence their choice. The authors explore two types of choice: active choice, in which consumers explicitly choose a plan, and passive/no choice, in which consumers take no action in choosing their plan. Using administrative and survey data for a sample of Medicaid recipients from a state that recently redesigned its Medicaid program, the authors identify what drives consumers’ choices using constructs loosely framed by classic motivation, opportunity, and ability models. The results show that when consumers engage in active decision making, there are few barriers to selecting a wellness-based health plan with greater prescription coverage. In addition, the findings suggest that it is important for informed people, such as health care professionals, to be involved in plan choice. Unexpectedly, Medicaid recipients who rely on word-of-mouth communication tend to avoid active choice.