ABSTRACT
This chapter discusses ways in which behavioral economics can and has been used to improve health insurance choices. It also discusses several promising approaches informed by behavioral economics to aid consumers in their understanding, evaluation, comparison, and selection of health insurance plans. The chapter discusses consumers are afflicted by decision errors when purchasing coverage because of suboptimal search and decision strategies, limited proficiency understanding health insurance plan features and how these features affect health care utilization and spending, and poor designs in health insurance decision environments. It presents common tools employed by choice architects to influence plan choice and then discuss the evidence on how the application of these tools has improved consumers' coverage decisions. One promising approach from behavioral economics is using consumers' inertia to their benefit and defaulting them into health insurance plans that are affordable, offer adequate risk protection, and are high quality.
