Lan Zou
Title
M.Sc.
Last Name
Zou
First name
Lan
Email
lan.zou@unisg.ch
Phone
+41 71 224 7955
5 results
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Item type:Publication, More Options, More Problems? Lost in the Health Insurance Maze(2024); While the opportunity to choose from a diverse range of options can be advantageous, consumers often struggle to make optimal decisions in the domain of health insurance. In this study, we examine the effects of decision aids on improving choice optimality in a health insurance setting that allows for variations in coverage but is standardized otherwise. While this relatively simplistic setting theoretically implies optimal conditions for observing large fractions of optimal choices, we observe widespread adoption of non-welfare-maximizing plans, with at least 36% of the population winding up with suboptimal insurance plans. In a hypothetical-choice survey experimental setting, we estimate the treatment effects of increasing transparency through information provision and restricting choice on choice optimality. We find that decision quality cannot be improved meaningfully by our interventions and that nonoptimal choice is economically relevant, as it accounts for an increase of approximately 9.4% in total annual cost.Type:journal articleJournal:Journal of Risk and InsuranceVolume:91Issue:1Scopus© Citations 3 - Some of the metrics are blocked by yourconsent settings
Item type:Publication, The impact of subsidies on deductible choice in health insurance(2022-08)Low-income individuals respond to subsidies that constitute a combination of income effect and subsidy effect. This paper disentangles the two effects by exploring three variations in Switzerland. First, I start by using the kinked relationship between prior earnings and subsidy levels to identify the effect of the subsidies using a regression-kink discontinuity design. Empirically, I document that subsidies increase the demand for low-deductible insurance contracts. I find that 40 percent of subsidy recipients select the lowest deductible plan, compared to 30 percent in the non-subsidy high-income group.Second, subsidy levels are fixed coupon conditional on the lowest deductible plan(most generous plan). Individuals face zero out-of-pocket premiums for higher deductible plans as subsidy levels increase. I explore discontinuities in the availability of zero-premium plans to examine the pricing effect(substitution effect) of subsidies on deductible choices.Type:journal article - Some of the metrics are blocked by yourconsent settings
Item type:Publication, What Do Consumers Do When They Select Health Insurance Plans?(2025-09-15)Inertia is widespread in health insurance markets, partly due to default options and limited consumer engagement. This paper examines what prompts consumers to switch plans despite the presence of a default option. We identify three main triggers: rational inattention, learning behavior, and health shocks. Using Swiss administrative data and a linked health survey, we first compare the plan choices of new and existing enrollees to quantify inertia: default effects increase suboptimal plan selection by 14 percentage points. We also find that inertia emerges immediately upon market entry. Among new enrollees, we find that consumers facing greater decision complexity are less likely to select optimal plans, consistent with choice attenuation evidence. Second, by tracking the choice patterns of new enrollees and comparing them with those of existing enrollees, we discover that learning does not enhance active switching behavior; however, learning and switching for existing enrollees saves more than new enrollees. That is, the most effective learning comes from switching behavior over the years instead of learning about the market. Later, using a survey linked to administrative data, we examine experiencing a health shock leads consumers to update their self-reported health status, which in turn increases their switching rate by 7.5 percentage points, in contrast to a 5-percentage-point increase otherwise.Type:conference paper - Some of the metrics are blocked by yourconsent settings
Item type:Publication, Magnitude and Social Correlates of Poor Decisions in Health Insurance(2024); This study investigates consumer choice in health insurance markets. Despite theoretical expectations, empirical evidence challenges the assumption that the provision of consumer choice enhances consumer welfare. Analyzing Swiss mandatory health insurance, with six deductible plans and standardized services, we identify social characteristics associated with suboptimal decision-making. Results indicate significant financial losses for a substantial number of consumers. While economically disadvantaged populations with lower incomes and less education tend to choose higher coverage plans, this is, on average, not optimal, emphasizing the need for a nuanced understanding of the relationship between consumer choice, social factors, and financial outcomes in health insurance.Type:working paper - Some of the metrics are blocked by yourconsent settings
Item type:Publication, The Value of Choice in Mandatory Health Insurance(2022-01); Giving consumers choice can improve welfare in principle. In this study, we explore choice optimality in a health insurance market that allows for variations in coverage but is standardized otherwise, theoretically implying optimal conditions for observing welfare improvements from choice. However, we find that as much as 49 percent of the adult population opts into non-welfare maximizing plans. In a hypothetical-choice survey experimental setting, we estimate treatment effects of increasing transparency through information provision and restricting choice on choice optimality. We find that decision quality cannot be improved meaningfully by our interventions, that pessimistic beliefs impair choice quality, and that non-optimal choice is economically relevant as it accounts for approximately 9.4 percent of total annual health costs. We suggest several policy changes in light of our findings.Type:working paper