In a column on Slate, the award-winning daily magazine for the Web, Professor Ray Fisman exposes an easily overlooked obstacle to preventive healthcare: the high rate at which Americans switch insurance plans. Highlighting a not yet published study by researchers at Case Western Reserve and Carnegie Mellon University, Fisman shows how the annual turnover may run as high as 30 percent, at least half of which results from entire employer groups switching insurers. The “search frictions” of the insurance market — the fact that shopping for healthcare plans is time-consuming and expensive — means that big price differences across plans stay put. While an employer won’t evaluate all competing choices, the authors of the new study argue, it will find one and switch every few years.
The authors' solutions include a federally sponsored reasonably priced health insurance plan. “This modest proposal for government intervention won’t satisfy Michael Moore or others pushing for a complete overhaul of American healthcare,” Fisman concludes, “but it may help to make Americans healthier while we wait for more ambitious reforms that are promised every electoral cycle but so far never delivered.” Fisman, who writes periodically for Slate, is the Lambert Family Professor of Social Enterprise in the Economics and Finance Division. His book on corruption and violence, coauthored with Ted Miguel, will be published next year.