Morning Must-Read: Timothy Layton: If ObamaCare plans are only offering narrow networks, blame information asymmetry

Timothy Layton: If ObamaCare plans are only offering narrow networks, blame information asymmetry: “I think there is an additional issue…

…to consider: the salience of information provided to consumers. In the Marketplaces, plans are differentiated mostly by three factors: Price, cost-sharing, and network. Anyone who has visited one of the state Marketplace websites knows that both price and cost-sharing information are very salient. However, information about a plan’s network is much murkier. Sure, anyone can follow a series of links to an insurer’s (often unclear) website and type in the name of specific providers to determine whether they belong to the insurer’s network. But, for most consumers, especially those with limited experience interacting with specific providers, a list of every doctor in the insurer’s network obviously does not provide a clear picture of the quality of the network. In economics, this lack of information about network quality is referred to as an information asymmetry. Information is asymmetric because insurers know more about the quality of their network than consumers.  In a famous paper that won him the Nobel Prize in Economics, George Akerlof showed that asymmetric information can produce market failures…