The Hassle of Wellness: Do Peers and Health Status Matter?

Shooshan Danagoulian, Cornell University

This paper looks at health insurance plan enrollment after the introduction of wellness features to a plan by a large employer. While the plan with the wellness features is offered at a lower cost to the employee, many have chosen not to enroll. This paper looks at the effect of peer choices and family health status on plan choice. Using a unique dataset of plan choice and utilization, I compare two identical plans, and focus on a subsample to avoid switching costs. I find that peer choices matter: a 10% rise in peer enrollment increases own probability of enrollment in wellness plan by 1.7%. Health is also a predictor of plan choice, with a 1 point rise in the family Charlson health score decreasing probability of enrollment in wellness plan by 2%. The results suggest that lack of experience and perception are a major source of resistance to wellness plans.