Choice Architecture & Marketplace Analytics: The Secret to a Successful Private Exchange

1 © 2015 Benefi+ocus.com, Inc. All Rights Reserved | Confiden@al & Proprietary

Choice Architecture & Marketplace Analy@cs: The Secrets to a Successful Private Exchange Seth Gregorie and Tom Dugan

© 2015 Benefi+ocus.com, Inc. All Rights Reserved | Confiden@al & Proprietary 2

Forward-‐Looking Statement This presenta@on may include forward-‐looking statements related to the future business and financial performance of Benefi+ocus and future events or developments involving Benefi+ocus. These statements may be iden@fied by words such as “expects,” “looks forward to,” “an@cipates,” “intends,” “plans,” “believes,” “seeks,” “es@mates,” “may,” “might,” “will,” “could,” “would,” “should,” “targets,” “projects” or words of similar meaning. Forward-‐looking statements can involve a number of risks and uncertain@es that could cause actual results to differ materially from those explicit or implicit in the forward-‐looking statements, including fluctua@ons in those results, general economic risks, management of growth, the need to innovate and deliver useful products and services, our ability to compete effec@vely, reliance on key personnel, privacy, security, regulatory changes, and other risks associated with our business as set forth from @me to @me in our filings with the SEC. Some of the products and/or product features discussed in this presenta@on may be works in progress and not yet generally available for sale. Benefi+ocus assumes no obliga@on and does not intend to update any forward-‐looking statements.


64 % 22 % RIGHT WRONG

Sources: h]ps://consumersunion.org/wp-‐content/ uploads/2013/03/Consumer_Difficul@es_Selec@ng_Health_Plans_Jan2012.pdf

h]p://www.ncbi.nlm.nih.gov/pmc/ar@cles/PMC3157937/

QUALITY of choices


80 Believe their risks are less than most people %

90 Sources: h]ps://consumersunion.org/ wp-‐content/uploads/2013/03/ Consumer_Difficul@es_Selec@ng_Health_Plans_Jan2012.pdf

OPTIMISM FALLACY of drivers think they are be5er than average drivers %


Ego depleGon


Lack of Trust


Not the cheapest Complicated CalculaGon


Choice Architecture


Value of Choice Architecture

•  Simplified versus tradi@onal plan selec@on

•  Choice Efficacy -‐ defined as Percent of top three preferences met by chosen plan

Success is measured by good choices Simplified Typical

62% 51%

68% 51%

74% 45% Source: h]p://[email protected]/downloads/talks/2014-‐ACR-‐abstract-‐AppeltGaoJohnsonVonGlahn-‐ChoosingHowToChoose.pdf


Status Quo Bias Defaults are

extremely powerful


Defaults 83

70

Projected reten@on rate on public exchanges %

% Ac@ve enrollees could get a be5er deal SUBSIDY CHANGES

Source: hQp://aspe.hhs.gov/health/reports/2014/Targets/ib_Targets.pdf hQp://aspe.hhs.gov/health/reports/2015/premiumreport/healthpremium2015.pdf


Expec@ng feedback

Helped reduce energy use in peak periods in Southern California

40% Source: hQp://www.chicagobooth.edu/news/2008ManCon/01-‐thaler.aspx

© 2015 Benefi+ocus.com, Inc. All Rights Reserved | Confiden@al & Proprietary 13 13 © 2015 Benefi+ocus.com, Inc. All Rights Reserved | Confiden@al & Proprietary

ExpecGng Error ExpecGng Error


Be Careful With Numbers


You’re the explorer/scienGst •  Know the source

•  Don’t assume the study or metrics are right

•  Don’t be afraid to challenge


Source: h]p://www.econoclass.com/misleadingstats.html

Misleading Numbers


Source: hQp://www._c.gov/news-‐events/press-‐releases/2011/09/ reebok-‐pay-‐25-‐million-‐customer-‐refunds-‐seQle-‐_c-‐charges

Be Certain Before

You Publish

Be Certain Before

You Publish


Beware of Rela@onships

Source: h]p://www.tylervigen.com/


Beware of Rela@onships

Source: h]p://www.tylervigen.com/


Poor Research Design

•  Sample size of 10

•  Are the video games violent?

•  Should have looked only among players of violent video games

Source: h]p://www.washingtonpost.com/blogs/worldviews/wp/2012/12/17/ten-‐country-‐comparison-‐suggests-‐theres-‐li]le-‐or-‐no-‐link-‐between-‐video-‐games-‐and-‐gun-‐murders/


Poor Visualiza@on

Source: h]p://www.businessinsider.com/the-‐27-‐worst-‐charts-‐of-‐all-‐@me-‐2013-‐6


Sources: h]p://www.reddit.com/dataisbeau@ful/comments/ and CBS News June 2008


Source: h]p://blog.minitab.com/blog/michelle-‐paret/using-‐the-‐mean-‐its-‐not-‐always-‐a-‐slam-‐dunk


Deaths and thousands hospitalized

100+ Propulsid (HEARTBURN)

Hospitaliza@ons in 9 months

93 Lotronex

(IBS)

Confirmed deaths, on market for 3 years

63+ Rezulin (DIABETES)

Source: h]p://[email protected]/view.resource.php?resourceID=005528


Guidelines at Beneficocus


What Influences Choice?


HDHP/PPO ElecGon Numbers

1.4x Associate + Spouse

MORE likely to select PPO than HDHP

1.29x Associate + Children

LESS likely to select PPO over HDHP


HSA ContribuGon Numbers 20.4

Employees & Employers

MORE likely to make above average HSA contribu@ons with employer match

% 67.3 % Married Employees

MORE likely to make above average HSA contribu@ons

than single employees



How Do You Recommend

The Best Plan?


The Dilemma 22%

of people get it right

Most recommenda@on engines are based on what other people selected

Studies show only


How do we recommend what is right?

RecommendaGon



People want to be beQer

35 © 2015 Benefi+ocus.com, Inc. All Rights Reserved | Confiden@al & Proprietary

Choice Architecture & Marketplace Analy@cs: The Secrets to a Successful Private Exchange Seth Gregorie and Tom Dugan

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Choice Architecture & Marketplace Analytics: The Secret to a Successful Private Exchange