My friend, colleague and frequent co-author Dr. Petra Rasmussen and her co-author Dr. Erin Taylor have a recent opinion piece in JAMA Health Forum on a matter of intense personal interest to me: How can the choice space for health insurance on Healthcare.gov be simplified?
While Americans value choice, research in behavioral economics and psychology has shown that people struggle with the decision-making process when they encounter too many choices and end up relying on biases and quick tricks, also known as heuristics, to cull their options and help them make a decision. This can lead individuals to choose a plan that may not be the best for them. With health insurance, the decision can be particularly challenging, and mistakes can be costly…
Without greater standardization, the use of metal-tier labels alone cannot successfully convey helpful information to consumers about the plans…HHS should learn from what states like California and federal agencies such as CMS have done to standardize Marketplace and Part D plans. To limit choice overload and ease the decision-making process for enrollees, HHS should consider replicating what Medicare and Covered California have done by requiring plans sold by the same insurer to be meaningfully different from one another.
I think that they are heading down the right path. I am a bit reluctant to embrace meaningful difference as the appropriate pathway though as the Obama Administration definition of meaningful difference was one difference on seven different vectors. The difference could be a $100 change in deductible or eligibility for a Health Savings Account. These differences are real, but small. Are they truly decision altering differences or are they means where a cynical plan designer can tweak their product offerings to dominate virtual and mental shelf space? I inkle on the later.
Instead, I think there is another approach that might allow for meaningful variation and differentiation. We have strong evidence that the marginal enrollees are buying basically on premium. Quality, network, customer service, brand recognition are, at most, secondary concerns to the marginal enrollee. So let’s embrace that.
I would offer that insurers when rolled up to the corporate level should be able to offer whatever they want in each metal tier but there must be a 3% or greater difference in baseline premium for each plan that is offered. Under this schema, an insurer that really wants to offer a no deductible but high co-pay and coinsurance plan can do so but they can’t offer a scratched mirror version of that plan which costs eighty seven cents more per month. Instead they can offer a barebones gold, a middle gold and a high gold plan at 76, 79 and 82% actuarial value. An insurer could also offer a skinny network and a big network with no gatekeeping where the benefits are the same but the network is the premium difference driver.
I think doing this will minimize the number of counties with 150 or more choices while still allowing insurers to offer plans that actually have value beyond throwing decision making for a loop.
Another Scott
+1
Car manufacturers figured this out long ago. Usually there are 3 basic trim levels – L, LS, GS – or similar. You generally know what you’re getting when you see that badge on the back. (Of course there are exceptions.). Insurance companies shouldn’t be allowed to play games with their offerings.
Thanks.
Cheers,
Scott.
Betty
Personal opinion: the whole privatization of a significant portion of the coverage for Medicare recipients is just wrong. I know it’s a losing argument, but the present situation is a mess.
L85NJGT
A large metro will have something like 4 insurance underwriters, the 3 plan levels, for 5 major provider systems. Add vision and dental options, and the plans stack up.
The decision tree needs to start with a provider network choice, and then into what insurance options are available for that ACO. Customers are focused on a favorite PCP, specialist or the nearby hospital campus, not insurance company branding.
ATLRobert
I think also there may need to be an effort to provide alternative names. I’m not very good at that, but things like “Spamming the market” and other terms I think are a good way to define what we currently see. There is a reduction in meaningful choice because the market is flooded with very similar plans simply intended to occupy the virtual shelf space – e.g. to capture 9 out of 10 spots on the first pages listings, or to suck people into comparing plans with a very minimal overall difference in cost from the same company instead of looking at switching. As long as the companies are able to define it as “offering more choice” it’s hard to win the argument.
Just Chuck
The insurance companies didn’t stop looking for ways to screw us when the ACA passed. I assume that their strategy in all these variations is to screw us, and that they will find an avenue within any plan I choose in order to screw me further. Their business model is largely based on not providing what you pay for, and there is no industry for which I’m a direct consumer that I trust less.
Ruckus
@L85NJGT:
@ATLRobert:
This. Companies measure their success by the bottom line and therefore are going for the big payout, the least coverage for the most dollars. Making the choices hard are a part of that because the human way is the best costs the most and for the most part the companies (and even you) mostly don’t know, other than by your past statistics, how you will stack up, costly or a money maker. And the ACA takes a lot of that choice out of their hands, while in theory adding a lot of paying customers. My point is that simple is better for the customer and worse for the company, at least in their minds. CA has taken some of that out of the company hands, which is better for the customer but the choice is still not easy because of the unknown and unknowable. You are far better off health wise with great insurance but the cost for that may/likely will be prohibitive. It is a roll of the dice for both you and the insurance company and one of you will lose if either of you is way out of line. And that is the base problem with our capitalistic view of healthcare, someone always loses.