My son is starting his Terrible Twos.
One of the great challenges he faces is his cognitive processing ability crashes six hours after he wake sup. He just can not make a decision as to whether or not he wants to watch Team Umizoomi or Bubble Guppies and once he decided that he wants Chuggington (which was never in the choice space), figuring out what episode he wants is another choice that he can not make. He can say no, and he can get frustrated but he can not process what he actually desires.
One of the ways that we short-circuit a tantrum yet to be is by me becoming absolutely absurd. I’ll put a shoe on my head and ask him if that is where it belongs. I will try to wear his jacket or use the cat as a shawl or attempt to read a book with my toes. Any of these actions will prompt a storm of laughing No’s and Silly Daddy, which cascades into giggles as he shows me HOW THINGS SHOULD BE and he forgets about the decision that he could not make. And then we start bed or nap time.
Everyone has processing limits. Most adults processing limits are significantly higher than those of an adorable toddler, but our limits are finite. Choice overload leads to very predictable cognitive biases as we shut down as the search and sorting costs of massive flows of poorly organized information aren’t worth the gains of making an optimal choice, so we satisfice instead on the criteria of stopping the pain of making a horrendous choice and make mediocre choices.
This is one of the problems of the Exchange model. Uncurated choices produce overload.
Austin Frakt contemplates the cognitive demands that buying individual market health insurance entails:
the federal employee program offers me about 20 plans to choose from, and a similar number to almost all other federal employees….
Health insurance has not one but many price-like characteristics. The premium is the most salient price, perhaps. But there are lots of others like co-payments (fixed dollar amounts you pay each time you visit a doctor, get a lab test or pick up a prescription), co-insurance (a percentage of the cost you pay for each visit, test or prescription), and deductibles (how much you pay before your plan pays a single dollar). Complicating matters, deductibles do not apply to every service, and co-payments and co-insurance can vary by service — a different amount for a hospital stay vs. a primary care visit vs. a visit to a specialist, for a brand-name drug vs. a generic, and so forth.
Given all this, computing something like a sticker price for a plan is daunting. The actual amount an insurance plan will cost me next year is its premium plus a complex interaction of its various other prices with the specific types of health care services my family will use…
He is juggling 20 sets of complex, interacting multiple variable problems with massive uncertainty as no one prices in getting hit by a bus, and few know their absolute or relative risk of naked mopping injuries. Austin is a health care wonk’s wonk, and he is overloaded with his choice set so he probably satisfices.
New Hampshire Exchange buyers will be facing a massively more complicated task this year than last year:
There will be more than 60 health plans available to consumers in New Hampshire when enrollment begins next month, up from the 11 offered during the first year of the federal health care overhaul...Five carriers will be offering plans …Anthem was the only company selling health plans through the new marketplace this year and was criticized for including only 16 of 26 hospitals in the network. This time around, each hospital in the state is expected to be included in at least three of the provider networks.
New Hampshire residents are seeing a whole lot more choices, including a far broader array of hospitals and doctors they can see, but they will also see significant duplication of choices. We know from the Medicare Part C and D worlds, that people will avoid making hard choices to find better insurance suited to their needs by sticking with what they have.
Colorado residents are in the same boat:
Brisk competition in the marketplace among insurance carriers led to a widespread and significant drop in the index premium, which the ACA defines as the price of the second-lowest-cost silver, or mid-level, health plan in any given geographic area…
The new benchmark plan with a lower premium is being offered by the nonprofit ColoradoHealthOp. Altogether, the number of plans for consumers to choose from jumped from 150 in 2014 to 176 in 2015.
Eighty-one percent of enrollees live in areas of the state where the second-lowest-cost silver plan is decreasing in price by more than 15 percent. Premiums for the second-lowest-cost silver plan dropped in every one of the nine rating areas across the state except Mesa County.
The number of choices increased by 15% and the pricing after subsidy has changed dramatically. People will be confused and they will not be making optimal choices. On average, people will be making decent enough and good enough choices, but not optimal choices. Colorado’s decision load is higher than New Hampshires as Colorado’s current Exchange buyers are dealing with significant post-subsidy price swings as well as network/plan configuration questions while New Hampshire seems to have tightly clustered Silver plans so pricing after subsidy will only be a few extra dollars per month for the #3 or #4 Silver compared to the #2 or #1.
The Exchanges are making some efforts to reduce the decision load. The biggest has been the spread of navigators and brokers who know how to break information down into digestible bits and curate choices. Someone who is extremely price sensitive and in decent health probably does not need to spend time looking at Platinum broad network plans. Someone who is in ill health and under the age of 30 probably does not need to know much about Catastrophic or Bronze plans. A knowledgable broker or navigator will be able to quickly tell someone whether or not Big City Medical Group or Super High Prestige Specialty Hospital is in the network of a given plan. Good assistance can narrow the choice set down to a managable number where near optimizing decisions can be made.
The Federal Exchanges will allow window shopping soon, and this will help as well as it reduces time pressure to make decisions. But right now, there is no Healthcare.gov decision support tool to help people narrow their choices from 176 to 5 or 6 that would need significant time to investigate and choose one of the top two or three choices.