One of my hobby horses for Exchange improvement is reducing the cognitive load of making good choices. Differences should be clear, they should be obvious and they should be meaningful. And these words should be defined by the average person who only thinks about health insurance for an hour or two a year instead of an insurance industry geek.
This is an area where the Centers for Medicare and Medicaid Services (CMS) needs to have better regulation as there are multiple regions throughout the country where an insurer has multiple plans of the same network, same plan design (HMO, EPO, PPO), being offered in a region with minor ($1 or $2 per member covered per month) premium differences that are driven by minor changes in cost sharing. One plan might have a $25 co-pay for PCP visits and $12 prescription co-pays while another plan that is very similar has a $30 PCP co-pay and while generic prescriptions cost $5.00.
The current regulation on meaningful difference is below (P.71 and P.72):
We proposed, in § 156.298(b), that a plan within a service area and metal tier (bronze, silver, gold, or platinum, and catastrophic coverage) would be considered meaningfully different from other plans if a reasonable consumer (the typical consumer buying health insurance coverage) would be able to identify at least two material differences among seven 53 key characteristics between the plan and other plans to be offered by the same issuer. The key characteristics were proposed in paragraphs (b)(1)–(b)(7), and include (1) cost sharing; (2) provider networks; (3) covered benefits (including prescription drugs); (4) plan type (for example, HMO or PPO); (5) premiums; (6) health savings account eligibility; and (7) selfonly, non-self-only, or child-only coverage offerings.
We proposed that, at a minimum, a reasonable consumer would have to be able to identify two or more of the characteristics proposed at § 156.298(b) as different in order for the plan to pass the meaningful difference test…To address concerns with the proposed meaningful difference standard, we have modified § 156.298(b) to have the standard set at one material difference rather than two,
and have removed premiums as one of the characteristics among which plans must be different.
In areas with minimal competition, this might be sufficient, however in regions with significant competition from multiple insurers, I would want a clearer distinction between plans being offered. A rule stating that in counties or rating areas that have three or more insurers offering a plan within a metal band meaningful difference would require two of the following three differences: different network, different plan configuration (HMO or EPO or PPO) or different covered benefits (dental/vision add-on or not added). Cost sharing changes would have to be significant changes if the plans were the same network, same configuration and same basic benefit structure. For instance Silver plans can have big deductibles and no-coinsurance or low deductible but high co-insurance. Either model can produce a fair Silver, but they are different risk models.
This rule would solve two problems.
The first problem it solves is spamming the 2nd Silver. Right now the current incentive structure is for insurers that think they are competing for the second Silver slot to issue half a dozen barely different plans to increase the odds that they’ll get the first and second Silver slots which means a single insurer would get the only two subsidized plans. This is a minor problem as long as the other competing plans are trying to get 2nd Silver as well. They should cluster fairly tight so $5 a month in additional non-subsidized costs aren’t a massive deal breaker if the rest of the value proposition is solid.
The second problem is that it reduces the cognitive load. As I mentioned yesterday, my family had seventy three choices on Healthcare.Gov. I’m an insurance company geek, I know how to navigate plans. If I had to make a good choice for my family on the Exchange yesterday, I would have been in trouble. I could have filtered down to Silver or Gold and the restrict by price to get to six or seven choices, of which two or three were not meaningfully different to me (I don’t care if my copay is $25 or $30 for PCP and $5/$12 for prescription drugs), but I would have hit choice overload. And if I was hitting choice overload, most people would have hit choice overload.
For markets to work well, people must be able to differentiate in meaningful and accurate ways the differences of the wares being sold.
NotMax
Cut the cake into too many slices and all there is to tussle over is crumbs.
burnspbesq
The traitor and war criminal Michael Cannon (and yes, i think those are apt descriptions of an American whose avowed aim is to kill thousands, if not millions, of Americans) opens his disgusting pie-hole at SCOTUSBlog today.
I wish a mutha would stick a clear and unambiguous chainsaw up his ass .
burnspbesq
My experience on Covered California last year wasn’t nearly as dizzying as that. When you line up the plans in each tier side-by-side, you see that there is a verry narrow range of differences in price and coverage. It took about 10 minutes to verify that my ortho and opthalmologist are in the BS netwark, and at that point it’s down to two options, BS Gold or BS Platinum
We were platinum this year, but I’m leaning toward gold for 2015, because I’m pretty certain that the higher premiums were more than the reduction in OOP costs.
The other interesting question is what (if anything) to do about the kid. His UK student visa gives him access to the NHS during the nine months he’s at school. What do we do about the other three months, since some chunks of it will be spent outside both the US and the UK.
Villago Delenda Est
This, right here, is one of the main problems with how the US economy works.
Corporations do not want to operate in free markets, with maximum transparency. They do not want consumers to have clear choices. They HATE HATE HATE actual free markets. Free markets suck. They cut into profit and hookers and blow for CEOs and their MBA minions.
This is why SMART government regulation is needed…as some obscure Scotsman wrote in the 18th century…to facilitate and protect the invisible hand, which the wealthy have always sought to restrain….in their favor.
In the Ivory Tower, markets sound great. The reality of them is that obfuscation is how humans work unless they’re forced to be transparent, open, and honest.
There are very few corporations who operate in such a way. When they do, they’re despised by the Ferengi scum of Wall Street. Take Costco for example.
WereBear
@Villago Delenda Est: Another problem with today’s markets is how the bottom tier of most things are useless; yet we’ve been trained for generations to “sensibly save money” by choosing it.
We bought a studio desk for music equipment, choosing something that was not only cheap, but on sale. Once upon a time, this would have been a sensible economic choice; I grew up with bottom-tier furniture, clothes, and food much of the time, and it was okay.
But now, bottom-tier furniture is impossible to put together (Mr WereBear had to drill all new holes and buy his own hardware) and what you wind up with is going to peel apart and collapse within a year or so. Bottom-tier clothes don’t last five washes before becoming unwearable. And bottom-tier food will kill your children and pets.
David Fud
Too bad some rich non-profit doesn’t cut through the cognitive load by putting their algorithm on top of the intentional confusion to clarify choices for consumers. Sounds like a good Google challenge project to optimize the inputs for each particular family. It is really only linear algebra, after all.
Villago Delenda Est
OK, FYWP is eating some comments. Can someone reach into the bowels of the beast and pull one of my replies to our Southern California tax attorney out so the public can view it?
mai naem mobile
I went to do the window shopping the other day and i swear the plans are cheaper this year. The choice thing kind of going on amazon where they do the shipping/cost of item/special shipping rates totals and they come out in different batches at essentially the same price.
April
I must say, too many choices sounds like a first world problem. In my remote part of California, we get to choose between Anthem and Anthem, one metal plan available at each level. Don’t get me wrong, I am glad to have the chance to buy health insurance without remortgaging my house, but we don’t have a true market place.
El Caganer
@David Fud: Yeah, a hypothetical rich nonprofit interested in health care….it might have a name like, oh, I don’t know, Robert Wood Johnson Foundation or something like that….
BGinCHI
Richard, you need to work on your headlines.
How about “Improving Meaningful Benghazi regulation”?
Or drop an f-bomb in there. Something. Anything.
David Fud
@El Caganer: exactly, teamed up with some Google programmers working on their personal 20% time instead of inventing the next .com dumbassery. Or just hire some programmer dudes. when I get my first billion, count on it.
Richard Mayhew
@BGinCHI:
Just for you :
Fuck this fucking shit — :)
Applejinx
@Villago Delenda Est: This. I wish I could get everyone to begin using the term ‘lawless market’ for ‘free market’ because that’s what the goal really is.
Lawless market accurately depicts what goes down, but it doesn’t sound all patriotic and shit. It sounds like a nightmare, which is increasingly what life is in ‘free market utopia’ unless you’re the .01%.
Plus, if you say Lawless Market it makes people sound kind of insane when they cry out, we must further deregulate our Lawless Market! More, more! You can sound sane while arguing ‘deregulating is more free’ but ‘deregulating is more lawless’ is even more self-evident, but way less appealing.
BGinCHI
@Richard Mayhew: That’s better.
More brio for sure.
jacy
I spent about 7 hours yesterday trying to choose a new plan to enroll in on the 15th. Long story short, I still don’t know what new plan I’m going to enroll in on the 15th.
One thing is that on some plans they show the deductible as $100 but then show the “overall deductible” as $2000. I can’t find the words “overall deductible” anywhere on the interwebs. And between the credit and the cost-sharing, I can’t figure out which plan will be better overall, although I think it’s a silver. I would like a platinum (because of the ongoing health issues), and I could get one for roughly what I’m paying how, but it might be better to go with a silver because of where my income lies on the scale. At this rate, I’m going to end up flipping a coin.
Richard Mayhew
@jacy: Jacy — check your e-mail.
jacy
@Richard Mayhew:
Thanks so much, Richard — I’ve replied.
burnspbesq
@Villago Delenda Est:
Yours seems to be lost and gone forever (dreadful sorry, Clementine).
Care to try again?
Villago Delenda Est
@burnspbesq: I will. This Cannon clown…how do you figure he’s a traitor and a war criminal?. Sure, he’s a minion of CATO, which is surely an indictment, but from his bio there I don’t see that he’s every served in a war zone in uniform, perhaps he was one of the vile shitstains the deserting coward sent to Iraq to “rebuild” it as some sort of “Democracy” that not one of the Founding Fathers would recognize? A puppet state where the vile Ferengi cronies of the Dark Lord could play freely, unfettered by worries about having to account for the externalities they create in their little sandbox?
Villago Delenda Est
@burnspbesq: I don’t know what it is, but I just can’t reply to you. Cannon…how is he a traitor and a war criminal?
OK, that one stuck. I must have used a naughty word in there someplace earlier, so I’ll leave it as it is without any embellishment.
Another Holocene Human
FWIW, I agree with you Richard and I would argue this is a problem in markets where there is very little competition as well.
Another Holocene Human
@burnspbesq: why not get him one of those catastrophe plans for younguns, and let him see NHS about minor stuff if necessary, or doc in a box if he gets a cold in the US or something. But that way you have insurance if something atrocious happens that requires big iron medical care.
burnspbesq
@Villago Delenda Est:
Let’s see now, the Constitution defines treason as “levying war on the United States” or “giving aid and comfort to its enemies.” I don’t have any problem arguing that trying to kill thousands of Americans is “levying war on the United States,” regardless of whether the weapon is a bomb, a virus, or a crackpot legal theory. And you’re the last person I would expect to stop short of declaring the Republican Party an “enemy” of the American people.
Villago Delenda Est
@burnspbesq: I just needed an explanation. That definition applies to the five who ruled in favor of the deserting coward in Bush v. Gore, as well.
Now, the war criminal part?
burnspbesq
@Villago Delenda Est:
Conceiving and executing a campaign whose sole objective is to inflict vast numbers of casualties among the civilian population?