Last week, I had two Health Affairs blogs published on the ways that the ACA choice environment is complex and confusing and potential administrative solutions. I got quite a bit of good feedback and I want to respond to some of it.
What about agents?
Insurers don’t like putting people in plans they leave, but I’m skeptical about a CMS algorithm, and the time it takes to print and mail consumer-level notices might be a couple of weeks depending on time, complexity, and size.— Gabriel McGlamery (@jgmcglamery) June 4, 2021
YEP! Agents are important. A good agent is an expert who can sort through a lot of confusing and conflicting features quickly and effectively. A lot of research has found that attention is the constrained commodity in the decision process. Individuals who make active choices with attention are more likely to make better choices than people who are inattentive for whatever reason. Agents can be a form of outsourced attention. However, given the way that agents are paid, either a flat Per Member Per Month or as a percentage of premium, the one-off non-iterated incentive is to sell something instead of sell the best thing. We probably need to think about how agent compensation interacts with dominant plan placement. More importantly, not everyone has an agent or a navigator or anyone else who can pay expert attention to the choice problem, so improving defaults to get rid of absolutely horrendous options is likely welfare improving.
FIX THE GLITCH. While I agree that dominated plan choice is a consumer concern that needs to be addressed…it’s pretty low on my priorities. Let’s get more working people subsidies then deal with the outliers
— Jenny Chumbley Hogue (@kgmom219) June 4, 2021
I disagree. Improving defaults and fixing the glitch are not mutually exclusive options. They are not in competition for constrained Congressional attention and they are in at most modest competition for CMS/regulator attention. These can be done at the same time. Both should be fixed and if for one reason or another the family glitch is not fixed, there is still a significant welfare improvement of improving defaults.
Nice piece. Will/should health plan quality ratings be part of a logic to reduce the complexity burden?
— Lori Suzanne (@lori__suzanne) June 5, 2021
I am extremely reluctant to even think about including quality ratings with any default changing options. I am comfortable about changing peoples’ plan defaults when the changes are within the context of both revealed preference (there is a reason a person chose Insurer X and Network A, so we keep them in Insurer X and Network A) and fully observable characteristics of plans. We can see that Silver (X,A) has a $5500 deductible/MOOP and a $250/month premium, while Gold(X,A) has a $2,000 deductible/MOOP and a $225/month premium and say that if we hold previous year choices to choose X,A constant, then the switch is welfare enhancing while if a person discovers that they hate insurer X and like Insurer Z, they’ll be making an active choice and revealing new preferences anyway. I feel confident about this logic.
Quality ratings in ACA plans have a couple of big problems. First, they are composites that are measured at the insurer/state level. An insurer can be amazing at behavioral health and horrendous at preventive care measures and get a decent rating. Another insurer can be horrendous at behavioral health and really good at preventive care measures and pharmacy management and get a similar rating. For some people, they want the behavioral health to be awesome, and other people want the preventive care stuff to be awesome while being completely indifferent to other measures. We can not extract a clear statement of preference and then premium/quality trade-off at the individual level if we’re switching people between insurers.
Secondly, we don’t really know if the quality measures are a strong signal (after removing selection from the equation) with actual improvements in morbidity and mortality. Abaluck et al have found that Medicare Advantage quality ratings are not tied to causal changes in mortality. More importantly, they have found that some plans are much better than other plans at reducing death. We don’t have that framework for Exchange plans.
I think that improving the choice universe and choice experience of the ACA individual marketplace is important. I know both HC.Gov and the SBMs are trying hard and trying creatively to make decision-making easier, more transparent and nudged towards improved outcomes, but this is tough if our expectation is that this is an individual level problem.
TomatoQueen
*shoving rant in here for safe keeping* I’ve got Aetna for Feds & have had it since it was offered under some other Magic Insurance name 3 or 4 years ago. I also work full time. I just turned 65 and so signed up for Medicare. I moved to a new apt last July and then had my hip surgeries in September. Among the many address changes I tried to do was the Aetna one, so I could receive all their nice mailings. First I had to send an address change notice to my (Secret Magic HR Dept, nobody knows where it is or who works there, all the HR Ladies I knew have retired). Did that. Postal address change done already. By Christmas I’m getting mail forwarded from Aetna. Why? Call Aetna. They do not do the address changes from customers, they only do it from HR Depts, but will make my change for 30 days. Send email to the only thing that looks like a HR helpdesk. Get nice reply from some guy I never heard of, will get right on it. And for a while (yes I’m still getting bills) mail from Aetna is direct to me. This week, it’s done what? It’s REVERTED BACK. I am now getting delayed mail forwarded from the Post Office again. Now I could find this funny, because I’ve worked in gov’t agencies since the age of 24, but I want to know if this is some sneaky stunt Aetna is trying in collusion with SSA to push me on to Medicare? *aluminum foil applied to forehead
Eunicecycle
I’ve never had to shop for ACA plans but I did shop for Medicare/Medicare Advantage and it’s very difficult. There are too many choices with variables such as premium, copays, deductibles and coinsurance. One plan is $89 a month another is $99 but you pay $5 less for X-rays and a bunch of other services. How do I know if I will use enough of the services to make up the monthly difference? (Made up numbers but you get the idea.) And this was with one insurance company. It seems like the ACA has the same issues.
David Anderson
@Eunicecycle: Yep, the choice space is tough.
I think getting rid of objectively hideous choices is a necessary but grossly insufficient step
the pollyanna from hell
Interstate move: I have been thinking I should move from Denver to a purple or even red state where my vote has more power against fascism. Colorado pays my Medicare Part B premium out of Medicaid money, and I think I might lose this benefit if I move. I assume that I will also suffer big penalties if I let it lapse. How can I best deal with this transaction cost/ administrative burden?
Thx for all your research, from randy
Keith Kennedy
I am a health care “customer”. I am a US tax-payer. I don’t want to have to research health care insurance. And, I suspect, neither do 99.2% of Americans. If we have “agents”, let’s have them focus on the 1 (one) US health care plan. The plan we pay for with our progressive taxes. The plan we all get. Oh sure, the .1% can get for-profit health care insurance outside of the “government” plan. But why would they? They can pay for any services they need or crave.
Stan dorn
@the pollyanna from hell: you may be OK moving. Some Medicaid coverage of Part B premiums is nationally mandated.
@the pollyanna from hell:
Roger Moore
@David Anderson:
From what you’ve said, it sounds as if the best solution is a curated plan space, so why aren’t more states doing that?
fake irishman
@Roger Moore:
This is a good point, but we could ask the same thing about “Why don’t all states expand Medicaid, it’s such a no-brainer?” Granted, there are a few states that are quite conservative/reactionary but have engaged in a lot of useful experimentation (Idaho comes to mind). However most states that have governments hating Obamacare saw washing their hands of creating an exchange as a cheap way to resist the ACA without forgoing its benefits
I think you are right though that there are still maybe 10-12 states that could be doing more in this area. California and Maryland are two that have worked the exchange space pretty hard. Dave is more up on this things than I or just about anyone else is though.
fake irishman
The agent comments were very intriguing to me, but like you, Dave, I’m really trying to think through the incentive structure for agents. I’m also a bit concerned that if we set this up badly, choosing an agent just becomes another layer of “choice” that strains consumers, even if agents can helpfully reduce choice strain.
Butch
@Keith Kennedy: I live in an area where there’s no competition; the ACA site lists nothing more than a few vague bullet points for each plan – not really any good basis for a decision. I’m working four gig jobs as a result of the pandemic and don’t have the time or energy for a lot of research, so we just settled on a plan we could somewhat (with difficulty) afford. We have discovered that the Blue Cross bronze plans available in our area are really pretty much like going without insurance because they’ve been so thoroughly gamed against the consumer.
dnfree
I agree with your positions on the latter two questions (eliminating objectively bad choices and the complications of including quality ratings). The agent question is tricky, as you also note. Three for three is my rating of your responses.
David Anderson
@Roger Moore: This just might be tomorrow’s post.
The TLDR answer is that we have a choice fetish and it is a strong ideological commitment to go against that default assumption that choice is good. And even if that commitment is made, it involves a good amount of technocratic tinkering and a governing philosophy with adequate resources to do it well.
David Anderson
@fake irishman: Rebecca Meyerson is doing some interesting work on health insurance agents, as well as a group at Emory — waiting to see what they write.
Butch
Coming in here late, but my impression in trying to work with an agent was that there’s very little compensation when the ACA website is involved so not much motivation to really assist? At least that was my experience.
David Anderson
@Butch: It has changed significantly over time.
Right now agents are making serious cash enrolling folks in ACA plans. 3 years ago — not so much.
Butch
@David Anderson: OK – that would coincide with the last time I tried to use an agent – could barely get a return call and ended up making what you’d probably laughingly call a “decision” on my own. Thanks for the response!