Yesterday’s post on the complexity of choice in the ACA choice environment prompted two great questions in comments that I want to get at for a bit:
First Butch on agent incentives to assist:
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.
Agent are paid by insurers. The ACA has no requirement on minimal insurer payment to agents. It is a variable cost. Insurers when they were losing money on every enrollee had little incentive to get more enrollees at a too low of a premium. They cut back on agent compensation. This was especially notable in 2016-2018. Agents were getting small payments (at best) for placing people into ACA plans. The business case for an agent might have been logrolling for other insurance products that the agent was selling.
However, since 2018, insurers, except for tech enabled disruptors who have lost 33% of their stock value since IPO-ing this year, have been Scrooge McDucking their profits. The marginal enrollee is profitable as hell for most insurers. Agents are getting paid regular commissions. I have heard that agents in several states and with multiple different insurers are getting significant enrollment bonuses for enrolling people during the current COVID/BIDEN SEP/quasi-open enrollment period.
So, agents being helpful are a function of compensation. If agents are getting paid, there will be a lot of help. If they can’t justify the time to assist in enrollment of new enrollees because they don’t get paid enough, there won’t be a ton of help. And this is likely related to help profitable the ACA markets are with more profitability leading to more enrollment assistance paid for by insurers.
Roger Moore has a good state policy question:
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?
First, this sounds like a good dissertation question (might not be mine, could be a friend’s but it is a damn good question).
I think that we have a default national ideological fetish of choice. Choice is good. More choice is better. That might be the fundamental assumption a lot of our systems are based on. We expect people to navigate choice menus of increasing complexity in order to provide a meaningful market signal of what is needed/desired. And this ideological commitment fundamentally disregards that we are barely evolved East African Plains Apes that get readily confused and have a whole lot of mental hacks and biases to keep the cognitive management load to a plausible level. High levels of complexity and long choice menus create opportunities for profit and skimming either through bad choice (insurers make more money on dominated health plans than non-dominated plans), navigation (brokers/agents get commissions to provide expertise in navigating complex choices etc) and system design. Complexity creates stakeholders who benefit from complexity. A state based marketplace that curates the choice space explicitly creates winners and losers. Insurers whose natural preference is to offer a limited choice menu benefit compared to insurers that want to offer a Cheesecake Factory-like choice menu as the trimmed menu takes away a lot of their preferred options. Insurers then have to compete more on the product themselves rather than cognitive biases and failure modes.
A state based marketplace that wishes to curate the choice space also requires significant technocratic competence. Figuring how to “fairly” curate the space in a transparent manner is a tough challenge. It requires technical competence and political cover by both the exchange board leadership and local political leadership against any pushback on the dominant ideology of choice. This is tough to do. It requires a significant investment of skill and attention. Some of the SBMs are spending their manpower resources and political capital to do so; Massachusetts, Maryland, California and others are willing to invest in improving the choice experience. But it is an investment that crowds out other choices that could be made.
Cameron
Do you see a viable way for us to get to universal health care? I’m not wedded to single-payer; I don’t think that there are a lot of countries that have it, but ACA seems really confusing and unwieldy. Part of that is me, since I’m on Medicare and the toughest choice (which I still found confusing) was what sort of supplemental plan I wanted. I think I’d be really lost if I were under 65.
Butch
The first one was my comment; I’m going to try an agent again this year because I try to know what I don’t know and could use some help in picking a plan. Thanks for the response, David!
Steve in the ATL
I have a dream…that one day I’ll be smart enough to comment on one of these posts
David Anderson
@Cameron: I can see the United States get to near-universal, 97% coverage with most of the remaining people uncovered either being in-between things or having complex immigration statuses. The coverage will be a patchwork quilt of programs and payers, but it will be coverage.
We know we can do this. In 2019, Hawaii was at 96% coverage, Massachusetts was at 97% coverage.
It is, at this time, mostly a give-a-shit problem.
Cameron
@David Anderson: Thank you!
Lobo
“I think that we have a default national ideological fetish of choice. Choice is good. More choice is better.” This is true. This ideology does not recognize limits. More is better. A lot of it is predicated on Econ 101 and the perfect market with perfect information. More choice, information, etc., will lead to more perfect outcomes until Nirvana.
Of course, humans and the human condition are messy and there are limits and the mythological perfect outcome might not be attainable or cost too much at the end. Good enough, i.e., the 80% solution is probably a better path. Now how to get there. I think the Agile process is a good one. Throw something out there, a few good enough choices, and iterate on them quickly and constantly to improve them. Build a good process to create “choice” and experiment.
Brachiator
I wonder what percentage of the population use an insurance agent?
There is maybe a choice paradox at play here. Choosing the right health plan is complicated. Having to choose an insurance agent to help you choose a health plan layers on more complication.
When I got health insurance through my employer, I made all the decisions myself and asked HR if I had a question. There was even an option, I think, for some life insurance.
For auto insurance I chose AAA, probably because Consumer Reports recommended them.
Life was simple.
PhoenixRising
This is what I learned over the spring, in a series of meetings about how to automate a path to enrollment for taxpayers who are mostly Medicaid eligible but uncovered. The rabbit holes the PhD/MPH whizzes jumped down were many and various.
My role as the small business owner/political advocate was to say, Folks, you cannot DO what you’re suggesting, because as a consumer I know things you don’t about what is “better” coverage for my family. What we came to was that we can automate Medicaid with the taxpayer’s choice of MCO but we can only hope to simplify the choice space for our marketplace, not “show the taxpayer her 3 best plans”.
The conceptual barrier was explaining that you can’t tell me the *best* plan, you can barely tell me the *cheapest* plan. Is the lowest premium best? highest actuarial value? lowest annual OOP? That piece of selection complexity is not just because of the cultural bias toward consumer choice.
Of course this is an example of the payment side reflecting the delivery side in health care, because Americans are rugged individuals who independently make consequential decisions we’re unqualified to make, otherwise we’d be commies. Just as the oncologist outlined my options and recommended a course of treatment, while emphasizing that it’s my choice, the ACA marketplace presents me with choices I don’t have the knowledge to meaningfully exercise.
And I know a lot and have a large data set (my past health problems, etc)! It’s not surprising that many people don’t enroll in coverage at all, and the degree of design competence required to lower that rate is daunting.
dr. bloor
Now that’s just mean. Come sit by me.
Lobo
@PhoenixRising:
The idea here is not a perfect plan but “good enough” not bad plan or plans. The permutation space is too large for an optimized plan. But choosing good enough, not bad plans alread happens. For example where I work we have a regular plan and managed plan and then a low and high deductible version of each. Is it perfect? No, but those are my choices and they work well enough. Even then comparing the four plans take more time than I want to invest. Here in the ACA create three model plans. Most will better off than straight off trying to choose. For those who want to invest more time, they than can use the model plans as a basis of comparison reducing the “Choice” penalty.