Picking a health insurance plan on the ACA’s individual markets is tough. It is not unusual for individuals to see over one hundred choices from half a dozen or more insurers. The benefit structures of plans can be all over the place. People have high inertia and inattention. People routinely make dominated choices. I’ve spent a lot of time thinking about how to improve the choice experience of consumers and usually I’m all for technocratic paternalism to deny objectively hideous choices to individuals or using strong nudges to place people into smarter defaults.
I was reading a working paper on Medicare Part D plan choice last night. The authors were modeling the cost of inattention on choice in this domain and found it to be significant. More importantly for this post, there was a great literature review that noted some studies that have found that employer sponsored insurance has too few choices. Other, more recent research has found that employer plans are optimized for people likely to be in the C and VP levels of demographics. So too little choice is a problem as is too much choice.
I was playing Exploding Kittens with my kids last night. One of the actions allows a player to select a random card from another player’s hand. The first time, my son got precisely the card he needed while the next three times, junk came out of my hand. Randomization from a virtually unlimited menu mostly produced junk. As I mourned my loss, I was thinking about this problem (as my kids asked me what I had worked on during the day.)
I’m very curious if there are welfare gains if instead of having standardized plan designs or strong technocratic paternalism, instead, insurers are allowed to do whatever they want, but consumers are only presented with a random or quasi random selection of plans as the first display option. The full menu might still be available but the first glance would be random so truly crud plans that are optimized to win the first look have a lower probability of actually getting the first look.
Please tell me why this is a dumb idea that should be forgotten quickly as I think it is intriguing.
One thing to bear in mind is that ‘random’ doesn’t mean ‘having no pattern’. Yes, in repeated random draws everything averages out, eventually. But you get to see all possible patterns and biases during the averaging process. Do you think that is fair?
I don’t know if that is a good idea or not. But I continue to be dumbfounded at why Americans do this to ourselves. It is as though we think americans deserve to be exposed to terrible choices with hidden risks, and should have to work intensely hard and and mindfully, only to fail despite best efforts.
The Swiss would never do this to the Swiss. We must simply hate ourselves.
So my assumption is that bad actors would respond by producing lots of crud plans, so that the market becomes 97% crud plans and the chance of a good plan showing up in that first random draw are slim.
I’m going to push for the Google Option here: continually update the ranking algorithm used to select which order to show plans in, in particular using characteristics that are being gamed to down-rank SEO’d plans.
If you can figure out how to use plan retention as a ranking signal — prefer to show people insurance plans that people stay in from year-to-year — that would also go a long way.
This may not be what you are looking for. In Ohio, if you receive Medicaid because you are getting “welfare,” you are randomly assigned to one of the HMOs the state has contracted with, and also a PCP at that HMO.
Now because Ohio Son has a Medicaid Waiver (because his mother put him on the waiting list way back when he was a wee little thing), he is entitled to traditional fee-for-service Medicaid. Which I think I have stated many times that I love, love, love (my great affection reflects the fact that we have a health system affiliated with a medical school that takes all patients because they are funded by an indigent care levy. So no limits on what doctors he can see).
Two years ago though, the evil county agency, Jobs and Family Services (“welfare” agency), saw that Ohio Son had SSI in addition to his Waiver and assigned him an HMO and a PCP. Which I made a fuss about and he was returned to fee-for-service Medicaid.
I don’t pay much attention to Ohio’s system for putting people on assistance into HMOs but I vaguely remember reading that they have promised each of the HMOs a certain number of customers/patients. Which they attempt to make happen by assigning people to specific HMOs.
You are probably able to ask for a different HMO but I wouldn’t think too many people know that or do that. I did wonder briefly what would happen if the patients sorted themselves out and an HMO had fewer than the promised number of customers.
Certainly if Ohio Son had been stuck in that HMO, I would have asked for a different PCP, one with at least a little knowledge of disability. How I was going to locate that PCP in a health system I had no familiarity with, I don’t know but I would have. As it was, the PCP he had been assigned to had a special interest that was totally irrelevant to Ohio Son’s needs (forget exactly what it was).
I might expect a few insurers to complain (or sue) because of imagined biases in the selection.
Which reminds me of the story of the invention of the automated telephone exchange, though in that case there was bias.
I’ve been browsing the market, in part because I’m not eligible for medicare until mid-next-year, but I hate my fking job and am trying to sort out what it would cost me to leave before medicare eligibility. I’ve also been browsing the medicare supplemental plans, so I can choose THAT next year. That is, I’ve been wading in the choice pools for a bit. What I really want is a guided choose-your-own-adventure tool, but I can only say that because this blog has educated me, and I have educated myself, so I have some idea what my criteria are–and I’m still uncertain about what I should do. (For example, if I left my job before Medicare and opted for COBRA, would I still be on the hook, come tax time, for the exorbitant cost of that plan? Or do I really need to just get a plan on the exchange for a few months?)
In answer to your question, it’s a dumb idea, because it means that any fluency people ARE able to gain–like Ohio Mom–gets buried under the raft of crap plans that Searcher imagines insurers would design (and I think Searcher is correct). Wading in these choice pools is hard enough; adding random snakes and alligators to those pools does not improve anything.
What if, instead, individuals could enter in several ranked criteria–say 1-5 strength, on what they are looking for:
premium range (5)
OOP cost (3)
specific medicine coverage (5)
specific provider coverage (4)
specific network coverage (2)
And then based on their chosen strength, the available plans would be ranked with notes like:
specific medicine match
premium range no match
specific provider no match
OOP cost match
specific network match
Formerly disgruntled in Oregon
I’m in favor of a reasonable amount of good-faith technocratic paternalism.
Formerly disgruntled in Oregon
Explains a lot about this place, doesn’t it?
Keep thinking. But people are right the insurers would overload system with junk to overwhelm randomness. But there is a kernel of an idea there. Something along the line of the game theoretic idea of accepting the second lowest bid. It prevents lowballing. I wonder if something similar could work here. Something like a person picks an initial plan out of a set of plans . The losing plans have to then provide their next best plan. Person picks again. Plans drop out and plans better than before appear. And so on until person satisfied. Something off the top of my head,
If the problem is that people are prone to make bad choices, then the solution is to reduce the effect of choices with standardized plans. Allowing junkies plans will just produce worse choices.
For a problem with insurers designing jumky plans to show up first in the listing, I think a better solution is to allow the sorting algorithm access to the user’s medical and financial info, and for it to figure out the best plans for the individual.
@narya: When Ohio Dad and I were researching Medicare, we found exactly one article that explained the following snag: If you opt for an Advantage plan and years down the road you decide to switch to traditional Medicare — say you develop a funky cancer and traditional Medicare is the only plan that will allow you to see the specialist who treats it — you may not be able to find a Plan B that will cover you or do so at a price you can afford.
In short, the Plan B companies will hold your new “pre-existing” cancer against you. It’s a small irony.
But you may decide not to include that in your calculus, there isn’t one best choice, they all have their pluses and minuses. You can’t outguess them, as my sister is fond of pointing out, “Their actuaries are better than your actuary.”
So, junk inspired by Exploding Kittens randomization from bad options as ‘gain’ (better than what there is) in a real world system where insurers flood the market with bad options designed to look good on the first look?
Assuming it can be implemented without insurers flipping out on being unable to optimize for scamming people with worse options, then resulting in some people sometimes getting better options than intentionally bad ones by ACCIDENT, this being an IMPROVEMENT?
I want to say oh my sweet summer child.
It ain’t your idea that’s the problem. Bless your heart.
@Ohio Mom: That surprises me not at all. I’d already decided to go with regular Medicare supplemental, not the (dis)”Advantage” plans. I do not like HMOs. I know they can work for many people much of the time, but when they DON’T work, they very much don’t work, and aging often brings more issues. And I like the docs I have and want to keep them.
The fundamental assumption behind Medicare Advantage, Part D, and the ACA is that it is optimal if consumers have a large number of choices, thus (theoretically) enabling each participant to customize their health insurance to suit their individual needs. This is simply flawed thinking, and no amount of tinkering is going to make more than an incremental improvement in an environment created by adhering to a flawed assumption.
That said, this flawed assumption is so ingrained in our collective thinking that I doubt it will change within my grandson’s lifetime, so tinkering is the best shot we have.
Anderson needs to be careful here! This is a blog where kittens and puppies are held sacred. Publicly admitting to playing a game called “Exploding Kittens” may have unforeseen consequences for David that even his fine mind would not be able to game out….
I like Fraud Guy’s idea. When looking at plans for my daughter with lupus I was interested in a high deductible plan. Why? Because her main medication (belimumab) is around $4800 per month, but the manufacturer (GlaxoSmithKline) has a co-pay card which can cover up to $10K for medication and infusion costs. She just avoids any planned medical expenses in January and February. She currently does this medication by subq injection at home, but initially it was a monthly IV infusion which cost about $10K per month. Don’t know if it is still that expensive for the IV infusion. In any event we know that she will have a few rheumatologist appointments every year with a whole bunch of labs with each visit so I tried to pick a plan that made sense for this situation. Did I make the best choice? No idea. An algorithm with weighted priorities might help people optimize their choices.
The basic idea being proposed might have some benefits like what Agile software development is supposed to have – get an initial action in place and then find improvements. Offer a first set of random options, the consumer picks a favorite, then do additional rounds of random selections so the consumer may be able to find stepwise improvements.
There are extensive analogies here to various aspects of mathematical optimization (local vs. global) and any divide-and-conquer search methodology.
@narya: That was our thinking when we went with traditional Medicare. But I know people who get very argumentative if you suggest that there may not be an advantage to the Advantage plan they chose so I tend to start off treading lightly on this subject.
The Part B plan we chose was an AARP plan (I’d have to look up which letter of the alphabet it is). The Part D plan was just whatever that site where you type in your maintenance meds and zip code spit back at us. We researched my plan and Ohio Dad’s separately but ended up with both of us on the same set of plans.
You know what you are doing, as much as anyone can. Too many choices, and never enough information because you can’t see into the far future — if you knew you were going to make it in fine health until a bus hit you, you could save a bundle with an Advantage plan. Too late for the two of us, we’ve already collected health conditions.
@Ohio Mom: I was wondering about the AARP plans–what has your experience been? Otherwise I’ll likely go w/ BCBS. I know I’ll pay a little more than I could pay with other plans, but whatever. I have also wondered about adding vision/dental, or just paying out of pocket for those; my contacts are $400+/year, and a pair of glasses can easily cost me another grand.
Curating the choices even more for normal people looking for insurance policies is a good idea. As you’ve noted many times, too much choice is a very bad thing.
Part of Google’s magic is they figured out a way to crowd-source the solution to this problem. Popularity in search results can be a good indication of quality. But they’ve also learned that people will work very hard to find ways to game the outcome to their liking, so it’s a never-ending battle.
For things like picking insurance policies, simply putting the most popular option at the top would serve to entrench the then-popular choice (which may not be non-dominated for people looking today or tomorrow). So some other factor(s), like randomness, need to be part of the algorithm.
Adding a randomness element is important, but what do you do if there are only 3 companies in an area:
ACME is objectively pretty good but higher cost
BETA plays games but meets the criteria
OMICRON is a god-awful choice if you actually need for them to pay for anything, but is “cheaper”
Who decides, and how, who gets presented to the person looking?
“The Obamacare website put this at the top of the list and said it was good insurance but they’re not paying my bills. I hate Obamacare…” :-/
Interesting problem if there are even more choices!
@narya: I got my last couple of pairs of glasses at EyeBuyDirect.com and have been very happy with them. (I’m an oldster and need progressives and cannot stand the “fashionable” tiny lenses that most of the local shops seem to be limited to.) Saved a lot compared to getting them at the local optometrist. They’re part of the giant EssilorLuxottica group.
Get a good eye exam, get your pupil distance, and a copy of the prescription, and you have everything you need to order online. (AFAIK, most optometrists do the same thing – they don’t grind lenses in their own shops any more.)
I agree with those who suspect that this idea would be gamed by insurers, who would spam the exchanges with lots and lots of barely-differentiated junk in the hopes of lucking into the top spot. Some sort of stepwise system like Fraud Guy suggests would be better, if we do want to introduce some randomness into the proceedings.
However, I’d add one large caveat: This should be done if and only if it’s possible to opt out of the randomization/whatever. Speaking only for myself, I would be incredibly frustrated if I saw plans in a completely different order every time I logged on to window shop/compare plans, or if it wasn’t possible to force-order the plans by metal tier or premium, etc. I guess what I’m saying is, maybe something like what you suggest is helpful for folks who don’t know much about the process of choosing insurance, but IMO it would be best to implement it in such a way as to not frustrate or degrade the experience of the (admittedly much smaller) segment of people who do have a lot of knowledge.
@narya: One problem we have run into is that wihen you age you may lose either competence or hearing, and changing becomes damn near impossible unless you have all your POA ducks in a row and those ducks are game for the fight.
@Another Scott: Such good advice. I hate tiny progressive lens glasses.
I went to write the website name down, and there on the previous page of my notepad was Dan B’s recipe for Napa Cabbage Salad.
Full service blog indeed.
@Ohio Mom: I’ve mentioned here before that when we were retiring, I went to a presentation by the one and only company that had an Advantage plan in our county. At one point, in response to a question, the presenter said “IF you have pre-existing conditions, and IF you can afford it, you’ll be better off with traditional Medicare.” I did have a pre-existing condition (and since have developed at least one more), and I decided I could afford traditional Medicare. I’ve had a couple of serious events, including a heart attack and rehab, and I never paid more than a few dollars out of pocket. For cataract surgery, there’s one test Medicare doesn’t cover, and it was $24 at the time of my surgery.
It’s a question of “Do you feel lucky?”
@narya: We’ve been retired for 10 years and have the BCBS supplement plans. We started off with the plan that has $0 deductible (I think it was F) and are now on plan G, which has a small deductible (which however could at any time be increased). The good part about the letter plans is that any insurer’s plan G is the same as any other insurer’s plan G. You’re looking at price and quality of the insurer. We have never had a single issue with coverage. When my husband needed surgery, we looked all over our area for the best doctor. When I needed surgery, we went to a specialist in Chicago recommended by my primary doctor. When I needed medical care while we were on a trip, in West Virginia of all places, it was covered, no questions. Yes, it costs money, but it’s been peace of mind.
@narya: What you need to do is make sure your income for tax years 2022 and 2023 is just above the level needed for subsidy – less than that you don’t get a subsidy, much higher and the subsidy is reduced as your income is higher. For a single person it’s around $18,000 in some states to max out the subsidy. (but every state is different)
If you play your income right, on the Obamacare marketplace you can get a beautiful BlueCross zero-premium plan with a max annual out-of-pocket of $600, deductible of $300, and $5 copays and drugs.
so quit your job at the point this year where youve made about $18K to $22K (again, check the subsidy levels and the specific plans in your state) and you’re all set.