Are Americans Ready To Choose Their Own Health Plans On October 1st?

September 5, 2013

A new study asks and answers three essential questions about the ACA-authorized public health insurance exchanges scheduled to open for business on October 1, 2013: Can people select the best policies? Do they know how well they are doing? Does the design of the sites change their performance?

The study, “Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture,” was based on six experiments asking people to choose the most cost-effective policy using websites modeled on current exchanges. According to the study’s co-authors, professors from Columbia Business School, Hebrew University of Jerusalem, University of Pennsylvania Law School, Columbia University Department of Psychology and University of Miami, the results suggest, “there is significant room for improvement.”

Their conclusions: “Without interventions, respondents perform at near chance levels and show a significant bias, overweighting out-of-pocket expenses and deductibles. Financial incentives do not improve performance, and decision-makers do not realize that they are performing poorly.”

That’s the bad news. The good news is that the study also showed that performance can be improved “markedly” through the use of just-in-time education, defaults that pre-select options based on individuals’ usage, and cost calculators.

In other words, when public exchanges use “smart” web-based tools, individuals end up with a much more realistic estimate of their expected health care costs and are able to select plans that better meet their needs.

In our experience operating the nation’s largest private Medicare exchange, we agree that sophisticated profilers, calculators and decision support tools can help people make better health care coverage decisions. But even in a world where automated help systems, interactive websites and specialized mobile apps are now capable of performing a wide variety of tasks that used to be the domain of live human help, we believe there are still situations that require a human touch. Buying health insurance is one of them.

On that front, there is also good news.

CMS Authorizes Web Brokers

In early August, the Centers for Medicare & Medicaid Services (CMS), which supervises the federally facilitated marketplace — the health insurance exchange operated by the federal government in 36 states – signed web broker entity agreements with several firms, including Towers Watson.
These agreements allow these firms to integrate with federal eligibility systems so that they can assist individuals every step of the way as they shop for and enroll in subsidized coverage through the federal exchange – including by offering live access by telephone to licensed benefit advisors. Once an individual selects a plan, his or her enrollment will go to the federally run exchange for processing.

Some firms plan to serve individual consumers directly. In contrast, Towers Watson will help employers provide health insurance education and enrollment services to their part-time and seasonal employees, pre-65 retirees and their dependents.

Federal Government Awards $67 Million for Navigators

In addition, on August 15th, the federal government announced that it has awarded $67 million to train “navigators” – non-profits, businesses, universities and local government institutions state and local communities enlisted to walk residents through the process of evaluating and selecting health plans that meet their needs.

Of the 105 navigators in 34 states awarded funding, United Way and Planned Parenthood are among the “big name” organizations chosen presumably to serve a broad audience. Other organizations such as Migrant Health Promotion, Inc. and the National Council of Urban Indian Health will cater to smaller, more targeted populations.

As the study referenced above points out, and most observers agree, the success of the public exchanges will rest on two things: the first is that consumers will be able to select the best policy for their needs. The second is that price competition, driven by effective consumer choice, will lower prices.

With web brokers authorized and navigators funded – and more likely on the way – that vision takes another step closer to becoming reality.

One Response to “Are Americans Ready To Choose Their Own Health Plans On October 1st?”

  1. Fascinating study. It sort of ties in with a study I wrote up last month that found most Americans don’t understand health insurance: As for the navigator program, it seems like Republican lawmakers are directing a lot of scrutiny/skepticism their way. Will the navigator program succeed despite that pressure from policymakers?

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