Today, consumers face a baffling health insurance marketplace, especially if they buy insurance on their own. Americans find it all but impossible to compare health insurance policies on an “apples-to-apples” basis because the policies are written in legalese and the terms of coverage are so varied. As lawmakers consider comprehensive health care reform, they have an opportunity to manage the way we “shop” for health insurance. Recommendations include new consumer-friendly rules for the health insurance marketplace. These rules require clear and consistent definitions of insurance terms, standardized health plan provisions, new health plan disclosure forms, unbiased enrollment assistance ...view middle of the document...
This approach would promote competition on price, improved patient satisfaction and quality of care. It would also avoid the problems of an excessive number of confusing, look-alike plans (Healthy Policy Brief, 2009).
What a health plan covers and how cost is shared between the plan and the patient is referred to as the “benefit design”. To engage consumers and facilitate informed choice, benefit designs should be standardized and vary around only a few features. In other words, health plan choices should feature clear, meaningful differences. To facilitate consumers’ ability to compare health plans, all health plans cover exactly the same comprehensive set of medical services, and vary only by their cost-sharing features and networks of doctors, hospitals, and other providers. Cost-sharing variation should be limited. To start, annual benefit limits and life-time benefit limits need to be eliminated. Cost-sharing terms like “deductible” should be defined using standard, industry wide definitions. Furthermore, the plan’s out-of-pocket limit should be a “hard” out-of-pocket. In other words, it must not feature exceptions that can drive the policyholder’s cost beyond the stated limit.
Making it easier for consumers to choose a health insurance plan means making the information about those health plans understandable, relevant, and “evaluable” — a fancy word meaning you can readily rank your choices from best to worst. To ensure that the materials are understandable, insurers should be required to describe their plans in simple, straightforward language, and use consistent, industry-wide definitions for common policy terms like “deductible,” “out-of-pocket limit,” and “hospitalization.” Health plan materials should also emphasize the information of most interest to consumers, such as out-of-pocket costs and access to doctors and specialists. Furthermore, they like to know if they have the right to see doctors outside the plan’s network, and at what cost. While health plans today make this information available, it is often difficult and time consuming for consumers to compare provider networks and access rules for dozens of plans. If consumers are to choose from among health plan options, they must be able to rank them. Information that makes this task easier is said to be “evaluable.” Evaluable information is presented so that it is easy to find the “best” option(s). To help consumers choose, government should require insurers to use a...
