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Improving Value

Comparative Information About Health Plans

The point of health plan shopping is a critical point for injecting better value into our healthcare system. Unlike the point at which health services are being consumed, the act of purchasing health insurance is a relatively dispassionate act, less often fraught with near term consequences for health and well-being.

In markets where consumers have a choice of health plan,1 plans have traditionally competed on premiums but they have not competed on the overall value offered by the health plan. Prior to reforms instituted by the Affordable Care Act (ACA), it was nearly impossible for consumers to develop an overall sense of how the amount of coverage they would receive varied across plans.2

The ACA instituted various reforms that did two things: made coverage offered by plans more standardized and increased the utility of comparative information. Among other things, these private insurance market reforms included:

  • No more pre-existing condition exclusions
  • No more exceptions to out of pocket maximums
  • No more dollar-denominated annual and lifetime limits
  • Standard set of preventive services covered at no cost

And in the fully-insured, small- and non-group markets:

  • Standardized covered services (the Essential Health Benefits package)
  • Grouped plans into actuarial value tiers

But consumer focus group testing in Massachusetts suggests that even more is needed to standardize plan designs and make it possible for consumers to rank order their choices based on value.

The increasing use of narrow and tiered-provider networks has added to consumer difficulty assessing their choices. There are no standardized measures telling consumers how narrow or broad a provide network is and network adequacy standards are non-existent, out-dated or poorly enforced in most states.

If health plan value can be made more transparent to consumers at the point of health plan shopping, this will lend pressure to improve value, which in turn, plans can apply to their provider networks, depending on how competitive the plan and provider markets are.

Strategies to improve health plan value and the the ability of consumers to differentiate plans by value include:

  • Stronger Rate Review 
  • Stronger provider network adequacy standards
  • Stronger provider network summary measures
  • Continued improvement in Summary of Benefits and Coverage information
  • Attention to Choice Architecture in comparative displays of health plan information.

 

Notes
1. According to Kaiser/HRET Employer Survey, 50% of covered workers are only offered one plan type, although more than one plan may be offered within that type. Consumers in the non-group market typically have a choice of plans.
2. Quincy, Lynn, What’s Behind the Door: Consumer Difficulties Selecting Health Plans, Consumers Union, (January 2012).