Is Buying Health Insurance Like Shopping on Amazon? : CJR
On Monday, the AP reported that, as part of its health reform efforts, the federal government would require states to establish online shopping services that would ostensibly make it easier for consumers to research and purchase health insurance. The AP reported: “The new marketplaces are supposed to work like an amazon.com for health insurance, providing consumers with one-stop shopping for competitively priced coverage.” As she has before, Secretary of Health and Human Services Kathleen Sebelius argued that “more competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today.” The AP didn’t say how that would happen, nor did it mention that up to half of the governing board for these shopping services could be composed of industry reps, creating the potential for fox-in-the-hen-house regulation. At least one consumer rep must be on the board.
The AP story brought to mind a piece I have been waiting to comment on—a fine story by WBUR’s Martha Bebinger that reporters ought to use as a model when looking for interesting ways to report on a not-so-interesting subject. Bebinger reported on the shopping experience of Sarah Bechta, a wife, mother, and doctor living in Northborough, Massachusetts. Bechta spent six to eight hours comparing plans, trying to figure out whether one of those newfangled insurance plans with tiers of high, medium, and low-priced docs and hospitals was right for her. Massachusetts is leading the way in creating new insurance products that, in turn, create more headaches for consumers. Insurers are encouraging them to choose low-cost providers; in return, they will give them a price break either on the premium or on their out-of-pocket costs. In effect, they are following a sales strategy that assumes buying insurance is like making a choice at Baskin Robbins.
Dr. Bechta’s experience shows the difficulty of “choosing the best.” Bechta learned that a tiered plan would cut her premium in half, and she would save around $1400 a year, a sum that “made me stop and think,” she said. But then she asked herself the relevant question: Would higher deductibles and copayments gobble up the savings? They might if she could predict what illnesses her family would have during the year. “I could not figure it out,” she said. Of course she couldn’t. If you have a chronic illness, some medical expenses are predictable. But for other people, they are not. Bechta did some rough calculations of the costs she would incur if her daughter came down with appendicitis. If her daughter went to a tier 3, higher cost hospital—such as Children’s, which her doctor might recommend—the premium savings would be wiped out.