Race to the Bottom
Insurers are experimenting to find out what to offer in the exchanges. Answer: the healthy buy on price; the sick want full coverage and access to a full range of providers.
Blue Cross found the monthly premium was the most important thing for 48% of people, and one of the most important things for another 26%. It dwarfed other factors like prescription-drug coverage and copayments for doctor visits.
Forty-one percent of the Rhode Island consumers said they would sacrifice a broad choice of doctors and hospitals in order to save money, even if their own doctor might not be in the plan’s network. Overall, Blue Cross plans were chosen by nearly 60%.
The research is shaping Blue Cross’s decisions. The company is initially selling a “tiered” plan that requires consumers to pay more to see certain health-care providers, and next year it will roll out a new design with a smaller network, both approaches that can hold costs down.
The insurer also isn’t offering any platinum plans to consumers, partly because the simulation showed they tended to draw people with significant health needs, a particular concern if it’s the only competitor with a platinum product. (WSJ)
“Simulations by firms like Stonegate Advisors LLC, which conducted the Rhode Island insurer’s test-drive, have found that consumers often choose plans fairly quickly, without always looking in-depth at the benefit details.”
That is a bit disheartening.
“On average, people spent just nine minutes on the process. And less than a third tried to access the definitions of key terms like “deductible.”
Even more so.
Yes, while this is disheartening, it is not surprising. People stop learning or reading anything when they feel like they know enough about it, and I bet that is what is going on here.
I don’t know if it is that they think they know enough, I think it’s more that they see no utility in knowing more.
Also consider that many people aren’t educated enough to even understand most terminology used in these plans and get discouraged at trying to do more research on something they don’t fully understand well. These things need to be taught in schools, more practical learning is essential.
Everything needs to be taught in schools. I don’t know if we have time for it.
“The…next year it will roll out a new design with a smaller network, both approaches that can hold costs down.”
Excellent.
What is this knew design going to consist of? Are people going to get lower quality healthcare under the smaller networks just so that the Doctors can hold costs down.
Well it would be insurance companies holding costs down, and there is no reason for why bigger is better in a healthcare network.
Giving people the option while reducing costs for the insurer is important, as long as we continue to depend on insurers.
No Kidding!!! Wow!!! You would have though…
Analysis of the natural experiments, that result from the Affordable Care Act, will keep PhD academic rick & finance researchers busy for years to come.
Yes, young healthy people aren’t willing to pay extra for Cadillac health plans if that means subsidizing older, sicker (richer) middle-age people.
If you don’t expect to have health issues, why pay for expensive coverage that is pays for costly conditions? If you have health issues, you undoubtedly want Cadillac coverage that someone else is paying for.
The ACA should provide a uniform tax credit that is good towards a high-deductible plan. Young people need to dig into their pockets and deposit additional funds into an HSA account for the future when health needs rise. Older, sicker people need to dig into their pockets to cover more of their own health needs.
Everyone — that’s you and me — need to stop looking to other people for help paying our own bills.
“Yes, young healthy people aren’t willing to pay extra for Cadillac health plans if that means subsidizing older, sicker (richer) middle-age people.”
Bubba, what you say is true, and it’s even simpler than that.
Young healthy people feel little need for insurance in the first place, and therefore seek the lowest-possible premium. That premium will buy some minimum coverage level. But coverage does not matter to the young and healthy, because they don’t expect to use the insurance anyway. Whether anyone else is “subsidized” is not part of the logic.
(A knowledgeable young healthy person will seek the lowest possible premium for a plan that has adequate catastrophic coverage in case of a serious illness or accident. Otherwise, same logic applies.)
btw, insurers know – and always have known – that if the population you wish to insure has a choice of insurance companies, yours better NOT be the only one offering the richest coverage. If you are, the young healthy people will buy from someone else. BCBS Rhode Island did not need any survey to know this fact.
I know longer sell health insurance to anyone, anywhere; focusing on all other lines to the exclusion of health insurance.
But when I did sell health insurance, it was the conventional wisdom that there were two kinds of health shoppers: price shoppers and feature shoppers. Feature shoppers are always, already sick and are bad prospects.