Health insurance and information costs

tanya

When I first moved to the U.S. for work, I had to initially buy my own health insurance. I started to do research, call insurance companies, and ask co-workers to try to choose the best fit for me. I found a plan that, in my view, balanced costs and quality with accessible premiums and coinsurance rates. When I went to the doctor for the first time and got the bill, I thought someone had made a mistake. It seemed like I didn’t have health coverage at all because I was responsible for most of the costs. After I called my insurance company and inquired for details, I learned the bills didn’t met the deductible because I had a high-deductible health plan. I asked why the doctor didn’t warn me those expensive tests would probably be covered by me? the insurance agent replied, “It is your responsibility to know…”

unexpected bill

I remembered that funny story twice this semester. First, in my Health Services System class while we were discussing about health insurance marketplaces/exchanges under the Affordable Care Act (ACA). The marketplaces are online platforms where individuals and employees of small firms can purchase private insurance plans. There are four tiers of qualifying health plans with different actuarial values: Bronze, Silver, Gold, and Platinum that range from lower premiums with higher deductibles and less benefits, to more expensive plans with higher quality. It is certainly not the same as shopping for holiday gifts online…

online-holiday-shopping

But, it is definitely more practical than what I did when I was buying my own health insurance. Instead of consulting multiple sources, consumers can have all the information centralized in their state marketplace. Complete information is crucial and, therefore, the role of state navigators will be important to help people know exactly which services will be covered or paid out of their pockets.

Also, during one of my Health Economics classes I learned about the so-called “consumer-driven health plans”(CDHPs), that combine high-deductible health insurance with a tax-advantaged account. Employers started to offer CDHPs in 2001, and by 2012 the plans represented about 15% of the privately insured market (EBRI survey, 2013). One of the main goals of CDHPs is to reduce health care costs by requiring consumers to take charge of their health care decisions, e.g. controlling the demand, not the supply of care. The survey did not find clear evidence about individuals becoming more cost conscious after enrolling in CDHPs; however, some studies have estimated that enrollees in CDHPs spend approximately 5-7% less than enrollees in traditional health plans. Again, asymmetry of information is an important factor to take into account when implementing these plans, so that people avoid having to pay for unexpected medical bills and do not delay needed care!

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