While much is unsettled about the future of the Affordable Care Act (ACA), the individual market will remain an important place where millions of people will buy health insurance. To that end, high-quality decision support for consumers will continue to be critical, particularly in the event that there is increased variation in the kinds of plans that are offered.
Since the inception of the ACA-regulated individual market in 2014, HealthCare.gov and the state exchanges have been the major sources of consumer information about health insurance plans. Over the years, the exchanges have expanded and improved upon their plan comparison tools. The current array of features for consumers who are shopping on the exchanges this year are shown in Table 1.
There are clear signs of progress. For example, all state exchanges and HealthCare.gov now offer anonymous browsing, and most have, at least to some degree, improved the usability of their sites from mobile devices.
There is considerable variation among exchanges in terms of how much and what types of decision support is offered. HealthCare.gov arguably continues to offer the most all-around consumer support, with a cost calculator, provider directory, and a formulary tool—reflecting perhaps its advantage of scale, and the budgetary pressures that have limited consumer activities in a number of state-based marketplaces.
Yet basic consumer support tools are still missing from most exchange platforms. Information about overall plan quality is currently only available on about half of state exchanges, based on star ratings of plans. Some have suggested that renewal rates be added to plans’ star ratings as additional quality information, but these rates haven’t been added to any platforms. When star ratings are present, little information is provided about how they are calculated. The Centers for Medicare and Medicaid Services (CMS) plans to start displaying quality ratings on HealthCare.gov in 2018 and has a limited pilot in place for 2017.
Additionally, this year CMS dialed back its planned release of a network size tool (used to evaluate the number of providers in a plan’s network), reducing it instead to a pilot that will be in effect in only a few states. Among state exchanges, only Idaho has addressed the issue of network size.
Beyond The Exchanges
While the exchanges have been the most important site of online plan shopping, a great deal of consumer decision support has been developed outside of the exchanges. In the early stages of a direct-to-consumer market, it seems advisable to foster the creation of many different consumer decision tools. Some may be ultimately incorporated into exchange platforms, while others are used by web brokers or function as stand-alone tools.
Advances in decision support by the private sector have certainly spurred activity by the exchange platforms and improved the customer experience that they provide. Right now, the supply of decision support is somewhat fragmented, but tools keep improving, and, ultimately, there will probably be some consolidation and reorganization that will enable more consumers to have access to the best tools.
For several years, the Robert Wood Johnson Foundation (RWJF) has worked with Health 2.0 to sponsor a series of application (app) developers’ challenges, which have focused on different aspects of plan choice. One area where better decision support is greatly needed is prescription drug coverage, which was the subject of a recent challenge. The three winners, HonestHealth, CleaRx, and ClearHealthAnalytics, have created solutions that simplify the process of comparing coverage for, and costs of, prescription drugs. Hopefully, over time, these “best-in-class” tools will be more widely available to consumers.
The Off-Exchange Dilemma
While there is much to be commended about progress made in providing consumers with decision support in exchange platforms, one clear shortcoming is that off-exchange plans are by definition excluded from tools created by exchanges. Nearly 40 percent of the individual market is currently in an off-exchange product, and these customers face a shopping experience that is decidedly inferior. While web brokers who sell exchange plans are required by CMS to display all exchange plans that are on the market, when it comes to off-exchange products, there is no such obligation. Brokers may show only subsets of available off-exchange plans, depending on factors such as cooperation from carriers and the structure of commissions. The ability to compare all of the products on the market is a hallmark of a high-quality consumer experience, and this is currently not an option for most unsubsidized consumers, who may want to shop both on and off the exchange.
State insurance commissioners can potentially require that insurance carriers participate with web brokers. But in general they have not, meaning that most off-exchange customers do not have any promise of a comprehensive place in which to shop for plans. Also, web brokers trying to sell in the off-exchange market must contend with incomplete data from carriers and difficult processes for enrolling customers in some plans. Despite these challenges, there are some web brokers that offer advanced decision support and display all available products (that is, both in exchange and off exchange). (Traditional or “offline” brokers, for their part, are under no obligation to show consumers all of the products on the market, either on or off the exchange.)
The segmentation of the individual market is not helpful to anyone, particularly unsubsidized customers. In some states, insurance departments list the available plans or participating carriers on their websites, but, in general, this information is insufficient for plan selection.
A recent example of a practice to emulate is in Pennsylvania, where its Insurance Department has partnered with Consumers’ Checkbook to create a plan comparison tool that shows all of the plans in the market. This is particularly relevant in Pennsylvania because in some (but not all) geographic rating areas, the lowest-priced plan for unsubsidized customers is an off-exchange product, making it important for these consumers to be able to easily compare everything available.
So, How Much Choice Is Optimal?
Decision support tools have evolved considerably over the past several years, and there appears to be universal support for a consumer-driven insurance market, yet there is no consensus about how much choice is optimal. This is a somewhat more upstream aspect of decision support, since it concerns the number and variety of insurance products from which consumers should be allowed to choose. A number of studies suggest that consumers choose sub-optimally, which, to some, makes the case for reducing their choices. Indeed, a number of state-based marketplaces have sought to standardize plans. CMS recently dipped its toe into this water by debuting “Simple Choice” plans for 2017 that were encouraged but not mandatory and received special promotion on HealthCare.gov. Given the far larger challenges facing the individual market, little attention has been paid to how consumers have reacted to these new Simple Choice plans.
While advocates of standardization are adamant about the benefits, others wonder whether the practice may impede innovation in plan design and whether it may be better for the market in the long run to permit more experimentation. Further, some exchange platforms have had difficulties making consumers aware of standardized plan options, further reducing their impact. Since the ACA-compliant insurance products themselves are fairly strictly defined, the difference between the best and worst choices is constrained, making the standardization stakes, so far, relatively minor.
In the future, there may be more reliance on the private sector to perform enrollment and decision support functions, which will increase the importance of collaboration between federal and state governments and private companies around transparency and data standards. State insurance commissioners in particular may begin to play a more active role in regulating their individual markets (although this would be complicated in the event of interstate sales of insurance products, which have been suggested in a number of recent proposals). Commissioners may wish to create or outsource consumer tools, as in the Pennsylvania example. Alternatively, commissioners can see to it that complete insurer filing data is freely available online in standardized formats, which would leave tool creation to a growing developer industry. Ensuring a more transparent market does require some regulatory initiative, but it is likely to be an important strategy that will benefit consumers.
We may be entering a world where insurance products will be more loosely defined, and plan standardization less likely. In such an environment, the availability of high-quality consumer decision support will be more important than ever. While the future of insurance exchanges is currently unclear, individual market consumers in every state will continue to benefit from high-quality decision support. As it is likely that the individual market will remain at least somewhat subsidized, there will also continue to be a public interest in helping consumers make the best decisions possible.