A new analysis suggests that smart design of the websites used for the new state insurance exchanges to enroll consumers in health plans could save consumers and the government more than $9 billion a year. It highlights the difficulty for consumers of choosing a health plan that best fits their healthcare and financial circumstances even in the new reform environment where they can more easily make apples-to-apples comparisons.
Co-authored by Tom Baker, a professor at the University of Pennsylvania Law School, and researchers at Columbia University, Hebrew University of Jerusalem and the University of Miami, the study suggests that when consumers are “left to their own devices,” they seem to make big mistakes when choosing health insurance. As a result, when they start enrolling in health plans on the state-run and federally run exchanges in October, they'll likely have a difficult time choosing the best coverage for their needs unless simple design features are included on the websites for the exchanges.
“Some states are trying very hard to use good choice architecture, but others are overwhelmed,” Baker said in a news release about the study, Can Consumers Make Affordable Care Affordable? (PDF), “I have high hopes for the federal Web portal because we have been providing our research results to the Department of Health and Human Services, and we get the sense that they understand the essential message,” he continued. “My prediction is that it will take a couple of years to learn what works.”
Baker and the other researchers conducted a series of experiments to see how well—or how poorly—respondents performed when they were asked to choose the best health plan to meet their needs. The study focused on consumers' ability to select a plan that was right given their expected healthcare usage, and the results showed that outcomes were much better when consumers were given some help. For instance, a control group in one experiment made errors costing consumers about $533, or about 10% of the cost of the cheapest policy. But that number dropped sharply to $77 when consumers were provided with a “smart” default option that preselected the most cost-effective plan and a cost calculator.
“The list of potential design improvements is not exhaustive and there are many other interventions that may improve choices,” the authors wrote in the study. “These include sorting by cost, the presence of quality cues, or limiting the number of options to those that meet criteria of cost-effectiveness.”
The study did not discuss the fact that under the Patient Protection and Affordable Care Act, consumers won't be totally on their own in selecting plans on the exchange websites. They will have the opportunity to receive in-person and phone assistance from “navigators” and insurance brokers in selecting exchange plans.
“We do expect that many people will want to talk to a person and not just rely on a website, so navigators and brokers will be very important,” Baker said in an e-mail. “But the call volume could be enormous, so an easy to use, effective website will make a big difference.”
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