Monday, September 29, 2014

Buying a health plan: Don't try this at home?

In a recent post, I cheered a bit while noting that most ACA marketplace users who should have bought silver-level health plans did in fact buy silver plans.

That is, most people whose income qualified them for subsidies reducing their plan deductibles and out-of-pocket costs -- subsidies available only with silver plans -- did buy silver. Somewhat less than 20% of those eligible for Cost Sharing Reduction (CSR) bought bronze plans, which have higher deductibles and copays and disqualify a buyer from CSR..

Perhaps a 15-20% "bad choice" rate is too high. After speaking with ACA navigator Kate Kozeniewski of Resources for Human Development (RHD), however, I had to wonder why the numbers weren't worse.

Premiums reign supreme

I asked  Kozeniewski, a program coordinator who helped oversee assistance provided to 45,000 people in Pennsylvania while directly assisting hundreds herself, whether clients generally understood the importance of CSR.

"We found across the board that people were not aware that cost sharing was not available to them unless they chose a silver plan," Kozeniewski said. Almost invariably, she said, people would look at the lowest monthly premium available (as reduced according to their income) and say,"This seems like it's within my budget, so I'll start here, and if this works, this is fine."

I asked whether would warn someone whose income qualified them for CSR that they would forego it if they bought a bronze plan. 

"No, it would not. I think that would be very helpful,"   Kozeniewski replied. (She later clarified that there may have been a warning of some sort for CSR-eligible users who were about to buy bronze -- but that if so, it was "nothing clear. It wasn't plain language.")

She added, "What was most important to people was the price -- the price of the premium -- and that was often the stopping point. They would not necessarily understand or go further without help from the person-to-person enrollment encounter."

Cost-sharing what?

CSR was particularly opaque to people, Kozeniewski said. "Definitely, people did not understand how CSR would take down their out-of-pocket costs, and how it would take down their deductible" -- and that a silver plan, with CSR, "was often a much stronger plan for a similar price as the bronze."

Given that lack of understanding, I wondered why the shopping results weren't worse -- why most low income people didn't choose bronze.

"I don't know," Kozeniewski responded. Almost everyone she encountered had little idea of the options available to them until she went over them step by step, after which many were open to choices other than the plan with the lowest premium.When walked through it, people could recognize that "cost sharing made a huge difference for them."

Kozeniewski's experience suggests that most low income people need help in choosing a plan that best suits their needs (as perhaps do most higher income people, many of whom use brokers). Nonetheless, and the state exchanges could do a better job getting vital information across.  The problem is in part a matter of word choice -- as in "cost sharing."

"I don't believe that it's a term people understand," Kozeniewski said. "I don't think that I knew what it meant until I starting going through training. Maybe try 'coupon,' or 'extra  savings'...I'm not a marketing executive, but I'm sure they could focus-group a word that people understand."

Some assistance needed

RHD has been conducting Health Insurance 101 workshops that highlight for Kozeniewski how little most people understand about basic insurance terms -- and how complex those terms are.

"Even plan-to-plan, how the deductible or copay works is different," she noted. "With Plan A, your deductible might not  kick in until you go to the emergency room or have a surgery. In Plan B, it might kick in when you go to your primary care for a second visit." Few of us are fully equipped to grasp the nuances: "Before I started this process I'm not sure I would have gone out of my way to see if there was a second prescription drug deductible."
A punch list for Marketplace 2.0

I asked Kozeniewski what her recommendations would be to designers and HHS as they retool and otherwise prepare for the ACA's second open season. Here's her list:

1. Find a different way to describe cost sharing reductions.
2. Clearly alert CSR-eligible buyers that they're leaving something major on the table if they don't buy silver.
3. Provide pop-up definitions of key terms like "deductible" and "out-of-pocket maximum" (as suggested in this University of Pennsylvania study).
4. Have local in-person help available -- that is, help from people who know the particulars of plans in a given area. Call-line help from HHS lacks this plan-specific knowledge.

The in-person help available to the uninsured varies enormously from state to state and even county to county --depending not only on whether state government is committed to making the ACA work or rather to sabotaging it, but also on the existing level of nonprofit social service delivery in a given area.  Based on Kozeniewski's experience, it's hard to imagine many people making optimal choices without in-person help.  

For further discussion with Kate Kozeniewski (and others) about users' experience with the ACA marketplace, see How to reboot

Update, 10/1/14: In a May 1 addendum to its April ACA enrollment report, HHS broke out state-by-state enrollment by metal level. As it turns out, Pennsylvania, where Kate Kozeniewski works, is tied with Mississippi for the lowest overall rate of bronze selection -- just 8% of all enrollees. Better, just 5% of subsidy-eligible Pennsylvanians chose bronze -- best among states using (this stat was not broken out for states running their own exchanges). State-by-state variation is wide on this front. 40% of Colorado buyers chose bronze. I'd like to figure out why.  

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