Premium vs. deductible: New tools oversimplify

Buying health insurance is hard, we're told. Forced to weigh premium against deductible and other out-of-pocket costs, people will make the wrong choice more often than not.  Decision support tools like total cost estimators can reduce that likelihood.

Maybe, maybe not. It seems to me that a cost estimator has to be pretty sophisticated not to oversimplify the decision.

The new Plan Match tool rolled out this month by DC Health Link, the District's ACA marketplace, is in one way at least more informative than healthcare.gov's Total Cost Estimator. The DC tool, furnished by Consumer Checkbook, provides not only a Yearly Cost Estimate that factors in the user's rating of his health, but also an estimate of "Cost in a Bad Year." The latter total is simply the plan's yearly out-of-pocket maximum plus the annual premium.

I'm not sure that that information doesn't give the wrong impression by leaving out a vast middle.

The tool might actually be more useful in any market other than DC -- which, uniquely, extends Medicaid eligibility to adults with incomes up to 210% of the Federal Poverty Level (FPL).  By so doing, DC eliminates the strong Cost Sharing Reduction (CSR) subsidies that are available in most states* to private plan buyers with incomes up to 200% FPL -- but only to buyers of silver plans. For those up to that income threshold, silver plans' out-of-pocket maximum is capped at $2,250  -- compared  to a $6,850 allowable OOP max for bronze plans. In most ACA markets, the "Cost in a Bad Year" would reflect that yawning gap for buyers under 200% FPL.

Weaker CSR is available, in DC and everywhere else, to buyers with incomes in the 200-250% FPL range. At that income level, the out-of-pocket maximum for silver plans is $5,450. That smaller contrast does come into play in the Cost in a Bad Year estimates.

Healthcare.gov is already better than it was when Open Season ended

On the eve when Healthcare.gov is scheduled to go live with the shop-around feature for plans available in 2015, here's a spot of good news about how that feature's already been upgraded. This is a pull-out from something I noticed mid-post, and so buried a bit, late last week.

[Update: 2015 shop-around is live now. As HealthSherpa did during the last open season, its starts with a single prompt for a zip code to draw a user in. While it asks for the same info as last season, it breaks the presentation into several screens, probably help people avoid missing key questions. BUT...the mouseovers are gone! Update post here.]

One complaint often voiced about healthcare.gov last year was that important information was not provided in context. For example, when University of Pennsylvania researchers studies the experiences of young,  well-educated users of the site, their first recommendation for improvement was to provide instantly accessible glossary definitions of key insurance terms -- i.e., popup definitions that appear when you mouse over the terms, on the plan price quotes or elsewhere.

The shop-around feature on hc.gov has remained live (though somewhat difficult to find) during the off-season, for the benefit of people eligible for "special enrollment periods" because they've undergone life-changing events such as job loss or divorce or marriage.  And I'm happy to report that at some point in recent months (or weeks), pop-up definitions have appeared. They work on the screen grab below:

Evidence from Kaiser: Most ACA shoppers made informed choices

How well-equipped are America's uninsured to shop for private health insurance in the ACA's marketplace?

The scary news going in was that most of the target population had a poor grasp of fundamental insurance concepts such as "deductible" and "copay." The good news is that most buyers seem to have picked up a working knowledge of the basic tradeoff between monthly premiums and likely out-of-pocket costs by the time they pulled the trigger.

I have noted in multiple posts, summarized here, that the vast majority of lower-income ACA shoppers avoided high deductible bronze plans and availed themselves of the Cost Sharing Reduction  (CSR) subsidies available only with silver plans -- even when, as in Mississippi, the silver plans cost them significantly more per month.  Now, Kaiser Family Foundation survey data, reported this week, suggest that private plan buyers considered deductibles and co-pays almost as important as monthly premiums.