Why Insurance Exchanges Won’t Work: People Don’t Like Choosing Insurance

[phantom power]

One of the big reasons I’m so pessimistic about the new health insurance exchanges created under the Affordable Care Act is the principle behind them. The idea is that everyone will be well informed dedicated shoppers who will know how to select the best plan to fit their needs, which will reduce cost for everyone. Aflac’s 2013 WorkForces Report shows how deeply misguided this assumption is in reality.

Two numbers from the report really stick out. The survey found 54 percent of workers would prefer not to be more in control over their health insurance expenses and options because they will not have the time or knowledge to effectively manage it. This is completely understandable. Selecting the best insurance plan requires not only significant knowledge about every component of insurance but also the ability to accurately predict the likelihood of future medical needs.

The other important number is 89 percent of workers choose to stick with the same plan year after year. This is in large part because many find the process so daunting.

A market where very few have the knowledge of what is the best bargain and where almost no one ever even tries to shop around simply can’t be effective. Looking at other countries where there is a “market” for health insurance indicates this will be a real problem. In Switzerland almost no one ever changes plans even though standardization makes it much easier to comparison shop than it will be under Obamacare.

http://fdlaction.firedoglake.com/2013/04/29/why-insurance-exchanges-wont-work-people-dont-like-choosing-insurance/

[leveymg]

1. Sounds like an argument for single-payer to me.

So, why not give people the lowest-cost option up front?

[phantom power]

2. so crazy, it just might work...

[Atman]

3. Insurance is deliberately complicated

This is right-on. Most American's can't figure out their checking account fees. But we expect them to weed through a 150 page insurance explanation (yes, that was the last one I got)? It is by design.

[denverbill]

4. One of my least favorite times of year is open enrollment for benefits.

I liked my jobs much better when we just kept the same insurance year after year. Now if you forget to sign up for some reason, you are just screwed. And choosing which plan to go with sucks.

[Nye Bevan]

5. The ACA standardizes and simplifies the policy choices,

hence "gold", "silver", and "bronze" policies.

If people are able to figure out what kind of HDTV to buy, what car they should purchase, what car insurance policy they should get, and so on, it really should be within their capability to spend an hour or two figuring out which health insurance policy works best for their family.

[phantom power]

9. People have difficulty with all those examples you mentioned...

and in fact they get ripped off all the time purchasing all those things, and for exactly the same reason: the feature list is complicated, which leaves them open to acting on bad or incomplete information.

[geek tragedy]

6. They won't have much of a choice.

People don't like paying their taxes either, but they do it.

[Fumesucker]

7. Too many choices

Just going grocery shopping in a store you are unfamiliar with is a PITA that takes far longer than in one you already know, you have to search for everything.

Same thing with trying to select say an internet provider or a cell phone plan, there's just too much to know.

Insurance is complex well beyond all of those situations and far more important, it's bewildering and daunting even for those of us who are thoroughly literate and reasonably well informed, for those who have trouble reading or just don't know much about the choices involved it is mind boggling. Close your eyes and point to a plan at random and hope for the best is all a lot of people are going to be capable of.

[Thinkingabout]

8. I don't think the insurance companies will go down easy. They have a captive audience now.

We pay more for health care than other countries, get lots less for the buck. I am hoping we go to the single payer system and allow the money spent on health care be for that reason.