If you’ve never had to shop for health insurance, consider yourself lucky. Between searching for affordable premiums, making sense of co-pays and coinsurance, and finding a plan with your favorite doctor, choosing a good health plan can be a daunting task. As a health policy student, I tried my hand last month at choosing a plan on the North Carolina exchange. Despite being well-versed in insurance concepts, I too struggled to figure out which plan would be best for me among the many options.
The Affordable Care Act (ACA) has been successful in its goals of increasing access to health insurance while preserving choice and competition in health insurance markets. It brought nearly 11 million people into the individual market who previously didn’t have insurance, and it offered them a variety of health insurance options to choose from. Despite achieving such historic milestones, however, it remains to be seen what the future might hold for the ACA. Until then, policymakers must continue working to make the process of buying insurance easier for the average American. Continue reading
By: Zarak Khan
Obamacare will bring many changes starting January 1, 2014 to people who don’t currently get their health coverage through their job. Part of the law requires that states set up health insurance exchanges (HIX). These exchanges are a key element of expanding coverage to those currently uninsured–particularly people who will be purchasing insurance on their own since they work in a small business that doesn’t offer coverage or are self-employed.
A health insurance exchange is a governing body that sets standards for what health insurance plans are offered in a state. It is not itself an insurance company and does not offer any insurance plans, rather it ensures that the insurance market in a state is fair, transparent, competitive, and provides adequate benefits. It also provides an online marketplace where people can log on and purchase insurance.
It’s important that North Carolina’s health exchange works well – it must be an easy, efficient and informative place for people to buy coverage. This isn’t a given. Imagine, if you can, the challenge that a person who has never bought insurance before would face when making this decision. They log on to a website and are presented with dozens of plans, prices, and options. Do you think they know what a deductible is? Or a co-pay? How good do you imagine their budgeting skills are? Throw on top of that the likelihood that they have limited literacy and numeracy skills and the assumption they will make the best choice for themselves and their family becomes even more of a stretch.
The way in which information is presented to people can significantly affect their decisions–that’s no secret (particularly if you’ve ever worked in marketing). When presented with the complicated information comprising a health insurance plan, people can struggle to process all that information. At times, they can be overwhelmed by the decision and choose a sub-optimal insurance plan.
Whether North Carolina creates an exchange in partnership with the federal government or allows Washington to create the exchange, Obamacare allows significant latitude in exchange design and research from the field of behavioral economics should play a role. Challenging the traditional economic assumption that humans are perfect utility-maximizing machines, behavioral economics melds psychology and neo-classical economics to understand how people make decisions. By understanding the places where people often struggle to make choices, policymakers can develop strategies to mitigate those problems.
Creating a thoughtful choice architecture–a structure in which consumers can make an optimal decision–for the user interface of the insurance exchange can help North Carolinians buy the best and most affordable health care plan for themselves and their families.