Why shopping for health insurance is hard

The premise is simple.  Create markets, let consumers choose the products that fit them best, and the competition will lead to higher quality and lower prices.  That is the premise behind the Affordable Care Act’s health insurance exchanges.  A necessary condition for this to work, however, is that patients have visibility into the quality and cost of each health plan.

Austin Frakt makes the important point that shopping for health plans in an exchange is not so easy due to the lack of visibility into which doctors are considered in-network and which are considered out-of-network. He writs

It’s virtually impossible to thoroughly check the quality of doctors in each insurance plan. A typical plan, even a narrow one, may have a network of hundreds or thousands of physicians… A study of 2016 marketplace offerings in 13 states found that only two provided indications of network size. Eight of them, as well as HealthCare.gov, provided a way to look up whether a doctor was in a plan’s network, but only two could filter plans to show only those with providers a consumer selects.

“To our surprise, we also found that few marketplaces could indicate which hospitals were in plans’ networks,” said Charlene Wong, a pediatrician and researcher at the Margolis Center for Health Policy at Duke University and lead author of the study…

Researchers at the University of Pennsylvania found that plans with more narrow networks systematically excluded oncologists affiliated with higher-quality cancer centers. In part, this is how the plans offer lower premiums, because higher-quality cancer centers may demand higher payments. But it’s pretty likely consumers don’t know that they may be trading quality for price.

Consumers may wish to trade off price for quality. That is a fine decision to make. What is not acceptable, however, is failing to provide the necessary information to consumers for them to make this decision for themselves.

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