What is and isn’t “transparent” in the O’Care Exchanges

Last updated on: October 11, 2013 at 12:40 pm by Jane the Actuary

What is and isn’t “transparent” in the O’Care Exchanges 2013-10-11T12:40:00-06:00 Jane the Actuary

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

Lunch break!

Megan McArdle has a post up on the exchanges, and a concern that the standardized tiers, fixed subsidy level, and open pricing will drive insurers to set their prices high, and drive consumers to purchase the higher-cost option as a marker for quality. Because the subsidy is fixed based on the 2nd-lowest-cost “silver” plan, insurers collectively benefit from that 2nd-lowest-silver-plan being expensively priced.

And that much is true — the entire system would benefit from insurers providing their pricing structure to the government without having any means of knowing where that subsidy baseline will fall, and there would indeed be some benefit to a level of discretion that means that the government may elect a lower subsidy level, to keep the insurers in line. But the insurance companies still have to compete with each other, and the problem here is a different one entirely.

McArdle titles her post “Do We Need Less Transparency on ObamaCare?” — but the problem is that the very nature of the exchanges limits the transparency and the ability of the consumer to comparison shop.

If I want to buy the latest Rick Riorden title (for my kids, of course), I can comparison-shop at Amazon, Barnes & Noble, or a discounter. If I want to buy some new clothes, online shopping isn’t going to work — at least not for me, and, I think, not for women’s clothes in general. Except for those rare product lines where the sizing is reliable and the quality is consistent, I need to look at the item myself.

And in the same way, there’s a lot missing from the exchanges: how is the company’s customer service? How broad is the provider network, and, if it’s limited, how good are they about keeping doctors in their network vs. constantly reshuffling them? How onerous are their preapproval processes? Do they have any innovations in coordination of care or evidence-based medicine? If it’s a high-deductible plan, do they provide tools to help consumers find lower cost options for a given procedure? For that matter, do they actively work to prevent fraud? And how extensive is their coverage of the benefits in the fine print? (Many years ago, back when our insurance was generous, I learned how much this matters — our company covered speech therapy for any reason, with no copay, for our weekly visits with my son; my friend had to pay out of pocket for her son because it was considered “developmental” and not covered under their policy.)

I don’t know about you, but last year at annual enrollment we were presented with multiple options which, on the face of it, seemed indistinguishable except that one was considerably more expensive than the other. (Remember, I’m an actuary, but a consulting actuary — I don’t work at an insurance company.) I suspected that the more expensive policy was probably better in all these intangibles/fine print areas, but we had no way to assess that, or whether they just were unlucky enough to have an unhealthier pool of employees for some other reason.

Now, I’ve said before that I don’t have a problem with subsidies, if they were structured more sensibly. But there’s no reason it would need to be tied to a government-run insurance agency. If an old-fashioned insurance agent provide value by helping his customers understand which plans provide value for the money (while being open about commissions), or a competing website can develop metrics that allow consumers to comparison-shop more effectively, shouldn’t they be able set up shop, with their customers still able to pick up the subsidy?

Uncategorized

Previous Post

October 10, 2013

Curse you, vampirestat.com!

Next Post

October 12, 2013 From the kindle: Promises I Can Keep: Why Poor Women put Motherhood Before Marriage, by Kathryn Edin and Maria Kefalas

Browse Our Archives

Select a Category Actuarial/Retirement Issues Politics Uncategorized

Select a Month September 2026 August 2026 July 2026 June 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 July 2025 June 2025 May 2025 April 2025 March 2025 February 2025 January 2025 December 2024 November 2024 October 2024 September 2024 August 2024 July 2024 June 2024 May 2024 April 2024 March 2024 February 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 December 2022 September 2022 August 2022 July 2022 June 2022 May 2022 February 2022 January 2022 December 2021 August 2021 June 2021 April 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013

TAKE THE

Religious Wisdom Quiz

What did Jesus say before raising Lazarus?

Select your answer to see how you score.

"Rise and walk!" "Be healed!" "Lazarus, come out!" "Go in peace!"