Tuesday, October 6, 2015

San Francisco Is Changing Face of AIDS Treatment - The New York Times

California Governor Signs Assisted Suicide Bill Into Law - The New York Times

Jerry Brown signs doctor-assisted death bill | The Sacramento Bee

Beyond Myalgic Encephalomyelitis/Chronic Fatigue Syndrome: Redefining an Illness - Institute of Medicine

Monday, October 5, 2015

People are bad at choosing health plans, part 2

With open enrollment coming up for the Affordable Care Act marketplaces, as well as Medicare and some employer plans, I am reviewing the literature on how well people make plan choices. I concluded my first post, which focused on Medicare, with two stylized facts I claimed generalized beyond Medicare: (1) people are bad at choosing plans; (2) providing easy access to cost comparison information makes them better. This post and a forthcoming one back up that claim.

Through a series of six experiments, Columbia business professor Eric Johnson and colleagues directly tested consumers’ ability to make rational choices among health insurance plans. Without additional assistance from calculators or the setting of “smart” defaults, they found that consumers are just as likely to select the lowest cost plan as they are to select any other. Moreover, people have no idea how bad they are at this task.

Subjects for the six experiments differed; four focused on a population similar to state marketplace shoppers, one focused on workers, another on MBA students. All respondents passed a test of comprehension of health insurance policies, for instance correctly identifying what are a premium, co-pay, and deductible.

People are bad at choosing health plans

People are bad at choosing health plans, part 3

In this, third post on how people are bad choosing health plans, I continue to summarize studies relating to commercial market plans, which I started in my second post. (See post 1 for research pertaining to Medicare plans.)

A study by Saurabh Bhargava, George Loewenstein, and Justin Sydnor examined the choices made by over 50,000 workers at a large U.S. firm among 48 health plans in 2010 and 2011. They found that the majority of them made objectively worse choices than they could have, costing themselves an average of $373 per year, or 42% of the average employee premium contribution. Lower income employees and those with chronic conditions were even more likely to make cost-increasing choices. (And perhaps this lower socioeconomic group are less educated, sophisticated, and unable to diiscern differences in the offerings.

It is true that offerings are nearly identical across the spectrum of plans that are offered. Examiing the Medicare Advantage plans in California between SCAN and Humana the benefits are almost identical, save for the absence of a Part D pharmacy premium (0). They both offer 6 free transportation trips to physician offices.

Apart from cost-sharing and premiums, the 48 plans were identical (e.g., services covered, networks, carrier, manner of presentation in marketing material). Across plans, there were four deductible levels ($1000, $750, $500, $350), three maximum out-of-pocket spending levels ($3000, $2500, $1500), two coinsurance rates (10%/40%, 20%/50% for in/out of network), and two copayment levels ($15/$40, $25/$35 for primary/specialist care). Do the math and that makes 48 possible options (4 × 3 × 2 × 2 = 48).

Because of premium levels, some plans were “dominated” by others, meaning they were objectively worse choices for everyone. For instance, a plan with a $750 deductible cost $500 more in premium than an otherwise identical plan with a $1000 deductible. Trading a guaranteed $500 cost for at most a $250 benefit is an objectively bad deal. (If one’s marginal tax rate is at least 50%, it might not be bad, since premiums are excluded from taxation. The study’s findings hold up even accounting for taxes.) All but one of the 36 lower deductible plans (<$1000 deductible) offered was dominated in this way by a higher deductible plan.

People are Bad at Choosing Health Plans

People are bad at Choosing Health Plans

Nancy Pelosi was correct, "You won't know what you get until you sign it "

It used to be that purchasing a home was the most important financial decision in one's life. Today, selecting insurance is right up there.

The Affordable Care Act passage did not make insurance affordable or accessible. It did make it much more complex especially for those who never had insurance coverage. It is a new landscape cratered with deductible, copayments, premiums, and charts defining eligibilty for subsidies

If you are confused....you have come to the right place. Even physicians and hospitals are overwhelmed with new diagnostic codes, CMS rulings and the new affordable care act. Change has occured so quickly that statistical comparisons of health cae costs between 2010 and 2015 will be unreliable because there is cost shifting taking place due to change from volume based reimbursement to quality measures, such as re-admission rates. The new reimbursement actually does depend upon fee for service. The net payment will be reduced if quality goals are not met. ( a form of penalty.) Bonus payments for meeting quality standards will vary from insurer to insurer. Medicare and Medi-Cal will have their own formulas.

It is no wonder that

People are bad at choosing health plans, part 1

Open enrollment is approaching for Affordable Care Act marketplace plans (Nov. 1), Medicare Advantage (Oct. 15), Medicare Part D plans (also Oct. 15), and for many employer-sponsored plans (dates vary by employer, but mine is Nov. 10). Apart from cases in which employers only offer one plan, in all these markets consumers have several to dozens of plan options. Are people good at choosing among them?

Nope. That’s a consistent finding across a large and growing body of research.