Shopping for a flat-screen TV can be exciting, even a little fun. You can compare clearly advertised prices to find the best deal; you can compare ratings of how the TV worked by others who’ve bought it; you can even look at the quality of the picture right next to others in the store.

In contrast, shopping for health insurance can be overwhelming, if not impossible. You can’t clearly compare prices, because aside from the premium, there’s virtually no way to know exactly what your out-of-pocket costs will be if you get seriously ill; you can’t compare how well insurance companies treat their customers because there is no rating system; and you can’t compare policies side-by-side, because virtually no two are the same.

Consumers Union has developed a blueprint to start reforming the insurance market, “Simplifying Health Insurance Choices,” which you can download here. The blueprint builds on the idea floated in Congress of a national ‘insurance exchange’ where those offering insurance – both private companies and a public entity – would openly and clearly compete on price, coverage and quality, so consumers could truly make “apples-to-apples” comparisons to get the best deal.

What do most of us do when faced with overwhelming and confusing choices? We stick with what we know, or pick a brand we've heard of, even if it may not be the best deal for us. Guess what? Insurance companies count on that, spending over $645 million in brand advertising in 2008 alone.

As Congress debates how best to reform health care so it’s more affordable and accessible, it also must reform the bewildering insurance market. Prices won’t come down unless there is true competition, and it’s impossible to truly ‘compete’ unless consumers can easily compare insurance policies based on what they cost, what they cover, and how well they deliver.

As the report notes, “Surprisingly, consumers have little in the way of national standards that help them buy health insurance. This near absence of consumer protections means that consumers often purchase coverage that doesn’t suit their needs, that costs them too much, and ultimately drives up our nation’s health care bill.”

There are a lot of good ideas in there, but the guts of reform in the report would center around five key points:

A manageable number of meaningful health plan choices. Right now, insurance companies overwhelm consumers with a lot of look-a-like plans with only minor variations that just serve to confuse and bewilder. For example, the average senior shopping for a Medicare Part D prescription drug plan faces some 48 different variations, with some having to wade through 70. Not surprising that one study found only 6 percent picked a plan that would save them the most money. Having a meaningful level of coverage choices that are clearly different would eliminate shopping paralysis and overpaying.

Standardized health plan benefits allowing “apples-to-apples” comparisons. What a health plan covers and how cost is shared between the plan and the patient is referred to as the “benefit design.” To make shopping easier, benefit designs should be standardized so each plan in that group covers the same set of medical services, and vary only by their cost-sharing features and networks of doctors, hospitals, and other providers.

Health plan materials written in “plain English.” We’re all familiar with this one if we’ve tried to read a policy, which are written in “insurance-speak” that comes from another planet. As the report notes, just 12 percent of adults are fully proficient in health literacy, which is necessary to understand the complex world of terms, costs and insurance underwriting.

Consumer-friendly decision aids. This includes the ability to compare on the Internet, one-on-one counseling services, and a 24-hour toll-free phone number. With proactive outreach to low-income and minority populations.

A strong oversight entity. They should monitor and crack down on violators, as well handle customer complaints and develop a system to rate plans on quality of their service based on consumers’ experiences.

Coupled with a public option, these reforms will take the mystery out of the insurance marketplace, ultimately helping consumers make better choices and spurring the kind of fair and aggressive competition needed to help lower our health costs.

comments (16)

Comments

1 Posted by Robert at 06/19/09 01:29 AM

I like this proposal. People could much more easily shop and compare for the optimum choice for themselves. The Fed government already approximates this concept on their Medicare Advantage website for each area of the country.

2 Posted by george kimball at 06/19/09 02:22 AM

Ms. Herold, I don't agree with a lot of your threads, but this one is dead on. Looking at the results of market competition, it would be absolutely nuts to make the health care industry non-competitive, though a lot of people seem to think it should be.

The market for individual insurance plans, because of the tax disadvantage (vs. employer plans) that raises the cost ~50% has never really developed. No insurer would touch it when the money is already gone - but if it opened up, taking insurance away from the sort of church-state control of employers that now exists, there would be real choices and real competition.

Congress seems to be busy finding ways to circumvent this - raising taxes on employer plans (this to lower costs???) and the like.

3 Posted by W. D. Groth at 06/27/09 08:01 PM

Your article on health care was way out of line. It sounded like it came straight out of Obama's mouth. Stay out of the political arena with your articles. It was not helpful and you had very few statistics to back up your statements. First of all your statistic that 62 % of bankruptcies were contributed to by health costs. The majority of the bankruptcys were due to buying non-health items on credit cards and taking out too big mortgages. They may also have had medical costs but that wasn't what sent them into bankruptcy. I believe preventive health care and children's health care should be provided by the government but everyone else needs to put the cost of health care at the top of their needs just as housing and shelter. Health care should be figured in before buying other items or for a mother to decide to "stay at home" as one of your examples did rather than paying for health care. My parents had no health care but they planned for it in their budget. The same people who aren't buying health care now are the ones who would be paid for by the hard-workers who are now paying for their own health care. We should START with preventive care and GRADUALLY add other care. Let's see if part of it works before we spend trillions of dollars. So far Obama's other plans haven't worked. Why do we need to hurry? You picked up and added as though it was fact that a new health plan won't be as expensive as what we have now. Where do you get your figures? That is the Democratic Party's mantra. Why would you quote that when there is no fact basis for it? We don't need Consumer Report following Obama blindly as too many non-thinking people are doing now as though they are in a high school pep rally.

4 Posted by Jack Dickson at 06/30/09 01:23 AM

Groth should read CU's prescription for change, which is a very well thought out proposal -- but, to it should be added standardized claim or event forms. The multiplicity now costs many $ and drives medical administration crazy. Then, there is the counseling service, which sounds a lot like the reverse mortgage counseling service, which doesn't work -- people don't know enough when they are "counseled." Even lawyers.

5 Posted by richard gayer at 07/01/09 02:08 PM

HEALTH CARE INSURANCE – NOT IN DOCTOR’S OFFICE
Keep Insurance Out of the Specialist’s and Family Doctor’s Office and Return to the Free Market

The debate about health care insurance has assumed that almost every non-cosmetic service must be covered, whether it is done in a doctor’s office, as an outpatient, or as a patient admitted to a hospital for major surgery. This assumption results in high costs, especially administrative expenses, because most covered events occur frequently in the lives of nearly all patients. Moreover, such frequent services have relatively low costs and so are affordable out-of-pocket by anyone with even low income, but the administrative costs added by insurance coverage drives the prices of these services beyond the reach of such people. Therefore, insurance coverage must in general be limited to relatively rare events whose treatment is necessarily expensive and requires admission to a hospital, and should require that patients pay 20 percent for such services without any “cap”. This will restore the free market to most of our health care system, in which the patient deals directly with the provider and pays for the services directly out-of-pocket. This is indeed a fairly balanced free market between small businesses (doctors’ offices) and consumers (patients). Neither an employer nor an insurance company should be allowed to interfere with this process, since it unbalances the market against the patient by replacing a small business with a very large insurance company or powerful employer.

Insurance makes sense only for rare events or events that can be made rare because they are largely under the control of the insured (plus very predictable events, like longevity-based life insurance). Common examples of such events are motor vehicle accidents, fires, and medical malpractice. Negligence causes such events, and their occurrence can be reduced through education and the exercise of reasonable care. Moreover, insurance for such events except fires is for the protection of others – persons harmed by the insured – and not for the protection of the insured person. Clearly, the purpose of health care insurance is totally different from insurance designed to protect others from the insured’s misconduct. And insurance that pays for future services to the insured defeats the free market in the provision of those services, especially insurance that includes an annual “cap” on patient expenditures.

Health care is really not insurable, since the individual has little control of his or her health. Health is largely determined by genetics and the environment. Good practices do not guarantee health and bad practices do not guarantee sickness. Avoiding athletic activities to avoid injury may reduce the need for medical services, but such behavior is neither sensible nor healthy. Careful behavior has only marginal effects on a person’s need for health care. Therefore, forcing people to pay insurance premiums to a private health care corporation for the right to live and breathe in the United States is both un-American and unconstitutional (as a deprivation of property – money – without due process of law). If payments for health care must be mandatory, they must be in the form of a tax, since a tax is a self-adjusting percentage of a person’s income. (If you make very little money, you pay very little tax, but you still get your health care.)

Employers should not contribute to health care (as distinguished from preventive measures). At best, they are interested only in providing short term care for the prompt return of their employees to work. Employer involvement, especially in paying for insurance, insulates users of health care from its true costs, so there is no incentive to economize. That is, it defeats free market forces. The present system is worst case, since small employers are individually rated and cannot associate with other small employers to spread risk. Just one very sick employee can cause a large rate increase.

Waste in a typical general practitioner’s office is largely due to salaries for clerical staff that handle insurance matters, but the sum of those salaries can exceed those of the doctors. In one office, six clerks support only two physicians and result in doubling the cost of health care. Without insurance, one nurse who doubles as a receptionist would reduce costs to the point where most patients could afford to pay the doctor directly out-of-pocket for their general practice care. In sum, we must keep health care insurance out of the doctor’s office and return to the free market there.

Thank you for considering this opinion.
Dick Gayer
Phoenix, AZ

6 Posted by Pam Joyce at 07/01/09 03:30 PM

I agree--we need to have standardization to be able to compare and understand how our healthcare coverage will fit each of us. Let's not forget, though, that we also have a relatively new, but increasingly popular choice called "Consumer Driven Healthcare."

"Consumer Driven Healthcare" is a membership type coverage system that reduces expenses, many times significantly. What I like best about it is that there are no medical limitations, exclusions, or requirements, and the membership fees are very, very low. There are a number of "Consumer Driven Healthcare" programs out there, but the biggest one that is leading the market is AmeriPlan(R).

I believe it would be helpful if easy comparisons could be made in this industry as well. Possibly the Consumer Health Alliance will be the organization that creates the standardization for these types of benefits. However, I strongly believe that AmeriPlan(R) would always come out on top. May I suggest you go to www.deliveringonthepromise.com/PJ2 for much more info about these benefit programs.

7 Posted by Deny Clark at 07/01/09 03:34 PM

If all we can get is health insurance reform then I would support this proposal but what I really support is a national health care service that everyone is able to access & hospitals are non profit & medical providers work for the Service at good salaries. We need to take the "fee for service" out of health care if we really want to cut costs/ prevent conflict of interest medical decisions & provide good care for everyone.
If Canada & and many other countries can make this work surely the USA can too.
Insurance companies are for profit which means they need to charge as much as they can & pay out as little as they can get away with. This does no service to consumers. Its time to end this costly "non service" that is bankrupting America & preventing universal access to decent medical care.

8 Posted by anambrose at 07/01/09 08:25 PM

When I was growing up Trolls were supposed to hide under
bridges. It appears they now lurk on websites that they never
ever agree with spouting stats from Rush, Hannity and Fox and being generally unpleasant while claiming the other side of any issue is spouting mindless propaganda. My second guess is that it works for the Health Industrial Complex and gets paid to fling smoke and mirror ad hominems like M&M's.

9 Posted by Thomas L. Carroll at 07/02/09 12:53 AM

Groth either knows nothing about the medical/insurance industry or has a vested interest in an insurance company. This is not Obama's plan, so don't even go there. Single-payer is working exceptionally well in other countries and produced the cost savings while maintaining health care making countries lie Canada, Taiwan, France, and England some of the best in the world and fear mongering has managed to put the US at number 36 and kept making billionaires out of disgustingly greedy insurance executives. Those millions gone bankrupt from medical problems are a fact of life whether you want to accept it or not Mr Goth!

10 Posted by Susan Thompson at 07/02/09 12:06 PM

I am totally committed to equality in the health care field. I don't care if you are a child parent who supports the child, or an elder, who will probably need the most care. All should be welcome to the best care this country can offer and freely, if for no other reason than to keep the working class working and supporting the government.
As to drug and prescription costs, I still think charity begins at home and if the drug companies can sell (for examp.) birth control products for $5.00 per month with no pre exam, in India then they can darn well sell it here for that, or the lowest price anywhere.

11 Posted by at 07/04/09 02:39 PM

There is currently an unholy alliance between health care providers and insurers. If you want care from a provider who has not made a "discount deal" with your insurer, you are denied that care. This is wrong! We need to rebel!
NO MORE "LET'S MAKE A DEAL HEALTH CARE!"

12 Posted by Dentists Palmdale at 07/07/09 02:57 AM

This is a very interesting article. We should have to choose which one is the best insurance for us, before purchasing one. We don't want to pay a high cost and we don't get to use it. It is useless, if it did.

13 Posted by Barbara Freitag at 07/10/09 12:30 PM

Budgeting for a family's healthcare now is impossible. At one time, 40 years ago, I could take my children to the doctor and be able to pay upfront. Due to the astronomical rise in cost, a visit to an internist to check blood sugar, blood pressure, etc., can cost more than $300. To force people, who may have not contributed in any way to their health situation, pay 20 percent of a hospital bill is ludicrous. Sorry, I can't "budget" the thousands of dollars a hospital bill entails. I can't control severe arthritis (which was in part caused by massive overdosage of prednisone for asthma, which I also couldn't control). I had an incidence in the 1970s when my blood was drawn for an arterial blood gas study that was actually for a person in the next room. I was told to let the insurance company know that the test was erroneously given and should be deducted. They paid anyway because it was too much work to avoid paying. Gee, I wonder if that has anything to do with rising health insurance costs?

14 Posted by Kathy at 08/01/09 12:44 AM

For once a common sense approach to revamping the too expensive health care industry. I am totally opposed to the "Obamacare" plans that are making there way through the house/senate, because as with any government program the red-tape that doctors, patients and hospitals will have to jump through is what drives up the costs. That, and the fact that the federal government will not create a sound immigration policy that stops allowing illegals to hijack our system. How ironic that I as a US citizen go to the hospital and rack up a $4,000.00 bill, that the hospital sicks every collection agency in the SW on me, and yet the illegal walks out knowing that they will not come after him because they would never be able to collect. I would also remind people that are disputing the bankruptcy rates of 60%+ due to medical expenses to keep in mind that it isn't just the cost of healthcare that kills, it's the cost of being unable to work and the like that contribute to the overwhelming costs that create havoc on one's pocketbook. Having suffered for the last 17 years from chronic/severe back pain, resulting in 7 major surgeries, I have been unable to contribute on a continuous basis to my family's finances in at least that long. The fact that I hurt myself at work and that workman's comp can get away with denying me coverage, thereby forcing me to settle for a less than $70k settlement has to be stopped. I have been forever impacted by the fact that I cannot sit for any length of time without extreme pain & muscle spasms that prevent me from obtaining employment of any kind, and yet the insurance company doesn't have to reimburse me for this loss is unexcusable. That is why any type of health reform must also include taking the profit out of the for-profit health industry. I was an active 20 something at the time of my injury and simply lifted a box the wrong way. Nobody can plan for what this type of injury can do to a family over the long term.
I also strongly oppose of abortion care being offered through a gov't sponsored plan, especially when they do not give me the right to end my life & suffering through legal means. Unless and until healthcare stops being a for-profit business we will never get control over the cost of providing it. I urge member of our gov't to read the bills that they sign and not make hasty decision based on false timelines for political gain by the democrats. This problem didn't happen overnight, nor can it be corrected overnight. Take your time and don't screw this up like the previous MUST have stimuluses that we were sold on, that have done everything but stimulate. American's want TRUE healthcare reform, not a half thought out

15 Posted by Bill Bloomfield at 10/04/09 02:46 PM

Act for reform! ACTUAL Reform!

For decades, Congress has put off ACTUAL reforms of our nation’s health care system, choosing instead to pander and attempt, at all turns, to nationalize the system. NEVER HAS WORKED, NEVER WILL WORK.

First, Congress needs to get out of the way of the market and allow it to flourish.

Second, any adjustments/reforms necessary can be done, if men/women of good faith can/will work toward REFORMING, not nationalizing. Can you say TORT REFORM?? That is a must to include in any reform package.

Any breaking of laws on the part of ANY Insurance company, Medical Support company, and, yes, elected officials, can be handled by existing law, some of which, undoubtably, need strengthing.

Most Medical insurance companies are quite honest and provide very good policies, with some for just about every pocketbook. One major problem in the industry is that MANY citizens do not want to pay their own way and EXPECT/DEMAND other taxpaying citizens pay it for them through transfer of wealth via the tax system, and a government HANDOUT check. This is UNACCEPTABLE, on ALL counts! ALL seem to want a Cadillac policy with a bicycle cost.

All any citizen need do is look closely at how the government has driven Medicare and Medicaid to the verge of bancruptcy, with its ineptitude, to realize that Nationalized Health Care is NOT a viable option, no matter what lies and half-truths that the incompetent liberals in the current congressional leadership are peddling.

16 Posted by Dr. Joseph Dittmer at 03/09/10 10:12 PM

Those who advocate for letting the 'free market system' work to get our health care system straightened forget it has been that very system that created the broken system we have now. Greedy insurance companies who use every trick in the book to cheat people out of coverage and who pad their pockets with unnecessary, unearned profits at the expense of people who deserved better have had their day. It is time to do what the rest of the civilized world has realized--health care can and is being offered, even in the US, cheaper and with less overhead by government groups (medicare, VA, state supported medical programs) than almost any for-profit company. Health care has to be a right, not a privilege. If not, how can we call ourselves an advanc ed civilization.?