Obamacare exchanges help, but confused consumers are still spending too much

Introduction

Here’s the good news: 74 percent of people nationwide who enrolled in health insurance plans through the Obamacare exchanges rate their coverage as excellent or good. That’s according to a Kaiser Family Foundation survey released last Thursday.

Here’s the not so good news: There’s a better than even chance that many of those folks did not pick the plan that is best suited to their needs. As a consequence, they very likely will be paying more in premiums or out-of-pocket costs—or both—because their health-plan picking skills leave a lot to be desired. That’s according to a study published earlier this month by the National Bureau of Economic Research (NBER).

Unfortunately for those folks, they’ll keep paying more than they should. And they’ll not have a clue that they could be saving quite a bit of cash if they had the ability or took the time to become better insurance shoppers. That’s according to both organizations.

One of the goals of the Affordable Care Act was to make it easier for people to comparison shop for coverage. Prior to the availability of the exchanges created by the law, that was next to impossible for people who didn’t have access to employer-sponsored coverage. There was no single place to go to shop, and there were no requirements that health plans provide information in understandable language and in a format that enabled customers to make apples-to-apples comparisons. And of course there was another problem: before Obamacare, insurers wouldn’t sell them any kind of policy at any price if they’d been really sick in the past.

It’s little wonder, then, that the vast majority of people who have enrolled in health plans through the exchanges feel good about their selections, especially when you consider the way the health insurance world used to be. The marketplace is considerably more consumer-friendly today.

That said, buying coverage post-Obamacare is no walk in the park. It’s useful to think of the American health insurance marketplace, even with the consumer protections in the law, as a big casino—but without the ambience and excitement. And it’s also useful to think of many American health insurance shoppers as first- timers in Las Vegas. They might get lucky, but the odds are with the house.

When we buy health insurance, we are forced to gamble, to make bets with the house (the insurance company) that will affect our ability to pay for care if and when we need it. When we are at the point of enrolling in a plan, we have to place a bet on whether we’ll be able to go another year without coming down with some dread disease or getting hit by a semi. Should we pick a plan with lower premiums and higher deductibles or one with higher premiums and lower deductibles? Do we really want to take the time to see if the hospitals we would want to go to are “in network” or to see if the drugs we might need to take are in tier one, two, three or four? How much fun is that?

It was no surprise to me that the Kaiser survey found that 69 percent of the people who bought coverage on an Obamacare exchange in 2014 stayed with that plan in 2015. Employers that offer coverage have for years found the same inertia among their workers during open enrollment. Very few employees take the time to see if there might be an option available that would be a better deal for them.

In my 20 years in the insurance industry, I never once heard anyone tell me they were looking forward to open enrollment. The process is such a drag that most people are more willing to leave money on the table than spend time trying to figure out which of the 50-plus coverage choices represent the best value. And if they haven’t had to test the limits of their coverage during the past year, to find out just how much they would have to pay out of their own pockets if something really bad happened, they’ll likely tell themselves and Kaiser Family Foundation surveyors that they’re happy campers.

One of the reasons growing numbers of us are underinsured, as I wrote last week, is because we made bad choices when picking health plans. The researchers who conducted the NBER study found that the choices made by health plan enrollees “reflect a severe deficit in health insurance literacy and naïve considerations of health risk and price, rather than a sensible comparison of plan value.” They also found that older workers, women, and low earners were especially likely to choose unwisely.

They concluded that their findings “raise doubts whether recent health reforms will deliver their promised benefits.”

Those doubts are justified. As long as we have to buy coverage in a casino, those promised benefits are not likely to materialize.

Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.