Insurance Experts Hope New Rules Will ‘Empower Consumers With Information’

When the Department of Health and Human Services unveiled proposed rules Wednesday requiring insurance companies and employers to have simple, standard forms and information, few Americans were as interested as Mila Kofman and Sabrina Corlette.

Kofman, the former superintendent of insurance in Maine, co-chaired a National Association of Insurance Commissioners working group to develop the standardized information about health plans that is akin to nutrition labels on food. Corlette was a consumer representative to the working group.

Kofman, now at Georgetown’s Health Policy Institute, says this kind of information is “really important… and in 2014 it will become even more critical.” That’s when the health law greatly expands coverage and states will have health insurance exchanges – online marketplaces – where people can shop for coverage. “People will have to make decisions and if they are not provided with simple, usable information, it’s going to be very difficult for consumers to find appropriate insurance that works for them and for their families,” she adds.

Corlette, a research professor at Georgetown University’s Health Policy Institute, predicted that the HHS’ 60-day comment period will be critical. “People are going to need to take a look at these forms and weigh in.”

KHN’s Stephanie Stapleton talked with Kofman and Corlette and here are edited excerpts: 

Insurance Experts Hope New Rules Will 'Empower Consumers With Information'

Corlette

What in your view is the core of the consumer tools put forward with this

proposed rule

?

Corlette: The summary of benefits coverage form is going to be the most useful. In focus group-testing, people responded really well in particular to the coverage examples. They found this useful in helping them wrap their brains around what their costs might be for a certain medical condition, and really understand how much health care can cost. [That] is what most people they are going to look at and digest as they try to make decisions.

Insurance Experts Hope New Rules Will 'Empower Consumers With Information'

Kofman

What parts of the rule do you think might draw the most attention and comment?

Kofman: Most consumers find the whole shopping experience for health insurance very difficult. If you put [the information] up on the web, make it easy [ to access] – don’t create any obstacles and don’t require consumers to call a number to request information — it will help consumers be better advocates for themselves when it comes to choosing a policy.

What you will hear from the industry is that they can’t provide this because they have to do basic underwriting and they need to have basic information about where the consumer lives to provide price information. I think that’s all legitimate. After 2014, there is no underwriting and so there is no excuse not to provide all of this online without requiring any additional steps to be taken by the consumer.

Between now and 2014, however, there are ways the industry can provide useful information without having to require the consumer to request [it]. I think that is going to be an area to clarify in the final regulations. The administration is asking for a lot of feedback on that question.

What are some of the other issues?

Kofman: There is question of how much flexibility to give to employers and whether to allow employers to use some other format or lingo or another method of providing this information. If the administration decides [to allow a lot of flexibility], I think it will not be as easy for consumers to really get a better understanding of what health insurance is, how it works and really shop.

I would add another issue that’s going to be a point for the final regulations to resolve – that’s a big issue for employers – is whether they will have to produce a new document in addition to the Summary Plan Description (complex documents which large employers are already required to provide, under current law ). Of course, for employers, it’s an additional cost if they have to provide an additional document.

I certainly hope the final requirement will be a stand-alone document. Not only will it make it easier for workers to figure out what works best for them when they have choices with their employer but also when they move from employer to employer or from employer-based coverage to individual coverage it won’t be so foreign, so new.

Some criticisms from the industry perspective say this proposed rule adds another layer to the health law’s hefty administrative burden. Will these tools really change consumer behavior enough to make a difference?

Corlette: I actually find that complaint really frustrating because, in my experience, health plans provide consumers with a ton of marketing materials. Each health plan has its own unique way of describing its benefits. They use different definitions, terminology, formats. So sometimes it is very hard to figure out what the exclusions in the plan are, what the limits in the plan are.

I think that there’s a way to do this that is cost-efficient, but that will rationalize the current system so that consumers get [standardized] information from each plan that allows them to make apples-to-apples comparisons. I think that obviously plans will continue to have incentives to develop their own marketing materials. But to me it doesn’t have to be in addition to what they already do.

Also, you hear a lot of people say we need a market-based approach, free-market principles. The challenge with that argument to date has really been that the system right now for the consumer is completely opaque. They can’t get good information so it’s not a functional free market. The hope with this provision is that if we are going to have a market-based system that we at least empower consumers with information to make decisions that are right for them.

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Cost and Quality Insurance The Health Law