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Consumer Choice Clashes With the Affordable Care Act

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Increasing consumer choices in health care may have just gotten far less likely.

Recently the Department of Health and Human Services proposed that most of the federal health exchange policyholders, including the 83 percent who receive subsidies to help pay their premiums, be automatically re-enrolled next year in the same policy offered by the same company.

That's right, no shopping around. No consumers looking for a cheaper plan or one with a lower deductible or less onerous coinsurance for treating chronic illnesses or kids' visits to urgent care centers. No finding a new plan that may have friendlier customer service.

What happened to all that advice to consumers to check out the market for the plan that's right for them – one pitch currently used to promote exchange policies on Healthcare.gov?

Politics seems to have trumped consumer protection. Maybe the government wanted to ward off technical problems given all the uproar and confusion over website glitches when so many people struggled to buy a policy earlier this year. Plus, if it could get thousands or even millions of Americans to simply auto-enroll, that would help boost the number of people with insurance and head off criticism from the press and opposing politicos.

Americans will be locked in; that is, unless they take the proactive step of actively shopping in the exchange. But if experience with Medicare Advantage and Medicare supplement plans is any guide, most people will stay where they are, even if that means they will pay more money. Studies have shown that seniors on Medicare tend to stick with their original choices, especially for prescription drug plans, even though newer plans may offer considerable out-of-pocket savings.

The National Journal summarized the dilemma this way: People who stick with the plan they have now "are at risk for some of the biggest premium spikes anywhere in the system. And some people won't even know their costs went up until they get a bill from the IRS."

A Healthcare Reform Briefing Paper published in July by the actuarial consulting firm Milliman brought more bad news.  People who stay with last year's plan will receive the same amount of subsidy they received this year even though changes in premium rates will likely mean that their old subsidy won't be right.

Because some carriers have raised their rates for 2015 and other changes have occurred in the marketplace, Milliman estimates that exchange policyholders with low incomes will see their premiums increase between 30 and nearly 100 percent. People over age 50 will see the highest increases. "We get into a very dangerous situation if we just tell everybody they can just auto-enroll," Milliman actuary Paul Houchens told the National Journal.

This situation can be very dangerous for families, especially those who have had a hard time paying their exchange policy premiums even with a subsidy. Imagine finding out at tax time you owe the government a couple thousand dollars for a health plan you thought was within your budget.

This whole business of auto-enrolling consumers shows once again the hypocrisy of advocating that health care consumers act as free agents in the health care marketplace. Or that they have reasonable opportunities to make wise selections with access to necessary information. With the auto-enroll option, the government downplays choice for millions of low-income consumers knowing full well a good percentage of them won't "vote with their feet" and find a better plan.

Furthermore, the notices that federal exchanges send to policyholders will disclose the current subsidy they are getting but not the "net premium contribution" for the plan they'll be re-enrolled in. In other words, consumers won't have full information about what they will eventually have to pay. That doesn't square with the notion of consumer sovereignty, does it?

It will be up to the navigators and others who assist exchange shoppers to tell consumers what's going on. Will they do that, or will they be good soldiers and support the government's auto-enroll program?

More Blog Posts by Trudy Lieberman

author bio

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website, CJR.org, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.


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Health Insurance   Trudy Lieberman   Pay for your Health Care   Minority Health and Health Disparities   Health Disparities   Inside Healthcare  


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