“Consumer Choice” and Complexity

One of the conservative mantras in recent years has been “consumer choice.” When Medicare Part D and Medicare Advantage Plans were designed, the availability of a variety of not-strictly-comparable plans was held to be a benefit to “consumers.” The Federal Employees Health Benefits (FEHB) program of health insurance plans available to federal employees and retirees was held up as an example of how “empowering the consumer” made for good insurance coverage – with federal employees having flexibility to change plans annually during enrollment “open season.”

I’ve been federally insured since the early 1980s. I’ve had the commonest federal health coverage since 1993 (Blue Cross Blue Shield Standard has the most enrollees with over half of those insured). However, this year BCBS Standard plan changes made me decide fast that I now needed to change my insurer. Coverage of out-of-network providers had been lowered markedly with a $7500 deductible for out-of-network surgeons. Although I haven’t had surgery in 50 years, I’m well aware you never know what weird malady you might get or what specific skills you might need, so that was a deal-breaker. [Incidentally, later on Congress became aware of this change and was irked – rightly – that OPM had allowed it. The change gave BCBS even more leverage over surgeons’ prices and could cost patients a bundle. Subsequently, for the first time in history, the federal enrollment deadline was extended this year and some BCBS changes were made – no $7500 deductible – but out-of-network coverage is still lower than previously and having evaluated the options, I am not interested any more in BCBS.]

I quickly eliminated a large number of my options. I was only willing to consider a nationwide plan not local insurers or HMOs. But intelligently comparing just the nationwide plans available to me took MANY hours. The insurance brochures follow a somewhat standardized format to aid comparability, but they comprise hundreds of pages. Happily, DC-based Consumers’ Checkbook publishes a first-rate, very helpful booklet each open season on making the selection. Even with that help, understanding my options was tedious, time-consuming, and dizzyingly mind-bending. [Each plan has its widely varying gotchas. Some insurers don’t pay network rates to a non-network provider at an in-network facility even if no one else is available. Others don’t want to pay for assistant surgeons. Some have low ceilings on hospice spending. Plans state catastrophic limits on spending, but sometimes pharmaceutical costs count toward the limit, sometimes not. And on and on . . .]

I narrowed it down to a few plans and have made a reasonable choice that I expect and hope to be pleased with. But, it’s all so complicated I’m still not certain that in the right (wrong) circumstances I might not have missed a gotcha. However, I believe I have chosen pretty well.

This year, comparing plans was a job that I (with an academic background, good health, and time) was willing and able to do. Realistically, most people are not able to evaluate sensibly such complicated options. I suspect most federal enrollees stayed with BCBS Standard this year even though with the changes they’d be better off in other available plans. I’m grateful I had time this year to do the work involved. Last year, I thought I probably should look at changing because of some other plan considerations. But I had a stressful and demanding job situation at that time, so I simply could not – and did not – do so. Most people are neither willing nor able to take the time to thoroughly read hundreds of pages and evaluate detailed options. So, they either rely on inertia (as I did last year) or they choose on something absolutely stupid – like the amount of the co-pay when they have a routine doctor visit.

Medicare Part D and Medicare Advantage plans put a similar burden on people. The old, ailing, or disabled are even less likely to be able to compare disparate, complicated plans. In the fictional ”consumer choice” fantasy world where everyone did take the time to choose intelligently, the aggregate time burden would be enormous. Here in the real world, most people don’t (and often realistically can’t) choose on the basis of considerations most material to them. They discover the adequacy of this year’s plan only if and when it ends up causing them problems – then they change in a subsequent year. Meantime, they may have incurred debt or been unable to meet medical needs. Most people are healthy. When plans are judged by last year’s experience, plans can keep most enrollees despite coverage gaps, because enrollees won’t uncover problems till they get sick (when plans are not sorry to have them switch away).

Although I’m happy to be in FEHB, I don’t think “consumer choice” is what has made FEHB better than much other health insurance. I think what has historically ensured its value is that federal provision of employee health benefits is fairly generous and that the Office of Personnel Management has looked out for federal workers. With OPM keeping a close eye, almost any plan selected has been a pretty decent choice (they fell down in their responsibility this year on the BCBS contract – the lame explanation of an OPM spokesperson can be found here. But FEHB is not, despite numerous claims, an advertisement for “consumer choice.” Consumer choice simply doesn’t have a chance of being a guarantor of quality without controlled, standardized, comparable policies.