Study: States should limit number of plans in exchanges

Study: States should limit number of plans in exchanges

By Sam Baker – 05/08/12 01:45 PM ET

States should use their new insurance exchanges to narrow down the number of plans consumers can choose from, according to an analysis published in the journal Health Affairs.

The article says states should follow Massachusetts’s example as they create their exchanges. A hands-on exchange with the power to set standards on top of the federal healthcare law will help prevent consumers from being “overwhelmed” by the process of buying insurance, the authors wrote.

The lead author of the Health Affairs piece is Rosemarie Day, a former deputy director of Massachusetts’s exchange. The state established its own exchange as part of then-Gov. Mitt Romney’s 2006 healthcare law, which formed the basis for President Obama’s 2010 reforms.

Day said consumers in Massachusetts preferred choosing from a handful of carefully vetted, clearly described healthcare plans. She said there is less evidence for the model used in Utah, where any plan that meets certain minimum standards can participate in the exchange.

States have looked to the dueling examples of Massachusetts and Utah — the only two states with exchanges that predate the Affordable Care Act — as they try to decide how best to structure their new marketplaces.

Conservatives favor the Utah model, while consumer advocates say exchanges should be “active purchasers” that have the power to negotiate directly with insurers.

Massachusetts’s experience shows that consumers prefer an active purchaser model, even though it could limit their choices, Day wrote.

“Findings from consumer research emphasized the value of limiting insurance plan choices on the exchange,” her analysis states. “Specifically, early focus groups showed that consumers wanted four to six carrier options at ‘low, medium, and high’ benefit levels.”

Consumers said they were anxious about the complicated process of choosing an insurance policy, and reported that they felt “overwhelmed” by the marketplace outside of a structured exchange, according to surveys the Massachusetts exchange conducted.

“Consumers valued having a range of options to choose from but also wanted the ability to obtain detailed information and were suspicious of apparently hidden information,” Day wrote, with co-author Pamela Nadash, a professor at the University of Massachusetts, Boston.

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One Response to Study: States should limit number of plans in exchanges

  1. Pingback: IAB Small Business News : Thursday May 10 2012 « Independent Association of Businesses

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