When Should Exchange Enrollees Not Shop on Premium Price?

CoveredOpen enrollment began November 15th for consumers looking to purchase or renew health insurance on the Affordable Care Act’s state and federal marketplaces. While the second time around is likely to go more smoothly than the first, Drew Altman of the Kaiser Family Foundation reminds us that challenges still remain.

One of these challenges is the relatively complicated way the financial assistance consumers receive is calculated. Individuals and families that previously enrolled in marketplace plans will be automatically re-enrolled unless they choose a different plan. However, because the benchmark product used to calculate their initial level of financial assistance may have changed, the monthly cost to the consumer may also change.

So, should a consumer simply switch to an insurance plan that has a more “competitive” price? This will and should happen in some circumstances, especially considering those at lower income levels are extremely price sensitive. It is important to remember however that health plans are no longer all selling the same broad network of doctors and hospitals; they are selling distinct and often non-overlapping networks. So for the purposes of saving a few dollars a month, a consumer may have to switch healthcare providers. And this may ultimately end up costing the consumer more in out-of-pocket costs, as they have to establish a new relationship with a new provider that often results in new visits and duplicative tests that would not have happened otherwise.

If a consumer happens to have a chronic condition, switching healthcare providers is even trickier and potentially even more costly. We know that it is essential for chronic conditions to be consistently managed by a care team (assisting an engaged and informed patient). Switching care teams often generates substantial costs since consumers with chronic conditions often have very complicated treatment plans with multiple medications that have been overseen by a coordinated team of doctors, nurses and other healthcare providers. So if a consumer has to switch her care team, she is likely to incur higher out-of-pocket costs as a result of this transition. This may suggest that the consumer should stay with the same health plan or switching may make sense. Regardless, it is a difficult decision for a consumer to make alone.

This is not just the case for people shopping on public exchanges. Employers are increasingly providing a fixed amount of money, a “defined contribution,” for their employees to assist in the purchase of a number of different types of health insurance options sometimes organized on “private exchanges.” So the same dynamics will be there for many people who have private insurance as well as for those who are shopping on public exchanges. Expert assistance will be essential.

Cross-post from the McKenna Long & Aldridge Health Vision Blog.