“... the interests of the public demand that by some legal regulation, companies be required to present to the public not only nothing that is untrue, but also all that is true regarding their condition.”—Proceedings of the First Session of the National Insurance Convention (predecessor to the NAIC), 1871.
States have long played an important role in shaping the decision environment for insurance consumers, although the issues and methods have changed considerably since the topic was first broached in the nineteenth century. State influence comes through multiple pathways, including the licensure of carriers and approval of products, the regulation of agents and brokers, and through the direct provision of information to consumers. While the Affordable Care Act (ACA) created some national standards for products on the individual market, this by no means has relieved states of this traditional role. The 12 states that have established State-based marketplaces (SBMs) have a heightened version of this responsibility with regard to marketplace plans, since they are literally presenting plans to consumers in a format designed to enable decision-making and enrollment. Many states have made considerable strides over the past several years in increasing the amount and quality of consumer information about the individual market, although progress is uneven. As the federal government may become less directly involved in the ACA marketplace and facilitate a bigger role for web brokers as well as the development of alternative products, state opportunities to provide important consumer information will only grow.
Despite the turmoil in the individual market this year, there was a surprising amount of progress in consumer support tools. Most of the few remaining SBMs that didn't have out-of-pocket cost calculators added them in 2018.
The presence of provider and formulary lookup tools have become nearly universal. Tools that provide information about plan quality and network size are still less common. A few states added quality tools this year, bringing the total of state-based markets with this feature to nine. Indicators of network size are the least common, and most SBMs still do not have them. As the number of carriers has declined in many market areas, state prioritization of quality ratings and network size indicators may be lessened, since in many markets there are fewer choices. Similarly, the interest in plan standardization and other active purchasing strategies have become less of a focus, as carrier participation has declined in many states, although Covered California has retained a considerable amount of control over plan design.
But opportunities for consumer decision support extend far beyond the SBMs. States with State-Federal partnership and State-based federally supported marketplace status provide a considerable amount of information to consumers about marketplace plans. At a minimum, they provide information about available plans, and tell consumers how to get enrollment assistance. Some have stepped up their efforts this year to compensate for federal reductions in outreach and advertising. Illinois, for example, partnered with web broker GoHealth in an effort to boost enrollment by improving consumer support.
There has also been an increase in consumer support activity in federally-facilitated marketplace (FFM) states, coming largely from state insurance departments. Pennsylvania, for example, maintains a plan choice tool that shows both on and off marketplace plans, to try to provide a higher quality shopping experience for off-exchange customers. Pennsylvania also sponsored state advertising for open enrollment this year, and has partnered with web brokers to help facilitate enrollment. South Carolina offers a guide that shows sample rates for marketplace consumers under various scenarios. New Jersey similarly offers expanded information about carriers and premiums. Yet the provision of this information is uneven, and a few state insurance departments still do nothing more than provide de minimus links to healthcare.gov and other federal websites, with no state specific information regarding ACA plans.
All consumer tools are not created equal, and the functionality of the decision support features on healthcare.gov still exceed those found on many SBM websites. In a number of states, for example, network and formulary tools refer consumers to static PDF files. Yet while healthcare.gov was once, without question, the most advanced website in terms of consumer decision support, states are making progress. The federal website lacks both quality rating and network size information, and lags behind many SBMs in terms of the total number of consumer decision support features. Given the reductions in outreach and enrollment spending for the most recent open enrollment period and other signals of reduced federal interest in the ACA marketplaces, the trajectory of ongoing investments in decision support features for healthcare.gov is uncertain. Federal interest in standardizing plan design will likely not increase, since CMS intends to discontinue their initiative to increase plan standardization with the “Simple Choice” option and has generally signaled an interest in increased flexibility.
Though it may reduce its involvement with decision support related to marketplace plans, the federal government has taken other actions that have broader implications for consumer decision-making. One is the effort to increase the role played by web brokers in the individual market. The other is the attempt to expand options for other kinds of plans, by eliminating the individual mandate and proposing rules that would loosen the requirements for association and short-term plans. Both of these moves have implications for decision support.
The administration has recently eased the process through which web broker entities (WBEs) (i.e. online brokers) can enroll customers in Qualified Health Plans. In 2017, it eliminated the "double re-direct" which had previously made the enrollment process cumbersome. Web brokers are potentially an important distribution channel that could positively impact enrollment, and many have developed sophisticated decision support tools of their own. In fact, WBEs that can assess eligibility and directly enroll consumers in marketplace plans that may ultimately render publicly run insurance exchange platforms unnecessary. However, the growing role of web brokers raises questions about what kind of decision support environment they should be required to offer. Currently web-based brokers are required to display information about all marketplace plans. Yet they are not required to sell or display any of the plans offered outside the exchange. Additionally, some WBEs sell both ACA-compliant and non-compliant plans, and may receive higher commissions for the latter, potentially providing them with incentives to steer customers out of the ACA risk pool. This trend could accelerate with the elimination of the mandate in 2019. Private web-based brokers will likely be involved increasingly in helping consumers make health insurance choices where publicly funded tax credits are involved. Tom Baker and Benedict Dellaert, writing in the Iowa Law Review, have studied the opportunities and challenges posed by this new class of financial intermediaries, and the capacities that regulators may need to develop.
The potential growth opportunity for non-compliant plans also has implications for consumer decision support. At present, most states permit some sale of limited coverage or short-term plans, with varying degrees of oversight, while a small number ban them completely. Proposed rules would allow short-term plans to have a duration of 364 days instead of the current 90, potentially widening their appeal. The National Association of Insurance Commissioners noted in a 2016 comment letter that many consumers bought short-term plans without truly understanding how they worked. They suggested that disclosure language warning consumers about the limitations of these plans was important, and that it should be provided by states. The potential growth of association plans creates additional opportunities for consumer education. As the individual market becomes more complex, state insurance regulators will play an increasingly important role in shaping the consumer experience, by regulating which plans can be sold, setting standards for brokers and agents, and by directly informing consumers about their choices.
Acknowledgements: Joel Ario provided helpful comments, and John Palatucci of Rutgers University provided research assistance.