Price, Price, Price: Health-Insurance Shoppers Have Priorities

The federal health overhaul’s big requirement that most people carry health insurance is still months away, but already insurers like Blue Cross & Blue Shield have a sense of what will matter most to consumers: price.

  • “To me, it’s all about money,” said Rob Roy, who compared plans in a consumer test for the insurer. Currently uninsured and working as a cook in a pub, Mr. Roy said he found the choices too expensive. He ended up opting for a competitor’s plan instead of Blue Cross.

To figure out who’s going to show up for the new marketplaces and what they want, companies have plunged into research. They have been setting up simulated exchanges for consumers to test-drive. WellPoint Inc., the insurer that may end up with the biggest presence on the exchanges nationally, has put about 55,000 people through these faux exchanges.

“You’re going to try to have a population of individuals who have never purchased this product,” said Raymond Smithberger, who oversees individual health plans at Cigna Corp. “It’s like buying a brand-new car if you’ve never driven before.” Cigna used the online simulations to help decide which state exchanges it would join, and to shape some elements of its coverage design.

  • Simulations by firms like Stonegate Advisors LLC, which conducted the insurer’s test-drive, have found that consumers often choose plans fairly quickly, without always looking in-depth at the benefit details. People with more health problems wanted richer coverage so they wouldn’t have to pay much to go to the hospital or doctor’s office.
  • Still, the focus on price, including the effect of subsidies, is a constant. Consulting firm Booz & Co.’s pretend exchanges showed that premiums were the most important factor in plan selection, followed by cost-sharing features like deductibles. McKinsey & Co., which tested about 150,000 consumers, found most would opt for smaller arrays of doctors and hospitals to achieve discounts.
  • “People were willing to trade off network access for price,” said Shubham Singhal, a McKinsey director who leads the firm’s health-care practice.
  • Blue Cross found the monthly premium was the most important thing for 48% of people, and one of the most important things for another 26%. It dwarfed other factors like prescription-drug coverage and copayments for doctor visits.
  • Blue Cross sponsored the simulated exchange last fall to get “a real-life glimpse into how people will behave,” said Jim Gallagher, the insurer’s vice president of marketing. The company tested around 500 people, but it struggled to enlist Hispanics, a key demographic; only four completed a Spanish-language version of the simulation.
  • On average, people spent just nine minutes on the process. And less than a third tried to access the definitions of key terms like “deductible.” That may raise concerns that they didn’t fully understand details of the plans, and insurers will need to help educate them, said Marc Pierce, president of Stonegate Advisors.
  • “I found it very difficult to compare the different options,” said Elise Loftis, who said she would want to seek advice from an agent. She wanted to know what the plans would cover in hospital costs. Her husband has had his hips replaced, which resulted in an infection and a second hospital stay, and the couple has a 3-year-old son. She chose a Blue Cross plan in the test.
  • The research is shaping Blue Cross’s decisions. The company is initially selling a “tiered” plan that requires consumers to pay more to see certain health-care providers, and next year it will roll out a new design with a smaller network, both approaches that can hold costs down.
  • As in the real exchanges, people had to enter income information to learn what federal subsidy they might get. Then they were shown tiers of plans, ranked as bronze through platinum, with platinum the richest and most expensive. They could also choose from three different insurers, and click to figure out details like deductibles.
  • Forty-one percent of the consumers said they would sacrifice a broad choice of doctors and hospitals in order to save money, even if their own doctor might not be in the plan’s network. Overall, Blue Cross plans were chosen by nearly 60%.
  • The insurer also isn’t offering any platinum plans to consumers, partly because the simulation showed they tended to draw people with significant health needs, a particular concern if it’s the only competitor with a platinum product.

A new, broad Blue Cross marketing campaign boasts of features it hopes will be inviting to consumers, like doctor ratings. Another ad focuses on the idea that consumers can get a refund the following year if they don’t use enough services to get through their deductibles—a design that tends to reward healthier people as well as encourage people to stick with Blue Cross.

*Modified from a WSJ.com article

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