People hate shopping for health insurance. Can Obamacare really change that?


Obamacare's reforms to the individual health insurance market are supposed to make people better health plan shoppers. (Chris Ratcliffe/Bloomberg)

Welcome to Health Reform Watch, Jason Millman's regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Jason with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, or sign up here to receive it straight from your inbox. Read previous columns here.

As proposed health insurance rates for the 2015 individual market continue to come in, the Wall Street Journal recently uncovered an interesting trend: The largest health insurers in a state are generally asking for the highest premium increases. That story was followed by news this week that the District of Columbia's largest insurer is asking for premium hikes much larger than the ones sought by its competitors.

The big takeaway from the Journal's story was this: "With dominant market share now, analysts say, carriers feel they have room to raise rates."

Now for the caveats. Even if an insurer is proposing a larger rate hike, it doesn't necessarily mean it would wind up with the most expensive plans — their plans this year may have been priced lower compared to the rest of the market and are coming more in line with their competition. Also, 2015 is still a big adjustment year, as insurers are starting to get a better picture of their enrollment mix. Finally, we're still dealing with proposed rates, which will undergo varying degrees of review before they're finalized, depending on the state.

Either way, it got me wondering: Just how much will people buying their own coverage shop around for a better deal on health insurance year-to-year? By creating a marketplace where plans have to compete for business under the same rules, Obamacare is supposed to facilitate the shopping experience. Some recent studies throw cold water on that idea, though.

Just 13 percent of seniors enrolled in Medicare's prescription drug program changed plans during the annual enrollment period, according to an October 2013 Kaiser Family Foundation survey that reviewed the first five years of program enrollment. Those facing the highest premium increases were the most likely to switch plans — anywhere between two and four times of the average rate of all enrollees who switched plans. Still more than two-thirds of enrollees who faced the highest premium increases stuck with their plans.

And less than 2.5 percent of people enrolled in employer-sponsored insurance in 2010 had changed health plans that year in search of a cheaper or better-quality option, according to a survey released last year by the Center for Studying Health System Change. That was pretty similar to the rate in 2003, the center said.

So, can we expect similar activity — or non-activity, rather — in the individual market in the Obamacare era?

Lynn Quincy, associate director of health reform policy at Consumers Union, said the experience of the employer-sponsored insurance market could be indicative of the new individual market. The employer market shows that people would rather just stick in the same plan each year if they could help it, she said.

"They have lives to lead, and they'll ignore these things — just like how we don't mess around with our 401ks," Quincy said.

Robert Laszewski, a consultant who's worked closely with the health insurance industry in the Affordable Care Act rollout, said last week's Kaiser Family Foundation survey on Obamacare's first enrollment period indicates that people in the individual market could be more active shoppers. In particular, the survey found that cost was the most important factor for people choosing a new ACA-compliant health plan this year.


There's also a very active policy debate taking place around the process for renewing health plans. The administration is expected to issue guidelines that could determine how easy it will be for people to stay in their existing individual health plans.

And then there's the technical question of how easily enrollment systems can re-verify an existing enrollee's income, which is essential for determining eligibility for federal subsidies. Laszewski said people who received financial assistance — which was about 85 percent of exchange customers this year — will likely have to go through the eligibility process again next year.

"That opens the door to people reconsidering who their carrier is and might lead to more switching — particularly based upon priced," he said.

Top health policy reads from around the Web:

Actually, health spending fell in the first quarter. "The U.S. economy contracted in the first quarter by the most since the depths of the last recession as consumer spending cooled. ... Outlays for health spending actually slowed in the first quarter, subtracting 0.16 percentage point from GDP. The Commerce Department previously estimated those outlays added 1 percentage point to GDP." Jeanne Smialek for Bloomberg.

Maybe we're not in as much pain as we thought? "When faced with intense criticism for her agency's approval of the powerful narcotic painkiller Zohydro, U.S. Food and Drug Administration Commissioner Margaret Hamburg turned to a sobering statistic:100 million Americans are suffering from severe chronic pain, she said. The 100 million figure has become a central part of the debate over the use of narcotic painkillers. ... That number — the equivalent of more than 40% of the U.S. adult population — is exaggerated and misleading, according to pain experts familiar with how it was derived." John Fauber of the Milwaukee Journal Sentinel.

Virginia GOP hires a SCOTUS heavyweight to fight the Medicaid expansion. Virginia House Republicans on Wednesday launched their opening salvo in an anticipated legal battle over Gov. Terry McAuliffe’s plan to unilaterally expand Medicaid against the wishes of the General Assembly. In a conference call with reporters, House Speaker William J. Howell (R-Stafford) trumpeted an analysis by former U.S. solicitor general Paul D. Clement, whom House Republicans hired to offer his legal opinion on a fight that has bitterly divided the Capitol. ... Clement, a partner at the Washington law firm Bancroft PLLC, served as U.S. solicitor general from 2005 to 2008 under President George W. Bush, and he has argued more than 70 cases before the U.S. Supreme Court." Jenna Portnoy and Laura Vozzell in the Washington Post.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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