In a 6-3 decision, the Supreme Court Thursday spared the Affordable Care Act from what would have been a death blow.
The Court’s action upholds the right of the federal government to subsidize low-income Americans who purchase health insurance through healthcare.gov, the federal exchange. Infamous for its rocky start, healthcare.gov now presents millions of Americans with price information for a list of insurance plans available to them where they live.
Healthcare.gov is now largely glitch free, but it — and state insurance exchanges — still need major overhauls, so they no longer lead Americans to make bad insurance choices.
Consider the way the exchanges divide health plans into tiers, based on metallic labels — of bronze, silver, gold and platinum. The bronze tier features plans with relatively low monthly premiums and high out-of-pocket medical costs, while the gold and platinum tiers feature more expensive and comprehensive plans. Thanks to these metallic labels, a consumer who faces a choice among, say, 18 insurance plans can choose instead to look at only the six silver plans, or the five bronze ones, a much less daunting task.
This sounds good in theory but, in fact, consumers don’t act in ways web designers might expect. Several months ago, two colleagues and I published an article in the New England Journal of Medicine reporting on an experiment we ran among bus riders in Durham, North Carolina. We gave people brief descriptions of bronze, silver and gold health plans and asked them which type of plan they would be most likely to choose. Then, to test whether the metallic label was unduly influencing their choices, we switched around the description of bronze and gold plans for half of the riders:
We discovered that gold plans were more popular than bronze plans, no matter which type of plans we described as being “gold.” In other words, people made potentially life-changing decisions based on assumptions about the colors rather than the actual information.
With both the state and federal health exchange sites, we need to pay more attention to how the principles of decision psychology and behavioral economics affect this process. As Richard Thaler and Cass Sunstein warned in their best-selling book Nudge, poor design can cause people to make choices that act against their best interests.
Consider Colorado’s exchange site, which lists health insurance plans from lowest to highest monthly premium. Does that order cause people to pay too much attention to monthly premiums, and not enough to other out-of-pocket costs?
Or consider the Massachusetts exchange, which presents information about the various plans in columns, with monthly premiums shown on the left, followed by information on co-pays, annual deductibles and maximum out-of-pocket expenses. Should the maximum expenses be on the left side instead? What size and color font will best highlight information consumers need to make their choices?
We don’t know the answers to all these questions yet, which is why designers of the health insurance exchanges should work closely with decision-science researchers to find out what works best. But, meanwhile, we do know enough to call for several design changes. For starters, the websites should make it easier for people to figure out which healthcare providers are “in network” for any given health insurance plan. Many people care a great deal about making sure their health insurance plan pays for the health care they receive from their current providers.
The websites should also make it easier for people to estimate the total annual costs with each plan—the sum of their premiums, co-pays, deductibles and other out-of-pocket expenses. d, these websites need to be guided by research on how consumers actually make decisions. (To read the rest of this op-ed, please visit The Sun-Sentinel.)