The Case of the Missing Health Insurance Premium

By Trudy Lieberman

The Department of Health and Human Services recently announced that health insurers and employers must provide more information to consumers shopping for health insurance. The ensuing coverage, shall we say, was a classic case of journalistic bungling. Reporters took what HHS officials fed them and crafted their pieces for public consumption. But the stories were confusing--in some cases flat-out wrong--and did not exactly offer the clearest of explanations about what's supposed to be a clearer process for buying health coverage. I'd wager the public didn't understand much of what the media dished out, and probably won't until they actually start shopping for coverage again in the fall and find the government hasn't made it easier after all. Most media stories, like this AP dispatch, got the main point :

Private health plans will have to provide consumers with a user-friendly summary of what's covered along with key cost details such as copays and deductibles. And because the summaries will use a single standard format, it will allow "apples-to-apples" comparisons among health plans that are not possible now.

The report that HHS released to the media discloses some important numbers: the amount of the deductible; what services don't count toward satisfying it; what's not included in the out-of-pocket limits, like premiums and charges from doctors who balance the bill; the copays; and, probably most important, the amount of coinsurance--the percentage of a bill patients must pay, which is increasing with each passing year.

But insurers and employers do not have to tell consumers how much a policy costs--in other words, no premium information has to be given. Yep, that's right--the key piece of information needed to make a good decision is missing. When insurers design a policy, they consider the interplay of coinsurance, copays, deductibles, coverage, and, of course, the premium, which lets them know what price point will make a consumer say "yes." Price is the bottom line for consumers, but it's poison for sellers, who fear a shopper might choose a policy with a lower price, other things being equal. So much for that price competition that was to solve all the ills of U.S. health care.

Most stories downplayed the importance of the premium omission. Sarah Kliff on her WaPo wonkblog said the information "got slightly pared back." A Detroit Free Press story did not mention premiums, nor did a short item in USA Today based on the AP story. The Los Angeles Times simply said the administration "dropped a requirement that health plans include premiums on the forms," and noted that consumer groups applauded the regulations anyway. Ron Pollack, the head of Families USA and health reform's biggest cheerleader, sent out a statement that didn't mention the premium omission.

The AP called the missing info "a shortcoming" and then gave the administration's reason for omitting it. Offering premium information is too difficult because, the AP reported, "insurers can currently charge more for the exact coverage to people in poor health." That's true in the individual market, but not in most large group markets, where all employees--sick or well--in the group generally pay the same price for any given health plan. Furthermore, even a general premium for shoppers in the individual market would be helpful in comparing offerings, as long as they understand that until 2014 they might be surcharged if they are sick.

The stories missed a larger point. Jost told me "premium disclosure is not required by statute." Chalk that up to clever bill drafting. The administration was trying to add it to the proposed regulations circulated months ago, but Jost said "plans and employers pushed back. It was one place to give." HHS official Steve Larsen did his media walk-back. "People have premium information. They will have that. The goal of this provision was to focus on coverage, benefits and how they interact," he said. In the disclosure pages I downloaded, premiums are mentioned almost as an afterthought, noted in the last section of the last page under the heading "Are there other costs I should consider when comparing plans?" The disclosure form says "it's an important cost." Duh!

Then there's the matter of how disclosures should be made, which deserved explanation. The disclosure rule is complicated, and consumers are not treated equally. Employers and sellers can make disclosures electronically for employees already enrolled in group health plans, for employees who are not already enrolled in group health plans, and for individuals who are "purchasing" insurance. These employees are also supposed to receive an e-mail or a postcard advising them they can ask for a paper copy. But for individuals who are simply "shopping" for coverage, sellers can post disclosures on healthcare.gov. In other words, a paper copy simply supplied by the seller or employer is not readily available.

Wait, there's more. Those currently enrolled in a group health plan must consent to electronic disclosure in most circumstances. The fact is consumers will have to make some calls to learn the premium, may have to request paper copies (or investigate some website) if they want to lay the offerings side by side, and will still have to read the fine print, although the AP told readers there would be "no fine print." This adds up to a complicated shopping experience, despite some improvement in clarifying and standardizing insurance terms.

What was needed from the media was analysis and sharp questioning about what these new disclosures would really mean for consumers in terms of ease of use and availability during the shopping process. We know consumers hate shopping for insurance, and take shortcuts to finish the task as fast as they can. But instead of helping them through this dreaded chore, the media gave the Department of Health and Human Services a free pass.