While HealthCare.gov 3.0, the online portal offering health insurance options for 37 states and the District of Columbia, is vastly improved over last year's cumbersome model, it still has a long way to go.
Over the past 12 months, behavioral economists have criticized last year's smoother-running version of the website on a number of counts—it was still too clunky and demanded far too much information before offering alternatives.
The site provided no definitions for terms such as co-pays and deductibles, which might be understood by people who have insurance but are new terms for many first-time purchasers. The site relied on metal designations (platinum, gold, silver and bronze) that don't provide accurate guidance for individuals and families with different needs.
Those metal designations also may cloud some peoples' judgment. This was demonstrated by two behavioral economists in a simple experiment reported earlier this year in the New England Journal of Medicine.
The economists tested two groups of people who had the various plan choices described to them. While one group received an accurate description of the plans, the other received reversed explanations for the basics of the gold and bronze plans. That group was told that gold plans had lower premiums and higher costs for receiving care, the opposite of the actual case.
The majority of those with below-median math skills said they preferred gold plans over bronze plans, regardless of which plan was labeled as gold. Obviously, people of all education backgrounds and income levels appreciate quality. And years of watching the Olympics have trained them to go for the gold.
But while that option may make sense economically for a family that knows it will have high medical bills, it makes no sense at all for young fast-food workers without health insurance who have never been to the doctor as working adults and don't believe they need coverage—a profile of many of those who so far have resisted signing up for a health plan.
Their premiums, usually subsidized, are crucial to making the risk pools behind the insurance plans being sold on the exchanges work. The 10 startup co-op plans that failed after offering policies that attracted too many high-cost patients to their low-cost offerings learned that lesson the hard way.
We'll hear a lot about that during hearings this week on Capitol Hill and on the presidential campaign trail next year. And it could get worse if there's a high dropout rate among those with few healthcare needs who last year stumbled into high-premium plans. That's probably why the Obama administration issued a report last week noting that 23% of people who re-enrolled last year switched to cheaper plans, saving, on average, $40 a month.
Will it be easier for them this year? A quick tour of HealthCare.gov 3.0 shows that some of the main criticisms have been addressed. It is easier to navigate, and doesn't require front-end registration beyond an e-mail address.
After giving your ZIP code and basic information such as current enrollment and family status, age, whether you're a smoker or pregnant, and estimated income for 2016, it tells you how much of a monthly subsidy you will be eligible for. It then asks how much healthcare you expect to use in the coming year, carefully defining low-, medium- and high-use choices.
You can either click through immediately to plan choices (which you can filter by either premium or metal status) or click through a series of screens that offer guidance on definitions. Once you've defined yourself and what you think you want, the site offers a series of plans, with the lowest-premium plan listed first.
As a Web experience, HealthCare.gov 3.0 is a vastly superior model. But from the standpoint of behavioral economics, it still has basic flaws. It lists the plans in order of premium cost, not overall expected costs based on the purchaser's projected healthcare needs. People most often opt for the first choice offered.
There are also pages upon pages of options—at least in the state I studied (Illinois). You have to go through all of them and check a “Compare” box to bring up a screen that lists narrowed alternatives. “People freeze when presented with too many options,” a white paper from Deloitte University Press noted.
The Obama administration has lowballed its estimates for how many people will sign up for 2016 coverage on the exchanges, at least partly for political reasons. Some further tweaking of the website might help it surpass its depressingly low expectations.