Why Insurance Exchanges Won’t Work: People Don’t Like Choosing Insurance
One of the big reasons I’m so pessimistic about the new health insurance exchanges created under the Affordable Care Act is the principle behind them. The idea is that everyone will be well- informed dedicated shoppers who will know how to select the best plan to fit their needs, which will reduce cost for everyone. Aflac’s 2013 WorkForces Report shows how deeply misguided this assumption is in reality.
Two numbers from the report really stick out. The survey found 54 percent of workers would prefer not to be more in control over their health insurance expenses and options because they will not have the time or knowledge to effectively manage it. This is completely understandable. Selecting the best insurance plan requires not only significant knowledge about every component of insurance, but also the ability to accurately predict the likelihood of future medical needs.
The other important number is 89 percent, that is the number of workers who choose to stick with the same plan year after year. This is in large part because many find the process so daunting.
A market where very few have the knowledge of what is the best bargain and where almost no one ever even tries to shop around simply can’t be effective. Looking at other countries where there is a “market” for health insurance indicates this will be a real problem. In Switzerland almost no one ever changes plans even though standardization makes it much easier to comparison shop than it will be here under Obamacare.
The way the “technocrats” claim the exchanges will be used and the way they will actually be used is likely to be very different. Health insurance plans are extremely complex, and expecting millions of people to every year to successfully spend days researching/shopping for their best plan is simply not believable.
Photo by Jeremy Brooks released under Creative Commons License