By Cassandra Mirasolo
In a world where the market for goods and services is becoming increasingly transparent, we neglect to notice how one market in particular is being further and further left behind: the market for health insurance.
With most goods and services, technology proves to be a powerful tool for researching products. Take Amazon for example; you can browse colors, sizes, and different styles of goods, all while reading open and honest reviews from other consumers who were once in your shoes. Another example, Facebook Marketplace, allows individuals who have previously bought goods from the user to rate their service.
How can it be that the American economy has developed into a system where it is easier to find reviews on jeans than to find reviews on health insurance plans? This cannot continue if we would like to see universal health insurance coverage.
The success of the Affordable Care Act’s provisions depends heavily on young individuals enrolling in health insurance plans, whether at the state or federal level. The first step in making a change may be to understand the data surrounding confusion and lack of transparency in shopping for health insurance options.
Data from a 2014 University of Pennsylvania study revealed that young adults were often not only buying coverage, but also comparing plans on the federal insurance exchange to options outside the marketplace, such as plans offered by their schools, employers, or their parents’ health insurance. Results from that study could leave readers feeling that our marketplace, a federally-run “exchange” for individuals and families to shop for and enroll in affordable medical insurance, and state-level marketplaces alike may not be providing individuals with the information they need to make informed purchasing decisions.
With technology being at our fingertips, we have gotten used to a world where we can browse the options and compare goods and services with those purchased and used by our peers, however, this does not happen to the same extent in the marketplace for health insurance.
The problem may not be that young adults do not want to buy into the health insurance system, but that they have expectations about online shopping that do not align with the health insurance market.
In the University of Pennsylvania study of highly educated young adults aged 19-30 in Philadelphia, one individual explained, “I just wasn’t able to comprehend all of the things on the Healthcare.gov – I got confused. I’m not a person to give up, not at all – but with the system, I just wanted to quit.” Additionally, the same study revealed that young adults were not even clear about the meaning of the term “deductible,” which presents a significant problem. We cannot have a functioning health insurance market without informed consumers.
This confusion seems to come from the lack of discussion surrounding health insurance and a market with unclear options. According to survey data reported last year by Forbes, 56%of respondents reported feeling “completely lost” in trying to understand health insurance specifically. This sentiment was most common among people on a family member’s job-based insurance (75%), people on COBRA (68%), and people without insurance (64%).
Typically, individuals on family members’ insurance plans are young adults who have not yet learned the ins and outs of the health insurance market. Some things that may remain unclear are how to obtain their own insurance, different types of plans available to them, and at what point they are required to get off of their parents’ plans.
Once we understand that this lack of transparency in the health insurance market is yielding negative effects on the entire health care system, we can begin our national initiative of educating, promoting awareness, and implementing price transparency for our so called “markets” for health insurance. Significant negative outcomes of consumer confusion are delayed payment of medical bills and avoiding care altogether. Consumer confusion surrounding use of a financing plan to pay medical bills can result in individuals winding up in debt. Similarly, pileups of medical costs make for a very stressful situation. Additionally, avoiding seeking care altogether is a safety risk for consumers, as they may wait until it is too late to diagnose a health condition. Data has shown that lower health insurance knowledge makes individuals more likely to delay or avoid preventative care. Consumer confusion yields visible negative outcomes, presenting us with evidence that increased transparency and consumer education must be the next step.
At present, the fatal flaw of our health insurance system is its lack of transparency. There is no logical way we can call the health insurance system a market without granting rational consumers the ability to examine their options and make informed purchases. After all, what other market doesn’t let you, the consumer, shop? Letting young adults navigate their options and shop in a way where price tags become visible will teach them what deductibles are and what plans best fit their health care needs.
The future of a health insurance market depends heavily on young individuals buying into the system, and the only way that this will happen is through education and transparency about health insurance and its prices.
Cassandra Mirasolo is a Decency LLC Summer 2022 intern. She holds a BA in Business Economics from Providence College. She will be a first-year law student at New England Law in Boston, Massachusetts this fall.