Politics & Policy

Shopping for Health Insurance

No doubt, the Obamacare exchanges are going to be a mess for consumers.

Starting today, the Obamacare exchanges are supposed to be open for business. They are critical pieces in the Obamacare infrastructure. Not only are they supposed to be the place for consumers to shop for their health insurance, but they are also the delivery mechanism for the financial assistance the government hopes will entice customers to shop there for their health coverage.

Obamacare advocates hope potential customers will flock to the exchanges on October 1 like Christmas shoppers descending on retailers on the day after Thanksgiving. But caveat emptor: Here are a few tips for would-be exchange shoppers.

Eligibility. Some customers may have long been anticipating the opening of the exchanges. Others may not have expected to shop for coverage until recently, when they discovered their employer plans would be terminated as a result of Obamacare. Whatever brings them to the exchanges, though, potential customers should be aware that they will be screened to determine whether they are eligible to shop there. Most individuals whose earnings fall below the poverty line will be rejected from the exchanges and shifted to Medicaid, the government’s poorly performing health program.

Premiums. Potential customers should look closely at premium prices. Some may find that an added discount is available. For example, certain individuals between 100 and 400 percent of the poverty line may get a break, in the form of subsidies, on the premiums and related cost-sharing requirements. But even that price should be checked against the penalty for not buying insurance. For 2014, the individual-mandate penalty is $95 or 1 percent of one’s income (whichever is greater). But, in some cases, even with the discount, the price of buying coverage may far exceed the penalty for not buying it.

Choice of plans. Potential customers should look at the choice of plans — not just the number of options, but the number of competing health plans. For example, having three types of coverage offered by the same insurance plan is not the same as having three choices from three competing health plans. The fewer the competing insurers, the less pressure on them to offer a quality product at a low price. And look closely. In some exchanges, it may look like there are several competing plans, but some of those plans may offer coverage only in certain regions in a state.

Provider networks. Potential customers should check to see whether their preferred doctor, specialist, and hospital are on the list of accepted providers. This is part of the fine print. To keep premiums down, insurers often chose to limit their network of providers. As a result, many customers may find that the physicians and facilities they’ve grown to trust are not part of their plan. In some cases their plans may end up looking like extensions of Medicaid rather than private models.

Privacy. Finally, before signing up, potential customers should make sure that the information they are sharing with the entity helping them to enroll is secure. Potential customers certainly do not want this exercise to result in personal-identity theft or exploitation of other sensitive information. Better safe than sorry.

So again: Buyer beware. No doubt, shopping for coverage in the Obamacare exchanges is going to be a mess. While being touted as a “marketplace” for health care, it is shaping up to be a market in name only. The Obamacare exchanges are designed not so much to provide a free and open market for consumer choice in health care as to give bureaucrats a tool by which they can micromanage and regulate health insurance like a public utility.

For this reason alone, the Obamacare exchanges are likely to fail in making good on promises of providing quality, affordable health care for millions. As the problems become more and more evident, we can expect the Left to get increasingly vocal in its demands for more government to solve the woes it has created.

— Nina Owcharenko is director of the Heritage Foundation’s Center for Health Policy Studies.

Nina Owcharenko is a senior policy analyst for health care at the Heritage Foundation's Center for Health Policy Studies.

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