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How to help Consumers choose the best Health insurance policy.

by reducing plan complexity, having a quality review system and computational resources to help consumer calculate benefits of a particular plan.

With the implementation of the Affordable Care Act or Obamacare, there will be a health insurance exchange market offering may choices to consumers. However the information presented will be complex and hard to understand for many consumers and this may lead them to make choices that are not very good for them.

It is therefore necessary to reduce complexity, increase information available to consumers and provide resources to do computation so as to compare options. This will help consumers choose the best health insurance plan for themselves.

The increase in consumer choice makes it important to make sure the consumers make rational and informed choices. The best choice will be the plan that offers highest quality care at the lowest price. If most consumers do this, then the health insurance exchanges will operate more efficiently.

Due to the complexity of the information presented to the consumers, studies have shown that most consumers will try to simplify their choices and choose an alternative that is satisfactory to them and not one that is optimal.

This problem is increased if the computational resources to help consumers analyze the information are limited. This is demonstrated by a study in employee 401K enrollment. Companies that automatically enrolled employees got higher participation rates than companies that allowed employees to enroll themselves. So the added task of filling the forms and enrolling prevented many employees from enrolling.

Since the ability of consumers to make rational choice is influenced by the complexity of the choice, information available about the alternatives and the computational and analytical resources available, we can help customers make better decisions by reducing complexity, providing more information on alternatives and providing computational resources to them.

Reducing Complexity.

The Affordable Care Act tries to reduce complexity of the health insurance options by defining a set of health essential benefits and grouping health plans sold in the exchanges into four tiers.

These tiers include Bronze, Silver, Gold and Platinum and are based on the value of the plan in relation to its cost.

This tier system reduces complexity for consumers and helps them make the best and optimum decision for themselves.

Increasing Consumer Information and Quality Reviews.

The use of a simplified quality assessment tool can help consumers make better choices. These assessment tools reviewed the quality of different alternatives by giving them star ratings. The choices with most stars are reviewed as best quality.

This also helps consumers make a better choice by choosing the plans with the best reviews.

Providing Computational Resources

The Affordable care act provides consumers with help calculating the affordability of insurance and the tax credits available for different people.

This will help consumers be able to calculate how any particular plan will fit into their particular financial and health situation hence be able to make optimum decision.


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