Which Health Insurance Plan Might Be Best for a Particular Consumer ?

Some consumers might be able to choose from a large number of health insurance plans. A particular consumer’s best plan depends on a number

of factors, some of which have been discussed. This final section brings together several of the concepts introduced in the report.

Health Issues
Perhaps the most straightforward component of a consumer’s selection of a health insurance plan concerns how many consumers the plan will cover. For example, is a self-only or family plan preferable? Another fairly straightforward consideration is the choice of health care providers. If the consumers to be covered already have chosen providers, or if they want to be able to choose providers at a later date (perhaps when they become sick), they need to investigate the network status of providers. The consumers can decide to restrict their choice to plans with networks in which their current providers participate, pay the higher OOP expenses associated with the use of out-of-network providers, or find new (in-network) providers.

It would seem like calculating which plans are affordable might be fairly straightforward for the consumer, because the consumer can find out the potential premiums and general levels of cost sharing before purchasing a plan. In addition, the consumer also has some idea of his or her (expected) income, assets, and other items that he or she might want or need to buy. However, affordability encompasses much more than premiums, cost sharing, and maximum OOP expenses. In particular, the consumer cannot know his or her OOP costs in advance. Despite the presence of clear cost-sharing rules, it is virtually impossible for the consumer to know how much and what type of health care he or she will need over the course of the year. Children may or may not get an ear infection, and an adult may or may not get colon cancer. A minor cough could turn out to be a cold, where no visit to a provider is needed, or it could be the flu, where a visit to a provider might be needed. As discussed in “The Challenges of Purchasing Health Care,” a consumer can only approximate his or her health status and use of health services over the year, and therefore can only roughly approximate the affordability of various health insurance plans.

Employment Issues
In some cases, ESI offers the best value for health insurance policies. But although there are advantages to obtaining ESI coverage, there are challenges as well. From the vantage point of the consumer, one of the biggest disadvantages is the general lack of portability. Because ESI coverage is tied to the job and not the person, any change in employment (such as going from full-time to part-time status or changing jobs) may alter the health plans, health care providers, or services to which the worker has access. Indeed, the consumer may no longer be offered ESI after an employment change. In addition, the consumer’s total compensation package may change when the employer offers ESI. Employers that offer health coverage may pay their employees lower wages because the employer uses the remainder of the employee’s compensation package to pay for part of the employee’s health insurance premiums. Workers who do not take up health insurance from their firms therefore may end up accepting lower wages for a set of benefits they do not use.

In short, determining which health insurance plan might be right for a particular consumer is far from simple. It involves, among other things, developing a sense of both what health care usage is likely to be over the term of