Thursday, December 17, 2009

Mindless eDrivel

[Welcome Industry Radar readers!]

One of the problems with online quoting services like
local, professional agent, one deals with a faceless, unaccountable person (whom one presumes is at least licensed in the state in which one resides) who answers questions from a script, and is ill-prepared to deal with folks who present unique or challenging problems.

Nevertheless, a lot of folks mistakenly believe that buying health insurance is really no different than buying a new computer monitor, book or slippers. So they fire up their PC's (or Macs), and head out onto the information superhighway looking for "a deal." Never mind that they are just as likely to get stuck as strike gold, and that they're unlikely (to put it charitably) to ever speak again with that anonymous agent at the other end of the intertubes.

So, Henry, why the diatribe?

Well, we recently received email from an outfit called "GoHealth," which had spent (one presumes) a pretty penny on a study which purported to show how consumers' health insurance choices were influencing, and influenced by, e-shopping for health insurance. The report (available here), is very pretty, and equally vacuous. As Bob responded when I asked for his opinion, "What are they smoking?" Mike was a bit more ascerbic: "It's not a glaring problem. It's a blessed solution. High deductible HSA plans begone! Hello, low premium, low deductible plans!"

The problem, of course, is that by focusing almost entirely on cost, rather than value, the conclusions are, well, absurd. And the fact that there are several logical inconsistencies does nothing to vindicate them.

Take, for example, the non-sequitor on the very first page: "In this current employer-based model, consumers do not actively participate in the research or shopping process ... That’s why millions who are now looking for health insurance turn to the Internet."

Hunh? If one obtains coverage through one's work, and it's subsidized by one's employer [ed: yes, we know that's not really the case, but that's another post], then by definition one is not out shopping for coverage. And if one is out shopping, it means that, for some reason, that relationship has ended.

And we're told that "[t]ypically, the employee is limited to a choice between a PPO and an HMO." Um, no. As we've pointed out, employers are looking more and more at consumer-centric health plans, such as HSA's and HRA's.

At the bottom of that first page, we're told that this report "reveals a surprising new trend."

One breathlessly awaits the details of that surprise, but to no avail. The only thing surprising in the mix of pretty pictures and meaningless jargon is that someone apparently paid good money to have this report published.

The report ostensibly details the buying process, but there's very little reality to be found therein. For example: "Consumers considered to be in the “purchase” stage include policyholders who fully submit an application and are accepted into coverage."

While that would be nice, there’s this process called ‘underwriting,’ which can create speed bumps along the way to that new policy. So one is left wondering about those who aren’t just “accepted into coverage,” but are offered a modified plan or premium, or perhaps declined. A knowledgeable, professional agent knows which carriers are more likely to accept a given risk, and which ones are more likely to offer favorable terms. Since this would be "off-script" for e-agents, it's no wonder that this important issue is completely sublimated.

In an effort to glom onto the current debate, the study hijacks the term "Insurance Exchange." One is tempted to admonish these folks to be careful what they wish for: under ObamaCare, they would be toast, as well. Still, it offers an interesting insight into the mindset of those behind this report: they're so impressed with themselves for cleverly turning that phrase that they fail to understand its significance.

Since I don't want to be accused of running up the score, I'll conclude with one last bit of fisking: this obsession with prices and how much less the consumer ends up spending than at the outset of the transaction. This way lies madness: as any experienced agent can tell you, you get what you pay for. Saving a few dollars in premium, but ultimately paying more than necessary for the coverage one really needs is no bargain. That local professional will help you understand why keeping the co-pay plan and raising its underlying deductible to save a few bucks is likely to end up costing you more than simply buying an HSA-compliant high deductible plan in the first place.

Bob explains this more succinctly: "Focusing on cost leads to poor plan choice by consumers. Carriers aren't dumb; every one of them have products that have been gutted to look good (from a price standpoint) on a spreadsheet. These so-called "best buys" are full of holes that can bankrupt you if something major happens." His point is neatly summed up thusly: "there is nothing wrong with those plans as long as you don't get sick."

But, of course, that wouldn't be in the script.
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