Proposed Rules Call for ‘Apples-to-Apples’ Health Insurance Comparison

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Finding the cheapest insurance plan for diabetes or breast cancer patients may soon be just as easy as flipping soup cans to compare calorie counts and sodium content.

Under a set of proposed federal regulations issued under the health reform law, insurance companies and group health plans would need to provide all potential customers with an easy to understand fact sheet that breaks down information about benefits, co-pays, deductibles, and coverage limitations.

Some plans already offer that kind of information, but typically not until after customers have already purchased the insurance. And too often, the packet is so long and dense it makes the average American’s eyes glaze over.

The new rules would mean all insurance companies would need to provide a simplistic breakdown of pricing and benefits in a standardized, four-page document that can be compared — “apples-to-apples” — to other plans, according to Dr. Don Berwick, chief of the Centers for Medicare and Medicaid Services.

For too long, Berwick said, patients have learned what’s covered by their insurance plan only after they become sick.

“How can you pick the plan that is best for you and your family if insurance plans are written in words you cannot understand or in type so small you can barely read it?” he asked in a blog post on the White House website Wednesday. “And how can you take advantage of the health benefits you have if you don’t know what your plan covers?”

The rules would take effect in March 23, allowing 180 million Americans with private health insurance to rest assured that “help is on the way to make sure you understand your health insurance,” he said.

In 12-point font — larger than most newspaper type face — the insurance providers will be required to lay out exactly how much a consumer will pay for everything from emergency care to mental health services and child eye care.

Three “coverage examples” will also be provided to illustrate what proportion of coverage a health insurance plan would cover for three scenarios: having a baby, treating breast cancer and managing diabetes.

To help cut the confusion even further, the packet will be accompanied by a glossary of terms commonly used in the health insurance marketplace, making clear the definitions for terms like co-pay and deductible.

Lynn Quincy, senior health policy analyst for Consumers Union, publisher of Consumer Reports, said in a conference call Wednesday that her organization found that most Americans like the new requirements and say that full disclosure helped them better understand their options.

“By making the terms of health insurance plans easier to understand, consumers are less likely to find themselves in health plans that don’t meet their needs,” she said. “Creating this health insurance disclosure will help reduce that confusion much in the same way that recent disclosures for mortgage terms or credit cards have helped to better inform consumers.”

Obama administration officials based the rules on recommendations from the National Association of Insurance Commissioners, which included representatives from insurance companies, consumer groups and academics.

But many industry representatives remain displeased and have thrown up staunch opposition to the announcement, which was supposed to have been made about five months ago.

Robert Zirkelbach, press secretary for the industry group America’s Health Insurance Plans, said in a statement that the benefits of providing the new summaries were not properly weighed against “the increased administrative burden and higher costs to consumers and employers.”

“Since most large employers customize the benefit packages they provide to their employees, some health plans could be required to create tens of thousands of different versions of this new document — which would add administrative costs without meaningfully helping employees,” he said. And that, in turn, could drive up premiums.

The Department of Health and Human Services will take such comments into consideration for the next 60 days before issuing a final decision.