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Monday, January 12, 2009

TMA LEGISLATIVE ISSUE BRIEF: HEALTH INSURANCE PRODUCT LABEL

Purchasing health insurance coverage today is increasingly complex. Health insurance companies offer a wide range of plans with different benefits, exclusions, and costs. It is nearly impossible to decipher the health insurer’s sales literature and then figure out a way to make a direct, product-to-product comparison.

Employers and patients need accurate, current, and honest information on copays, deductibles, and health plan networks to make decisions in today’s health care market.

The real need for this information is not when patients are sick or injured, but rather when Texas businesses and their employees are shopping for health insurance coverage. A California study in June 2008 examined what would make shopping for health insurance easier. It found that people wanted standardized information that makes it easier to do a side-by-side comparison of each product, much like the nutritional label on a soup can. Furthermore, study participants wanted information that is accurate, complete, and reliable.

Standardized and reliable nutritional labeling has made it much easier for consumers to make better food choices. Consumers can examine 20 different boxes of cereal and easily compare the product benefits, such as number of calories and percentage of fat, sodium, sugar, or protein. TMA believes the same standardized system could aid employers and patients when shopping for health insurance. The “health insurance product label” would enable employers and patients to compare health plans easily based on standardized measures of value. For example, the label could identify the premium and copay, medical loss ratio, average annual amount paid by the health insurance company vs. out-of-pocket expense paid by the patient, and out-of-network benefit – to name a few. Read the Coverage Facts: Individually Purchased Health Insurance, 2006 (PDF) report.

Medicine’s 2009 Agenda

  • Support the requirement of standardized reporting and value measures that health insurers/HMOs and their brokers could use to help employers and individuals make direct side-by-side product comparisons.

Medicine’s Message

  • Health insurance companies should be more accountable and more transparent about what benefits are available in each product they sell.
  • Brokers and agents should be required to use a standardized format when presenting the coverage options for each product line.
  • A 2007 statewide poll found that 72 percent of Texans feel our health care system puts insurance profits ahead of patient care.

See all of TMA’s legislative issue briefs in the Governmental Affairs section of the TMA Web site.

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