No Duh Healthcare Consumers

Uwe Reinhardt’s explanation of why healthcare costs so much in the U.S., “It’s the prices, stupid,” has become ubiquitous in the industry. People use it in published research papers, speeches, PowerPoint presentations, reports, social media posts and even blog posts.

The beauty of the explanation is its simplicity. It applies to most of the behaviors we see in healthcare today. Why? Because healthcare functions just like any other industry in the U.S.

Case in point is a 16-page report from the Urban Institute and the Robert Wood Johnson Foundation on how people choose ACA health plans on state and federal health insurance exchanges. (I still can’t bring myself to say “marketplace.”) The short answer is: It’s the prices, stupid.

Here are the details. The report is based on plan selection and enrollment data for 2023 from all states. Overall, of the nearly 15 million people in the study pool:

• 57.9%  chose a silver plan.
• 26.3% chose a bronze plan.
• 15.8% chose a gold plan.

When broken down by income, the percentage of people who chose silver plans dropped dramatically as people’s income went up as they no longer qualified for tax credits that covered most or all of a silver plan’s premiums. For example, at 100% to 150% of the federal poverty level, 81.4% chose silver plans. At greater than 400% of the federal poverty level, just 11.3% chose silver plans.

When the researchers looked at plan choice and enrollment data from the federal health insurance exchange only, they saw a similar pattern. The percentage of people with silver plans dropped to 56% this year from 71.6% in 2016 as premiums rose and tax credits came down. The percentage of people with bronze plans rose to 33.4% this year from 20.7% in 2016 as they sought out cheaper health plans.

The researchers concluded that people who buy health plans on state and federal health insurance exchanges “largely chose plans based on price.”

If I were back in grade school, I’d say, “No duh,” to the researcher’s conclusions. It’s not as eloquent as Uwe’s explanation, but it gets the point across. Consumers in healthcare behave just like consumers in any other industry. We need to keep reminding ourselves of that as we build a new healthcare system that serves customers, not incumbent healthcare sectors. That’s the real value of the new report from the Urban Institute and the Robert Wood Johnson Foundation. Keep ’em coming.

Thanks for reading.