February 27, 2009
Read your insurance policy lately? We thought not. State Sen. Kirk Watson, D-Austin, is an attorney and couldn’t make it through his own. But the murky soup that is the common insurance policy, he realized, is more than just a nuisance. It’s keeping Texans from choosing the best insurance for their money, and thus is part of our state’s health care crisis.
To fix it, Watson has proposed an elegant plan: black and white labels that bring to mind the nutrition facts on a can of soup. Under the boldface title “Insurance Facts,” each list would include the plan type, the monthly premium, the percent of expense paid by insurance and annual out-of-pocket payments for consumers.
In smaller type, the label would outline the plan’s annual deductible, out-of-pocket maximum, office visit copayments and further details such as lifetime maximum.
Watson has submitted the bill to the Texas Legislature, and is now shopping for co-sponsors and a House sponsor. He said he has heard lots of informal enthusiasm from fellow lawmakers on both sides of the aisle, but a pronounced silence from the insurance industry.
The Texas Medical Association relishes this idea, and so do we. No amount of labeling will change the gut-busting cost of insurance: For small employers in 2006, the average annual premium for family coverage was $11,310. But both for employers and the many individuals who have to fend for themselves — the number of Texans with employer coverage has dropped 16 percent in six years — knowing what they’re paying for is the next best thing.
In fact, a California study found, the gibberish that passes for insurance policies actually undermines health coverage. “A lack of confidence in the accuracy of plan descriptions and concerns about making the wrong choice or not understanding what was being covered,” the HSM Group found, “were cited by consumers as reasons why they did not have insurance.”
For buyers who take the plunge, that lack of confidence is still often justified, noted Lewis Foxhall, president of the Harris County Medical Society. All too often, employees will blindly check off a box on their workplace insurance options — discovering only when they have a major medical expense that the plan they chose won’t cover it.
A standard insurance label would end such surprises, which so often add bankruptcy onto the burdens of serious illness. Under Watson’s proposal, insurers would have to list their plan elements in a consistent, “apples to apples” order, visible in any written document promoting their products, allowing consumers to compare plans directly.
Choosing insurance, and paying for it, is a miserable task. But selecting wrongly can have life-changing consequences. Unfortunately, Texas insurance companies have done nothing to improve the transparency of their product — or for that matter, their processes or the way they spend their premiums. Product labeling, in a format American consumers are used to studying, can at least help Texans choose the insurance that sustains them best at the lowest cost.