Choice – Commentary by Aaron Katz
Choice. The role of “consumers” in making wise decisions and, thus, providing the market with the “right” incentives to right itself.
The critics of the ACA notwithstanding, its most profiled feature – the insurance marketplaces for individual coverage – is a competition, consumer choice model. Granted, the ACA “restricts” these choices by requiring that offered plans all cover the same ten “essential” services and fit into four actuarially equivalent “Olympic medal” corridors, and banning use of pre-existing condition exclusions or health status-differentiating premiums.
Everyone seems to have bought into the theory of choice. Even our health policy leaders on the political left – Insurance Commissioner Mike Kreidler or state Senator Karen Keiser, for example – are promoting choice-expanding policies. Kreidler extols the ever-greater number of insurance companies and products in the insurance exchange. Keiser promotes greater price transparency.
Choice is good in many things. But is consumer choice the right foundation for an efficient, effective health care system? Can “consumers” (nee patients) choose wisely about their health and health care, even with perfect price, quality, and outcome information?
I just read an essay by Guggenheim Fellow Sophia Rosenfeld reviewing four books about choice in which she discusses limits to and perhaps distortions of the classical rational choice theory. In it, Rosenfeld sums up a decades-long body of research that suggests “the ability of any one of us to choose what’s in our best interest is severely limited.”
It’s not a lack of information the bedevils our choosing selves, but our propensity to favor what we know over what we don’t yet know, to poorly predict the future, to ignore facts when they don’t fit what we “want,” to overlook relevant information and overemphasize what is irrelevant, and to “get distracted” by emotions.
Emotions around a child’s or parent’s ill health challenge the most rational of us, and it seems unlikely that a more readable spreadsheet will overcome the strong psychological forces at play.
So, we are living through a social and economic experiment, this era of ObamaCare. Some evidence suggests the choice model may be reshaping health insurance (if not yet health care) in positive ways – premiums in the exchanges haven’t been as high or risen as fast as many naysayers predicted, more “young invincibles” enrolled than expected.
Whether the shape evolves in positives ways one, three, ten years from now may depend on whether health care reform overcomes, according to Rosensfeld, the human tendency that “when it comes time to choose, the impulsive, unreflective parts of the brain dominate the analytic parts.”