Health Insurance Exchanges (HIEs) have garnered support on both sides of the political aisle during the health reform debate. A health insurance exchange is a central marketplace where consumers can go to compare plans and governments can enforce certain consumer protections such as minimum policy features. HIEs that exist currently tend to be on the state level because of the way insurance is sold and regulated. If the final reform bill includes a public option or non-profit co-ops and a mandate for coverage, the principal method by which non-insureds will be purchasing insurance will likely be through HIEs. 

Reformists like the idea of an HIE because the idea is that it fosters competition and will lower costs. Like Orbitz or Travelocity, the principal function of an exchange is price discovery or the ability to compare prices for plans on an apples-to-apples basis. So if I'm self-employed and I am the head of a household of four, I should be able to go to the HIE, type in my basic search parameters and get results that tell me not only what my monthly premium would be but also my co-pay, deductibles and out-of-pocket maximums.

The Commonwealth ConnectorIn Massachusetts, the state established the Commonwealth Connector after it adopted health insurance reform that mandated coverage. I typed in some basic information (zip code and birthdays) and searched for available plans for a family of four. I was presented with three levels of coverage (bronze, silver and gold). I selected the silver plan and was presented with three different types of benefit coverage (low, medium, high). I selected low and five plans were available, ranging in price from $744 to $996 per month. The five plans available were grouped together because they featured the same deductible, co-pay and out-of-pocket maximums. The site also presents a link to find a specific doctor and plan details. While it is helpful to be able to compare plans with their topline benefits in this way, the site fails to provide basic information to the user as to what is a deductible, co-pay or out-of-pocket maximum. Once a user clicks on more detail, the site has a footnote on the term Annual Deductible and instead of a definition is presented with the following note: The "Annual Deductible" is also referred to as the "deductible" in this grid. The deductible refers to the overall calendar year deductible, unless otherwise indicated. Some plans may have a separate deductible for specific benefits. For example, some plans may have a separate prescription drug deductible. A user who looks for an explanation of annual deductible is probably looking for more information on "deductible" not "annual."

eHealthinsurance plan detail page Assuming many of the users that will flood the system have never had insurance, they will need a basic primer on this industry jargon. A site that does a better job with handling basic terminology is eHealthinsurance.com. After going through the same search parameters, the site provided me with plan pricing and comparative details. Terms were linked to basic definitions and there was another link to a basic insurance primer.

What both sites lack is good information on the providers themselves. An important factor that consumers need to understand about their insurance providers is the carrier's medical loss ratio. The industry has also started calling this ratio the medical benefit ratio in recent years. A medical loss ratio is the amount of the premium that providers pay for actual medical services. The lower this ratio is, the less money the carrier pays out in claims. The industry medical loss ratio has been steadily declining in recent years. As a consumer, I may be willing to pay more monthly if a carrier's medical loss ratio is higher since the odds of getting my claim denied would be lower. Currently, it is not easy to uncover this information for a health insurance consumer. They need to go through state filings or the company's 10-K report in order to get it. 

Another factor consumers would want to know about would be the rate of consumer complaints filed with the state regulatory commissions for that particular provider. New York State publishes a yearly guide of insurance providers which contains rankings of carriers by the number of complaints received by the insurance commission, the timeliness of payment for claims, and the insurer's appeals process.

Health insurance, unlike an airline ticket, is not a commodity purchase and there are a number of factors that will affect a consumer's decision in addition to price. These factors include "Is my doctor part of the network?" to "Will my insurance company drop me if I put in a claim?" True competition cannot take place without transparency. Arming the consumer with this information at the point of purchase will be a good start.