Health Insurance Labels Coming Soon

In a groundbreaking move which could greatly simplify the process of shopping for health insurance, insurers will soon be required to label themselves, much like food products are labeled for nutrition content or cars for their price breakdowns. Health care labeling could be one of the simplest and least-invasive ways for insurers to attract new customers, while making the selection process much easier for the purchaser.

This labeling will encompass both price and scope of the insurance coverage. Pricing will be based on national average costs, not exact figures that individual consumers would pay, because the person being insured has much to do with policy pricing. Also, there will only be three medical scenarios which will be listed on these labels: maternal care, treatment for breast cancer, and treatment for diabetes.

“Today, there’s really no way for consumers to figure what their premiums are buying,” said Sabrina Corlette, who is a researcher at Washington, DC’s Georgetown University in their Health Policy Institute. The university is assisting in the label production process.

A health plan’s real value will depend on which health issues a policyholder experiences, but in the majority of cases the consumers who are shopping for insurance plans have no basis of comparison regarding treatment costs covered by a policy. “It’s the Wild West,” Corlette said.

These new “coverage facts labels” will be required under the Patient Protection and Affordable Care Act, the umbrella law which comprises the health care reforms sweeping the United States. The National Association of Insurance Commissioners, in an effort to comply with the PPACA, has been drafting the labels. The Association gave the actual job to a working committee composed of state insurance regulators, representatives of the insurance industry, and consumer advocates.

The committee has agreed to ask for public feedback and input on the labels’ early drafts, as well as to conduct extensive consumer focus tests for more detailed responses prior to presenting these findings to insurance commissioners at a state level. Once the labels have been approved they will be sent to federal authorities who will ultimately decide if and how to incorporate the labels into regulations for health insurers.

The labels are an integral part of the administration’s efforts to break down insurance industry jargon and costs so that individual consumers can truly understand what they’re buying. The law also makes it mandatory that insurance buyers get new, simplified plant benefit summaries which would be used for comparison purposes. The labels are supposed to be included in the final section of a benefits summary document given by each insurer. These new regulations are supposed to come into force in 2012.

“We want there to be as much information in the hands of consumers as possible,” stated America’s Health Insurance Plans spokesperson Susan Pisano. This group is an industry group which will be running testing with consumer focus groups. “But we want to make sure that the information is valuable from their perspective.”