There's a learning curve with all online transactions -- banking on the Web, buying songs from iTunes. So how long will it take America to warm up to shopping for health insurance online?
And, more importantly, how long will it take us to shop wisely?
That depends largely on the architecture of the websites through which America will do its shopping, according to a new paper written by a University of Pennsylvania Law School health insurance expert and several other colleagues.
"I think it will take awhile," said Tom Baker, a professor of insurance law at Penn. "We're kind of in the dark ages" on the issue of Internet health care shopping.
On Oct. 1, Americans who lack health coverage can begin to shop for it through the online insurance "exchanges" mandated by the 2010 Affordable Care Act. Some states will build their own exchanges, and other states have deferred, allowing the federal government to build and operate those exchanges.
Once Americans warm up to the idea of buying health insurance online, the goal is then to get those shoppers to make the best purchase for their health care dollar.
The stakes are high: Overpay for an appliance on Amazon, you might waste $100. But as much as $10 billion a year, collectively, might be at stake for those who buy health care through the exchanges, and for the taxpayers who are partly subsidizing those purchases.
The issue? Calculating the best health insurance plan requires honed math skills as well as some long-term forecasting. One study, cited in the Penn paper, notes that when it comes to Medicare's "Part D" prescription drug benefit, only 12 percent of seniors pick the plan that is most cost-effective for them.
"Decision-makers do not realize that they are performing poorly," the paper said. "However, performance can be improved quite markedly by providing calculation aids, and by choosing a 'smart' default."
Price calculators help somewhat. Steering people toward a default "smart choice" helps as well. And it works best of all when those tools are used in tandem -- buyers seem to appreciate second opinions and make a better decision as a result.
"Without that stuff there, they're performing at the level of making a random choice," Baker said.
One regular trip-wire: wisely weighing out-of-pocket costs against the monthly premium. When buyers aren't given any guidance, they often gravitate toward plans that cost more per month, but have lower co-pays and deductible costs.
But for people in their 20s and 30s who may not go to the doctor very often, it usually makes more sense to go with a cheaper plan that has higher co-pays for doctor visits. In other words, a dollar is a dollar -- but buyers value co-pay dollars more than premium dollars.
It's a "strong and consistent bias," according to the paper, issued by Penn's Institute for Law and Economics, and a candidate for scholarly publication this autumn. (One test group that outperformed the rest was MBA students, who selected the most cost-effective plan 73 percent of the time.)
The bad news, the paper said, is that "consumers, left to their own devices, seem to make larger errors when choosing health insurance." And if people aren't making the right choices, at the right cost, the exchanges won't induce the hoped-for competitive pressures on health insurance prices, driving down costs for all.
The good news, Mr. Baker said, is that "people are looking for advice about what's a good choice," and the federal government seems to be taking the "choice architecture" of the sites seriously.
"If things don't work fantastically at first, there will be plenty of opportunities to do better," he said. "These sorts of things you learn a little bit by trial and error."
Contact Bill Toland: firstname.lastname@example.org. Distributed by Scripps Howard News Service, www.shns.com