Individual Health Insurance Markets That Work, Part Two
As an industry, we haven't been particularly focused on pricing the individual market, and the rules are changing with community ratings. I think carriers are rightly anxious about who is going to start shopping, the risk profile, and will we lose our shirts or make money. [Also] what' the appropriate balance of pricing a product attractively to draw customers without being so low that we lose money and it's not sustainable?
One of the key challenges on the exchanges will be pricing. It's a different set of circumstances in Australia, but we may want to look over there for what they have learned about the methodology and approach to pricing products for individuals. We'll have to work it out through trial and error here.
HLM: How does Australia approach pricing in a consumer-driven healthcare market?
Gordon: A leading consumer advocacy organization in Australia surveyed their consumers, and found that people were really surprised when they got a bill for certain services. As a result, they worked on implementing a framework called "informed financial consent."
In the U.S., we are familiar with informed consent. They have that, too. But, in Australia, it's almost like when you take your car to the mechanic; the mechanic gives you an estimate.
One of the things we think in healthcare is that it's too hard to predict the cost. You don't know until you get in there what procedures are going to be needed. I would say that it's just like your car. They don't really know until they get under the hood what things they're going to need to fix, but they can at least give you an estimate.
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