Insurance policies are getting coverage labels

I am a chronic food label reader, scanning everything I purchase in the grocery store to ensure it adheres to my particular dietary choices. I also read the dreaded fine print related to medications and their side effects, big purchases like cars, and contracts I sign--all in an effort to be a savvy consumer.

The one thing I can't easily compare, however, is insurance plan benefits. "It's nearly impossible for a consumer to make apple-to-apple comparisons," says Sabrina Corlette, a research professor at Georgetown University's Health Policy Institute. "It's the Wild West."

Because insurance policies are so complex and bogged down with unfamiliar, hard-to-understand terms and details, consumers are spending vastly different amounts of money for the same treatment. In fact, a 2009 study of three California insurance policies found that a patient would spend about $4,000 for a standard breast cancer treatment under one policy or as much as $38,000 under another, even though both policies had similar deductibles and out-of-pocket limits.

That's going to change next year when insurers are required under the federal health reform law to provide consumers with "coverage facts labels" that supply health plan benefits information on a standardized chart using the same plain English terms. A group of state insurance regulators, industry representatives and consumer advocates is drafting the labels. For now, they are only addressing treatment costs related to maternity care, diabetes and breast cancer. The group just announced it's seeking public comment on the draft labels and will begin conducting consumer focus testing for additional feedback.

The labels will hopefully help consumers better understand what they are purchasing, although the actual costs at a specific hospital may be different from the amounts listed on the coverage label. "But you will be able to look at the label and look at two different policies and figure out if you're a diabetic or if you have baby, under which policy it is likely that more of your costs will be covered," said Mila Kofman, co-chair of the working group and Maine's superintendent of insurance.

Such standardization is obviously welcome news to people like me who are used to scrutinizing product information and are often forced to decipher industry jargon before completing a purchase. It will make my job as a consumer much easier. But even people who aren't used to examining the fine print will likely appreciate the ability to compare like costs with like costs among different health plans. "It's a great way to educate consumers about insurance," says Randy Kammer, a vice president of Blue Cross Blue Shield of Florida and a member of the working group. It tells them what kind of information they need to consider when choosing a policy and "will create incentives for them to look deeper." 

Although these insurance labels are still almost a year away from fruition (barring any unforeseen complications and delays along the way), I am already eagerly awaiting them. - Dina