One feature of health reforms and health exchanges is the standardization of product offerings, in this case the package of health benefits. This standardization is believed to heighten competition, and to increase consumer understanding of the product and ability to make good comparisons. A paper from the National Bureau of Economic Research utilizes the experience of the Massachusetts reform and health exchange to examine effects of policy standardization. (NBER Paper) Health insurance policies are not easy to understand, and regulations have actually made them more complex and confusing. Standardizing levels of benefits and presenting simple, important information helps with consumer decision-making. A number of companies also sell software that helps consumers understand what benefits may be best for their situation and hopefully the exchanges will deploy this functionality. In Massachusetts, when reform became effective, an exchange became the primary method for individuals to find coverage. As benefits were standardized, health plans could still differentiate on provider networks and brand, but because the standard benefit packages, and the price associated with them, was the first item presented to consumers at the exchange website, they tend to focus on those items. After standardization, enrollees tended to choose richer benefits and plans with lower deductibles, which while they cost more, provider greater overall value.
The researchers also devised an experiment which indicated that both standardization of the menu of choices and the interface used to present those choices contributed to this effect. In essence, policymakers were making a choice for consumers that benefit package and accompanying price should be the primary factors upon which they select health care coverage. If provider network composition had been selected as the primary item presented to consumers, the results might be different. The method of standardizing and the choice interface did shift market share within the state among health plans, but in general health plans were able to figure out how to continue to maximize profits. The research validates the importance of considering the design of products to be offered on the exchange and how those products are presented to consumers. It such also be recognized, however, that consumers should be able to decide for themselves what factors are most important in evaluating choices and to see information presented in a way that emphasizes those factors.