When Insurance Companies Control Your Choices

"Choice" has long been a conservative buzzword (except when it comes to reproductive freedom) but the real policy question is rarely between whether or not we have choices, but whether our policies gives us good choices or bad choices.

I've previously discussed how Sen. John McCain's health care plan amounts to "No Choice At All." [1] Our co-director Roger Hickey has observed his plan envisions "'giving people the freedom' to buy insurance in other states with weaker regulations." [2]

Today offers a fresh example of what that means.

My state of Massachusetts recently deregulated auto insurance to entice big national insurance companes to enter the market. My local Daily Hampshire Gazette (sub. req'd) had a reporter shop for insurance online [3] to see if he gets a better deal with Progressive Insurance than the local insurance he now carries.

What he found is confusion. Thanks to unclear industry jargon, he inadvertently asked for a reduction in coverage:

To compare apples to apples, I did my best to make sure the information I submitted to Progressive matched my current policy through Commerce Insurance. Sounds easy enough, but some of the insurance language tripped me up. I failed in three areas, unknowingly dropping or reducing existing coverage.

"Your insurance premium is lower, but you missed some coverage that you already have," said [local insurance agent Richard] Perras.

One of the changes involved my deductible. My current policy calls for a $500 deductible on a 1999 Subaru Legacy and $1,000 on a 2003 Hyundai Elantra, both of which are waived if I'm involved in an accident with another vehicle in which that other driver can be identified and is more than 51 percent at fault.

For the Progressive site, I did not select this type of deductible. Instead, I selected a standard deductible with no waiver based on who is at fault. Had I gone through with this coverage, it would become my responsibility to collect the deductible from the other insurance company in the case of an accident. Under my current policy, my insurance company takes care of that.

I also chose not take a rental car on the Progressive survey, an option on my policy.

Finally, the Progressive site defaulted to an $8,000 deductible in the personal injury category, probably because I have health insurance. I went with their recommendation, a move Perras said gave away a lot of coverage, including replacement services. These include things such as medical bills, funeral expenses and more.

"These are subtle changes, but they are three areas where the coverage is lower," said Perras. "You made some choices you didn't realize you'd made ... how will you or anyone else be able to compare if you don't understand what coverages are and what decisions you need to make?"

As you can see, without smart rules, it's very easy for companies to manipulate consumers with fine print and confusing jargon. If you can't make an informed choice, you're not in control, which means the choice is ultimately not in your hands.

With health care, we do need choices -- a guarantee that everyone has a choice between high-quality, affordable plans [4], which the Health Care for America plan [4] provides.

Expect to hear more conservative talk hyping the joys of "consumer-driven health care." But conservative proposals leave insurance companies driving the bus, leaving us with nothing but bad choices.