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The Good, The Bad, And The Ugly Of Obamacare's Online Price Comparison Site
Tomorrow, for the first time, Americans will be able to easily compare health insurance plans. President Obama’s signature piece of legislation to overhaul the healthcare system, The Affordable Care Act, is betting that price comparison websites will disrupt health insurance the way Travelocity disrupted airline prices. It’s a nice theory, but crippling IT glitches, political roadblocks, and sneaky insurance options may throw a wrench in the President’s plans.
Here’s what you need to know about the online comparison program and how it could impact prices.
Basics
On October 1st, The Health Insurance Marketplace opens up to the public. Each state presents prices and features of various health plans in a (hopefully) easily comparable layout. Every health plan covers the basics like catastrophic insurance and prescription drugs; premium plans layer on features like physical therapy. If everything goes to plan (it hasn’t), enrollment begins Tuesday and health insurance coverage begins January 1st, 2014.
The Good
Since the early days of the Internet, economists found that easy price comparison online reduced the costs of all sorts of goods, from airline tickets to health insurance. The “growth of the Internet has reduced term life prices by 8 to 15 percent and increased consumer surplus by $115-215 million per year and perhaps more,” wrote Austan Goolsbee in 2000, a University of Chicago Professor of Economics and former Chairman of the President Obama’s Council of Economic Advisers
Unfortunately, hospitals and insurance companies have been quite skilled at obfuscating medical costs, even in states that required price disclosure (upon request by each individual patient).
At first blush, Obamacare’s mandatory transparency rules are a run-away success. Even before the health exchange officially opens, insurance providers are already racing to offer competitive pricing. in New York, price plans have already dropped a whopping 50%.
Before Obamacare, “If you’re in the individual market, you get screwed” says Ezekiel Emanuel, former healthcare advisor to President Obama and one-third of the Emmanuel brother triumvirate. “The brokers have an interest in steering you to a high price plan”.
Ideally, Obamacare will cut out the screwy incentives of insurance brokers and let consumers find the cheapest plans for themselves and their family.
The Bad
Having more choice doesn’t always result in sunshine and rainbows. Just walk down a grocery isle brimming with 20 different types of peanut butter, and it’s easy to see that when consumers are deluged with options, they take mental shortcuts that result in poor choices. “The Internet is very good at comparing single prices,” says MIT professor Glenn Ellison, who finds that complicated pricing structures can blunt the positive effects of side-by-side comparison.
Plane tickets are relatively simple: most people just want to get from Point A to Point B in the shortest amount of time for the lowest cost. Choosing a healthcare plan purely on price, however, could result in dangerously poor coverage.
“People may be totally motivated by the cost of the policy and spend not an adequate amount of time looking at the deductibles and the co-pays and what is covered,” says Kenneth Davis, CEO of Mount Sinai hospital.
The Health Insurance Marketplace is shaping up to be a complicated mess of options. “Individuals will have an average of 53 qualified health plan choices in states where HHS will fully or partially run the Marketplace,” boasts the Department of Health and Human services.
That’s a lot of choices to sift through.
When I walk into a Whole Foods trying to find a jar of nut better, I’m forced to mentally juggle a combinatorial nightmare of almond, cashew, macadamia, or peanut, and raw, organic, roasted, and honey glazed. After I realize I’ve wasted 20 minutes of my life trying to select a breakfast spread, internally I scream “I JUST WANT SOME F****ING PEANUT BUTTER”, grab the cheapest jar and rush to the register.
Health insurance could suffer from the Whole Foods nut butter dilemma, only instead of getting a sub par bagel schmear, a family of 4 finds it has to choose between college and healthcare for their chronically ill daughter.
“We need transparency about quality,” says Emanuel, “how do I know the cheapest or second cheapest is good or crappy?”
Emanuel predicts that “towards the end of next year”, there will be a cottage industry of websites offering better ways of comparing plans. “I would not tell my children to go become an insurance broker”.
The Ugly
Prepare yourself to be shocked: a massive government IT project is experiencing glitches. Technical problems will prevent both small businesses and the fine citizens of Washington D.C. from signup on the Tuesday launch.
Part of the problem is that the insurance exchanges are being run by the States themselves, unlike the airline industry which releases prices to the public, so that comparison websites can develop their own systems. I reached out to the HHS last week to understand why the government decided to handle this completely on their own and have yet to receive a response.
More experienced government agencies, such as the Presidents’ Office of Science and Technology Policy, have learned not to develop their own websites, and instead just release data to the wisdom of the Internet masses.
Perhaps more strange, the White House is turned into a mini version of Tiger Beat magazine to attract young invincibles. “Thanks for spreading the word. #ROAR,” Prezi O-B tweeted his BFF, Katy Perry, thanking her for spreading the word about the new healthcare exchange.
[https://twitter.com/barackobama/status/371827203840819200]
While Obamacare mandates coverage, it doesn’t mean that youngins will sign up in a timely manner or choose not to pay the fine ($95 or 1% of their income, whichever is bigger). Currently, 26.5% of 18-34-year-olds are uninsured. In order to bring down costs overall, Obamacare is betting on healthy young citizens to subsidize the costs of their elders.
On top of spicy tweets, the White House penned a high-profile partnership with viral video maker, Funny or Die, for a celebrity-fueled promotional video. Much of this hinges on Obama being able to make insurance cool.
And, of course, that’s not the only problem. There’s also politics. Several Repubican-run states have flat-out refused to cooperate with Obamacare implementation and help inform consumers, all while the House of Representatives has voted (unsuccessfully) 40 times to repeal or defund the measure.
18% of America’s GDP is hangs in the balance of this mess. All of these promises (and issues) are hypothetical; ultimately it all depends on your faith in a government-regulated free market and the ability of semi-educated consumers to make the smart choice.
I Believe I Can Fly With This Soon-To-Be Commercially Available Jet Pack
A few things come to mind at the mention of a jet pack.
The Jetsons come first, and then this hilarious video, in which Fox 5 News embarrasses itself with a water-propelled jet pack. But what if I told you that we’re about a year away from the first legitimately available jet pack for sale?
It’s true. Martin Jetpack, a New Zealand-based company, has just revealed the latest prototype of its jet pack, which is promised to be available in mid-2014. Though the name suggests otherwise, the P12 Jetpack is actually propelled by ducted fans, powered by premium gas.
Founder Glenn Martin has been working on building a jet pack for the last 30 years, starting in his parents garage. The P12 marks the 12th iteration of his dream, and the closest version yet to commercial availability.
Unfortunately for the (incredibly wealthy) average Joe, Martin will be releasing the Jetpack to first responders like policemen and firemen before bankers, NBA players, oil tycoons, etc. will have their chance at a purchase. However, Martin says the jet pack should be commercially available to anyone (who can afford it) by 2015.
As for pricing, it’s predictably high. The Martin Jetpack will cost anywhere between $150,000 and $250,000, excluding the cost of premium gas as well as any costs associated with getting a sports license in the U.S., and purchasing the necessary flying equipment. But hey, what’s $300k compared to feeling like you live in the future?
The P12 is said to reach a maximum of 46 mph, with a max flight time of around 30 minutes. In that time, at a normal speed of around 35 mph, the Martin Jetpack can transport an individual about 20 miles. The highest that this personal flight vehicle can go is 3,000 feet, but it’s recommended that the pilot remain around 500 feet.
Why? Well, flying at a lower altitude won’t give enough time for the safety systems to work. This includes a rocket-deployed ballistic parachute.
That said, acrophobics need not apply.
According to GizMag, the pilot will also need hearing protection, helmet, neck restraint, boots, and a fireproof suit.
So who’s ready to fly?
[via Gizmodo]
HireArt, A Job Applicant Screening Service Used By Airbnb, Cisco, eBay & Others, Gets More Affordable
Y Combinator-backed HireArt, a job applicant screening service which today touts business customers including Airbnb, Cisco, eBay, Gap, Facebook, General Assembly and others, is today launching a second, less expensive pricing tier designed for those who don’t need a full-service recruiter, but rather a curated feed of potential job candidates they can review themselves.
Launched last year by three college friends from Yale, Elli Sharef, Dain Lewis and Nicholas Sedlet, HireArt has until today been focused on offering employers a contingency service, where it took a success fee of 10 percent of the first year salary from those job applicants it helped to place.
At its core is this idea that reviewing candidates through a resume process is broken. Applicants like to exaggerate their experiences, and sometimes even outright lie about their abilities. Other times, great candidates are missed because their backgrounds don’t seem to match up with what the employer has in mind in terms of experience, leading them to slip through the cracks.
HireArt’s solution, instead, is to have job candidates actually do the work first. The applicants complete a series of tasks that demonstrate they have the skills needed for the job at hand. For example, they might write out some code for a developer job, or if they’re claiming to be an Excel expert, they might have to create an Excel model using a provided dataset. Meanwhile, creatives might have to come up with a product pitch.
Candidates applying to positions on HireArt can upload files, write out responses, or even upload videos, depending on the task. Employers can either review the applications on their own, or outsource that work to HireArt if they choose.
To date, 70,000 candidates have applied for positions advertised on HireArt from nearly 300 employers. Many of these companies are in the startup space, but some are bigger name brands, like Gap, Safeway, and Cisco. Facebook is a newer addition, having recently posted its third or fourth job.
According to Sedlet, HireArt’s business has been growing at around 20 percent month-over-month, but it’s so far been a “high-touch” recruiting service that uses software to try to bring the headhunting process online. Today’s launch of a more affordable plan is a move to bring HireArt’s services to an expanded customer base. The new plan is $595 per month, allowing employers to get a feed of applicants that are first curated by HireArt, and access to an optional account manager, if they need someone to speak to.
“The new product is aimed at companies who don’t necessarily want a headhunter because they’re expensive or they’re not quite right for certain jobs, but they still don’t have time to wade through tons of resumes,” says Sedlet. He adds that it’s still about simplifying the hiring process for these business customers, while also allowing them to retain more control.
The company uses a small team of “graders” to review the applications from candidates, using a rubric developed internally, so even the new pricing tier involves some human involvement during the “curation” process. But with the lower-priced tier, HireArt doesn’t provide its additional recruiting services, including scheduling interviews, negotiating salaries, or selling candidates on the job itself. Employers simply receive the applicant feed with work samples and video interviews, which they can also now share internally among colleagues at the company to get further input.
HireArt also confirmed that it raised $1.4 million seed financing in the form of a convertible note from Learn Capital, Felicis Ventures, InterWest Capital, TripleWest Capital, 500 Startups, Gus Fuldner and other angels.
Employers interested in trying the new service can use the discount code “TechCrunch” for 25 percent off. (Valid for a month from today’s date).
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