My Musings on Silver Plan Pricing Stratergies

[leevena]

Good point Leevena,
I was referring to the the most expensive plan out of 10 or 15 with same benefits and and comparable network. A plan on the exchange "in name only".

The exchange model is doomed to fail because of structural issues. There was a program similar to this in California called PacAdvantage. It required carriers to offer 4 (i believe it was 4) plan designs that all carriers had to follow. The idea being that employers and employees now had choice/competition. Employees would choose based on brand name, cost, and network.

PacAdvantage started out with many carriers, with the same results. The lower cost plans attracted the good risk and the higher cost plans attracted the bad risk. After a few years of being the higher cost plan, the carrier would go away. Next up was the #2 plan, who then became the #1 highest cost plan. Over time that one went away...and soon PacAdvantage went away.

Over time there will be 2, maybe 3 carriers available in the exchanges. You can count on one of them being the local Blues plan and then someone else of the big boys (Humana, CIGNA, Aetna, United).

 

[Post Quartermaster]

How many 21 year olds don't have parents?

If the parents are required to have healthcare, and the child is ineligible for subsidies if eligible for coverage under parents, do you think a lot of 18-26 year olds will purchase sans-subsidy?

I recognize, whether they're individuals or part of a family, those healthy young adults will end up in carrier's blocks regardless. Being in the block is more important than what tier they're on from an actuarial standpoint.

I'm just pointing out that the issues surrounding subsidies of 18-26 year olds may be a non-issue, or at least uncommon.

I don't know much about SC rates, but I assume you're age banded because you gave an age, and I assume that issue clears itself up a bit with the higher premiums that come with family plans and older individuals.

I know plenty of 21 y/o's - though there are exceptions, most of them are no longer claimed as a dependent on their parents tax return.......

 

[sman]

Lee, normally I would agree, but this is different. The low income crowd will spend as little of their own money as possible which means opting for the lowest overall premium.

I am sure some folks will evaluate other aspects, but I really don't expect a bunch of Einstein's dissecting each plan, reviewing networks, Rx formulary, etc.

This is especially true after being put through the wringer on the financial application for subsidy qualification.

Carriers don't want exchange business and will do everything they can to discourage buyers. If someone does wander in to their plan they will make sure there are plenty of booby traps to discourage claim payment.

Bob gets 5 stars because he said "booby".

 

[leevena]

Lee, normally I would agree, but this is different. The low income crowd will spend as little of their own money as possible which means opting for the lowest overall premium.

I am sure some folks will evaluate other aspects, but I really don't expect a bunch of Einstein's dissecting each plan, reviewing networks, Rx formulary, etc.

This is especially true after being put through the wringer on the financial application for subsidy qualification.

Carriers don't want exchange business and will do everything they can to discourage buyers. If someone does wander in to their plan they will make sure there are plenty of booby traps to discourage claim payment.

Bob, I completely agree with you, no disagreement at all, costs will be a significant driver for lower income people. What I am saying is that for those people who choose a higher cost plan (and remember for the most part the benefits are similar) they are looking beyond cost and it is usally at the network. And if they a are looking at the network it's a high probability that they are higher risk people. As you know you only need a small percentage of high/bad risk in the pool to make it go south quickly.

 

[RayNY]

PostQuartermaster,

"Dependent" has a different definition in for this rule: A group health plan or insurer may base eligibility for dependent child coverage only in terms of the relationship between a child and participant, and may not deny or restrict coverage based on factors such as financial dependency, residency, student status, employment or marital status. The health reform regulations do not provide a definition of "child" for these purposes. (Via UHC's definition, Dependent Coverage to Age 26 - Health Care Reform Provisions)

Argument's sake, I'm under 26, haven't lived at home for a decade, graduated college, support myself 100%, and even had employer sponsored coverage. Because my Mom birthed me, I was able to go under her (nicer PPO Family Plan) at no additional cost. My married, non-student sister, with a child, is also eligible (although the husband and kid are not).

 

[Yagents]

Higher income will pay more for a bigger network as they care about their future medical care options. Just look at MA vs Med Supp as an example.

 

[ActuaryGuy]

Carriers don't want exchange business and will do everything they can to discourage buyers. If someone does wander in to their plan they will make sure there are plenty of booby traps to discourage claim payment.

Agree with everything else except this last part. No idea where you are getting this from.

The concern over risk from some in this thread (not all) seems way overstated - you are all aware that "risk adjustment" across carriers is part of the new world, yes? Plus reinsurance protection, and risk corridors... Carriers with a good understanding of the 3 Rs recognize exchange business as a huge opportunity.

 

[sman]

In all seriousness, do you really see the single 20-something crowd who earns $20k to $30k actually coming out in mass and purchasing insurance? Because I don't.

My son is 23 and if I weren't paying for his health insurance I don't know if he'd purchase insurance. Mostly because he thinks he's superman. He's probably been to the doctor once in the past 2-3 years.

I see this scenario playing out all over the country. These types will think, "I never go to the doctor, why do I need to spend $150 per month on health insurance". Especially in the beginning when the penalty is virtually nothing.

This really is going to be a clusterf!@# in my opinion.

 

[Post Quartermaster]

PostQuartermaster,

"Dependent" has a different definition in for this rule: A group health plan or insurer may base eligibility for dependent child coverage only in terms of the relationship between a child and participant, and may not deny or restrict coverage based on factors such as financial dependency, residency, student status, employment or marital status. The health reform regulations do not provide a definition of "child" for these purposes. (Via UHC's definition, Dependent Coverage to Age 26 - Health Care Reform Provisions)

Argument's sake, I'm under 26, haven't lived at home for a decade, graduated college, support myself 100%, and even had employer sponsored coverage. Because my Mom birthed me, I was able to go under her (nicer PPO Family Plan) at no additional cost. My married, non-student sister, with a child, is also eligible (although the husband and kid are not).

I understand that.....but......it is a bit of a 2 way street. For the purposes of exchange subsidy eligibility, the average single 21 y/o who waits tables & is filling out the subsidy questionnaire is going to read the text below - taken from the cover page of the subsidy application. You don't expect the IRS to run around determining whether <26y/o, non-claimed dependents are eligible for coverage under their parents employer healthplan (assuming they have one), do you?


What the 21 y/o see's on the exchange application (and most likely, on the marketplace webpage):


Who can use this
application?
single adults who:
• Aren't offered health coverage from their employer
Don't have any dependents and can't be claimed as a dependent on
someone else's tax return
NOTE: if any of the following apply, you need to ill out a different form
to make sure you get the most beneits possible:
• You're married or have dependent children.
You were in the foster care system, and you're under age 26.
You have items that can be deducted from your income. if your only
deduction is student loan interest, you can use this form.
You're American indian or Alaska native.

 

[LGilmore]

Another thing to realize is some carriers don't want to "win" this business. Early on, who knows how things are really going to go? We can only think that it will be competitive as carriers grab for numbers, well, what if that is not the goal of the carrier?

Here we have had carriers since day one of obamacare's announcement building surplus. Really building surplus. Then the product they throw out there is so bad, it will drive business away. They also plan layoffs.

What it looks like is they will sit out obamacare for as long as possible and live off a smaller payroll and the enlarged surplus. They will have fewer customers and fewer claims and be able to hold out for a while. We've done it here before and they held out for 6 years to get what they want.

Obamacare makes them have a product to sell, it doesn't require them to be the lowest cost.

The assumption is young people who haven't purchased health insurance and don't see a need, so they don't visit the doctor will continue with that mindset after they purchase coverage. I am betting the opposite happens. They will use it, with a vengeance. If we are forcing them to buy it, they will use it.