Not all filed plans will be sold

Just a quick technical note.  The Qualified Health Plan filing period is now.  Insurance companies are preparing their plans for the 2015 open enrollment period and need to file their preliminary rates, their preliminary plan designs and their preliminary networks with state and federal regulators in the next couple of weeks.  This means we’ll see stories like the following (h/t ACA )

Twelve insurers filed 114 individual health plans for sale inside the Exchange, Washington Healthplanfinder. If approved, the number of Exchange plans would increase from 46 to 114. Eight insurers currently have plans inside the Exchange.

Also, 10 insurers filed 119 individual health plans for sale outside of the Exchange, raising the potential number of non-Exchange plans from 51 to 119. If all are approved, the number of insurers will stay the same. The total number of plans available may change during the review process.

I guarantee that there will not be 114 plans for sale on the Exchange in Washington State this November.  I don’t know how many plans will be filed and then either not approved or not offered once approved, but this number is non-zero.

 Why would an insurance company file a plan, get it approved and then not sell it.

There are a couple of reasons.

The first is if there was a significant deviation in the network between the initial filing and final filing.  For instance if Mayhew Insurance wanted to file a narrow network plan that paid 109% of Medicare rates for a set of rural counties, and the network depended on one group of a dozen specialists to provide key high end accessible care and that group all dies in a team building parasailing accident, then the network can’t function and the product will get pulled.

Another is as a tool against providers.  For instance if there is a hospital group in an outlying county that wants to get Medicare +100% for all services and all products, building a network which can serve that county while excluding that hospital is a piece of leverage to haggle about the next three year contract.  If the insurance company gets a decent price (say Medicare +15 for Exchange, Medicare +48 for Commercial), the gerrymandered network plan might get withdrawn.

The preliminary filings also gives an insurance company a good idea of what is competitors are doing.  It might not make sense to sell a product that is matched against a nearly identical competitor’s product when the competitor is already deeply embedded in a dominant marketing position in a region.  The plumbers only have so much time to plumb.  If the product is going into an uncontested segment, the effort could be justifiable, but if the segment is already under fierce competition, the plumbers’ time is better spent elsewhere. 

Similarly, and this is a net policy negative, a product could have been offered that is adverse selection friendly.  For instance, if there is a network with several very good pulmonologists  in a region with known high concentration of Exchange eligible kids with cystic fibrosis while all other networks have the minimal required number of pulmonologists, the plan may get pulled as it is extremely likely that the really attactive network will attract way too many $300,000 per year cystic fibrosis members without sufficient revenue numbers to support that type of medical expense. 

 Finally, the actuaries will get several more months of data to refine their models and see if anything strange is happening.  Products and plans might get pulled if the pricing model changes due to new data.

19 replies
  1. 1
    Dennis says:

    Richard, really glad John gave you the keys to Balloon Juice. You write the kind of stuff that should be in newspapers, if they wanted to survive.

  2. 2
    japa21 says:

    Richard, as usual you have provided another service in explaining all the ins and outs of the implementation of the ACA, particularly from the insurance companies’ POV.

    And you are obviously correct in terms of plans filed does not equal plans implemented. The company I work for (let’s call mine Japa Insurance) filed plans in 25 (approx) staes last year but implemented them in 17. They are planning on increasing the number this upcoming year.

    I do have a question for you regarding what will happen in terms of provider participation in the coming years. Enrollment in exchange plans is projected to grow immensely over the next few years. This would obvioulsy increase the prospective pool of patients for participating providers.

    Do you see the same thing happening as happened with HMO’s?

    In the beginning many providers refused to accept the lower HMO payments or the capitated form of payment. However, as more and more people became covered by HMOs, more providers went along with the reduced payments to maintain a sufficient enough patient base. After all, receiving Medicare plus 6% for several patients was better than receiving Medicare plus 25% for a significantly reduced number of patients.

    I can see this happening with the exchange networks as well, meaning many of the current narrow networks will be able to be expanded.

  3. 3
    WereBear says:

    Richard, I also find your posts very informative. They point up the truly high mountain that would have to be climbed for Single Payer to become a reality. Perhaps this incremental approach (I’m sure we will get there) will be the least disruptive, and actually, a good thing.

  4. 4
    Schlemizel says:

    I’ll add my thanks for your excellent work. In discussing healthcare with friends and coworkers I realized how little most people know about the whole process. My life has taught me more than I care to know about it but not nearly as much as the work you have done here. I wish you had a much wider audience, you deserve it.

  5. 5
    Richard Mayhew says:

    @japa21: Ask me again in a couple of weeks when I can think of anything other than getting Mayhew Insurance filed for next year. My brain is fried and will be for a while.

  6. 6
    Randy P says:

    I picked up an Italian paper, Corriere della Sera, this weekend to shake the rust off my Italian.

    One of the first articles that caught my eye was a headline about a new WHO study on longevity. “Why we live 4 years longer than Americans”. The US didn’t even make the top 10 in longevity. Most of the top 10 were European countries with their evil soshalist medicine. And now, thank FSM, the US is moving in that direction.

    Why did the “best healthcare system in the world” line ever gain traction when faced with cold facts about people not actually, you know, living? And as I recall our infant mortality is also not up there with most industrialized nations.

  7. 7
    Omnes Omnibus says:

    @Randy P:

    best healthcare system in the world

    If you have good insurance (or boatloads of cash) and have a complicated problem, the US has the place to be. There is a reason that the deposed Shah of Iran came to the US for his cancer treatments.

  8. 8
    Belafon says:

    @Randy P:

    Why did the “best healthcare system in the world” line ever gain traction

    Because we’re the greatest country in the world and if you say anything otherwise you must be a Democrat and a traitor.

  9. 9
    Omnes Omnibus says:


    if you say anything otherwise you must be a Democrat and a traitor.

    But you repeat yourself.

  10. 10
    Randy P says:

    @Omnes Omnibus: And that was pretty much what the Italian experts said in the article.

    in a nation like the US where the technology in the cardiovascular field is the best in the world, but there is not a system of universal access to healthcare, the median rate of mortality from cardiovascular conditions is not much different from that of Albania.

  11. 11
    Calouste says:

    @Randy P:

    The U!S!A! is ranked between Costa Rica and Chile in life expectancy. The only developed country they are ahead off is, rather surprisingly, Denmark.

  12. 12
    cckids says:

    @Omnes Omnibus: If you have good insurance (or boatloads of cash) and have a complicated problem, the US has the place to be

    Well, yes. During the Great Health Insurance Debates of 2010, the Repubs kept pointing to cancer treatment survival rates from the US as a key to their “best health care in the world” meme.

    They never mentioned that, if you pulled the results from people over 65 out of that grouping, US survival rates were no longer so good, in fact, they sucked. Funny, how having guaranteed health care improves outcomes.

  13. 13
    cckids says:

    @cckids: O kaaaay. blockquote fail. FYWP

  14. 14
    Baud says:

    Some OT news developments for a sleepy Monday:

    N.H. Police Commissioner Who Called Obama The N-Word Resigns

    In another state, he might have become the leading candidate for a GOP Senate nomination.

    GOP Pollster Finds Sen. Shaheen Crushing Scott Brown In Matchup


    British Cleric Is Convicted in Terror Trial

    Yet, Gitmo.

  15. 15
    scav says:

    The best American Health Care is rather exactly like the Best American Victorian Parlor: expensively furnished, carefully dusted and left undisturbed for most of the year but always ready to be opened and used to entertain and impress “important” guests.

  16. 16
    jl says:

    Thanks for another very useful post.

    I am curious about RM’s ideas on why health insurance is always sold on an annual basis. Because that’s the way it’s always done? Meddlesome state insurance regulations? Something due to large influence of employer based plans?

    Here’s the thing. If it is true that people value the security of having insurance, especially people with some health condition, there should be a demand for multi-year contracts. But they don’t exist, as far as I know. If health care really were a good like any other, where are the middle men and brokers, who should be creating health insurance futures and options, and using them to offer multi-year polices to people who want them.

    To some extent, this question is moot now. Big chunks of the ACA was designed to solve the problem of people wanting to buy long term health insurance, but being unable to do so at any price.

  17. 17
    Baud says:


    I am curious about RM’s ideas on why health insurance is always sold on an annual basis

    Good question. I wonder if that will change once everyone is covered under Obamacare.

  18. 18
    Baud says:

    More OT news: Oregonians now must get gay married.

  19. 19
    BAtFFP says:

    Hi Richard,

    this is massively OT but oh well; I wanted to give you an update on how things worked out for the Fam, insurance-wise, after the questions you answered for me a few months back about The Family Trap.

    We ended up keeping the Spousal Unit on the exact same insurance he already had, because he is so fond of the co-op model and in particular how well they manage/integrate information throughout the care spectrum. It turned out that ultimately his plan’s cost only went up by $60/month for better coverage + prescription meds benefits + a far lower yearly max out of pocket. Hooray!

    (Incidentally, this awesome feature of his insurance — the coordination of info — became particularly significant to us during my various prenatal office/hospital visits. I’m not in the co-op because I’ve got my own insurance through work and so I went to the ‘well-integrated’ Big University Health Care System; at BUHCS apparently every single location, department, and provider uses their own computer system — none of which talk to each other. It was unbelievably frustrating. Have any discussions of the merits of the various insurance options ever taken into account end-user ease of use??)

    Even better, after Mini-Me was born we investigated the Apple Health for Kids you had suggested. We are dead-on average median income for WA state but far below the King County average and so Mini qualified for the Apple Health, AKA Medicaid for Kids. She’s the typical shiftless Medicaid moocher, to be sure, and at 5 weeks old is both a) totally perfect and b) a complete drain on society (or at least on mine). Best of all, her socialized insurance is costing us only $30 a month; yet one more reason I’m so glad we live in godless liberal Washington State.

    Thanks again for all your help – since rumor has it you too are now living in town, should there ever be another Seattle meet-up I would happily spot you the beverage of choice!

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