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 Signups.net )
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a decent price (say Medicare +15 for Exchange, Medicare +48 for Commercial), the gerrymandered network plan might get withdrawn.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.