CMS recently released the 2018 insurer/plan enrollment report. I took a look at my former employer, UPMC Health Plan**, as their strategy still leaves me scratching my head. They offer three distinctive networks in Western Pennsylvania.
The three networks can be quickly defined like this. Each network is a subset of the network below ## :
- Partners: Narrow network centered on UPMC owned facilities; offered in parts of Western PA.
- Select: Medium network centered on UPMC owned and close ally hospital facilities in Greater Pittsburgh
- Premium: Broad network that is basically the standard commercial network. Offered in all of Western PA.
UPMC then attaches a set of five common benefit designs to each network to generate a fifteen unique plans. People buy the cheap plan most of the time.
|Network||Silver Enrollment Ever in 2018||Silver Enrollment in Cheapest Plan||Lead Plan Market share||Least Popular Plan Market share||Silver HHI for Network|
|2018 Enrollment Data for UPMC Health Plan|
There are a lot of choices, but people are very consistent in buying the cheapest plan for a given network. There is meaningful difference between networks once you get outside of Pittsburgh city limits so I can see people making distinctive valuations of the networks and choosing from there if they have multiple options. The least popular plan is only getting 1% or 2% marketshare for a given network. All three of the network submarkets would be considered very concentrated for silver plans if we were to apply an HHI standard.
I’ve always questioned the spread strategy as the UPMC strategy crushes the spread between the benchmark silver and cheapest silver which makes plans pretty expensive for healthy buyers. I’ve been spending more time in the behavioral econ space over the past year, and cognitive load and sorting through options is costly and could lead to ineffecienct choice. There is good evidence (McWilliams et al 2011) that choice overload crushes good choice in Medicare Advantage space, and I suspect this may be the same story going on in the Exchange space.
** Side note, these networks were what I was working on at UPMC Health Plan when I started writing for Balloon-Juice.
## Miniscule and idiosyncratic variations aside