Where I live, there are six health insurance entities offering Silver plans on the Exchange. They can be divided into two groups. The first group contains local, regional and national players who all have a history of offering large network commercial products. Their Silver products are split between general networks and narrow networks that usually contain 50% to 60% of the general network’s providers. The narrow networks all contain the regional high end specialty hospitals. If I had to buy insurance from the Exchange for my family, I would expect to pay $650 to $700 per month for a narrow Silver before subsidy.
And then there is a single insurer in the second group. It has a long history in the region selling large network commercial products. If I had to buy their narrow Silver Exchange product, I would be looking at $447 or $463 a month as they offer two slightly different flavors of narrow Silver. The second narrow Silver plan sets the subsidy rate in the market. Their broad Silver price point is within a couple bucks of everyone else’s broad Silver.
$100 of the differential can be explained by the super-narrow network that is being offered. None of the regional specialty hospitals are in the network, most of the central city hospitals are out of the network, and the individual providers are extremely thin as well. Reimbursement rates are similar to everyone else’s. The remaining one hundred dollars in differential looks odd to me. This non-obvious price differential suggests the possibility of a loss-leader strategy