Mayhew Silver PPO/$ 2,250/ $3,500 is the triple slash line of my current project as my boss wants to see if we can use that base configuration with a brand new network for 2016. Most health insurance policies will have a triple slash line of plan type, deductible, out of pocket max. The triple slash is almost always stated to cover a single individual. The assumption is that the multiple person/family policy will just double the triple slash. So a Mayhew Silver family PPO would be $4,500 deductible with $7000 as the maximum out of pocket. The Family slash would apply to a family of two, it would apply to a family of three, and it would apply to a family of seventeen.
This is changing. I have been seeing some competitors introducing three tiered slashes on benefit design. The first tier is the traditional single person coverage, the second tier is what is used to cover two people, while the third tier is the three or more person tier. That would mean Mayhew Silver PPO $2,250/$3,500 would have the couple tiered at $4,500/$7,000 and the family tiered at $5,250/$8,000. Any one individual could only contribute a maximum $2,250 to the deductible or $3,500 to the out of pocket maximum. The equivilent two tier design from a pricing and acturial value coverage point of view might now be a Mayhew PPO $2,650/$5,000. This is a cost control measure.
It is a removal of some of the general subsidy that nuclear families with kids get from single adults or paired adults with either no kids or adult children. This has been going on for a very long time on premium pricing. Insurers,when they quote pricing to employer groups, will quote four, five or six seperate price points for different coverage units. The common tiers for pricing areEmployee Only, Employee+Spouse/DP, Employee+Child, Employee+2 Children, Employee +3 or more Children, Family are the common price points. Some groups only price an Employee +Children tier. Usually the benefit package would be the same once the pricing tier was not Employee Only.
There are two goals. The first is to have the insurance company on the hook for less payout, although that is a fairly limited goal if the plan is a non-grandfathered Qualified Health Plan (QHP) as the QHP has to hit an actuarial value band. The second and I think the bigger goal is to spread the deductible out over more people so that the cost control incentive of the deductible is more applicable. Let’s walk through the following scenario:
Jay and Amy have three kids, Philip, Felicia and Baby Jane. Amy maxed out her share of the family deductible and out of pocket maximum for her non-complicated vaginal delivery of Jane in February. Jane had some breathing problems and a one night stay in the NICU. Jane’s NICU stay used up all of her deductible and out of pocket maximum as well. Under the traditional two tier design, Jay, Philip and Felicia have no incentive to control their health care utilization for the rest of the year as they have no more cost-sharing. The three tiered benefit design still puts some pressure on Jay, Philip and Felicia to not go to the emergency room for a sprained ankle but to go to the urgent care clinic, it still puts some risk sharing on the individuals.
From a cost point of view, the split design increases the maximum probable pay while reducing the maximum potential pay by the insured individuals.
SP
So I’m curious, what metal is my work plan equivalent to? Total annual employer+employee premium for family is $17805, employee contribution is 20%. HMO/$0/$2000 individual and $4000 family (1000/2000 for OOP on prescriptions), copays $20/$200/$500. Seems like platinum to me given the 0 deductible?
Central Planning
While that’s true, they also have the incentive to get the care they have been putting off. Without the other health events in your example, there’s a good chance they would have to pay full (well, insurance company rates) price for their exams and treatment. I’m sure I’ve read other threads around the high deductible plans stopping people from getting care because of the out-of-pocket expense.
Aren’t there studies somewhere about people finally getting Medicare (insurance for the first time or in a long time) and then receiving the care that has been otherwise delayed/postponed? Is their care frivolous? Isn’t it cheaper to treat people sooner than later?
I understand insurance companies trying to minimize their payout. I have 5 kids, so that kind of tiered plan would be extremely expensive for us.
On the other hand, I think that people with more kids should get lower insurance rates. We have created more people going into the insurance pool in the future. My kids will be subsidizing the health care industry when they are 26 (or earlier if they get a job/married/whatever).
I suppose that thought process could also apply to getting more social security/medicare/medicaid when we get old too.
ETA: seemed a little wordy. tried to clarify it.
NotMax
The whole health insurance racket more and more resembles a huge game of Fizzbin.
Central Planning
I think the rules are a little more like the rules of calvinball
Richard Mayhew
@SP: Solid Platinum as the OOP is what drives the drop in actuarial value.
Yatsuno
OPM just started doing a Self plus 1 tier this past year. I wonder if a lot of the re-tooling has to do with matching that market. Of course that was added because of the Windsor ruling, but hey, maybe it has larger effects.
Richard Mayhew
@Central Planning: From a societal perspective, I see your argument. From an insurance company perspective, they are trying to minimize pay-outs, so it is a very different calculus that the actuaries and product designers are engaged in.
WaterGirl
I’m pretty sure the language here is English, but I have no idea what any of this means.
But it would be wrong of me to neglect to mention how much I appreciate your posts here and all the information you provide us!
SP
Are any companies incentivizing people to get insurance through partner’s employer? Seems like a good way to spend a little to avoid larger cost. Most places I know, if you don’t take insurance because you have other options you get nothing. Paying a couple thousand to avoid thousands more in subsidies if you can get someone to sign up elsewhere seems like a good investment.
Richard Mayhew
@SP: Yep, happens all the time. My wife’s company won’t offer insurance to me as I have my own employer sponsored coverage available. They’ll extend coverage to the kids but not me. My company covers the entire family.
Central Planning
@Richard Mayhew:
Totally understood, the companies aren’t running a charity.The company I work for self-insures and already has multiple plans like you mention: me, me+spouse, me+kids, or me+family.
I suppose it would be interesting to see if insurance companies would do a me+1 to see if the cost is different if the +1 is a child or adult, or any other identifier that might change what kind of care someone “typically” gets.
cahuenga
In other insurance news: Not sure what’s going on here in San Luis Obispo, ACA health insurance options are back down to 2 providers this year, prices going up. Apparently introducing competition here ain’t happening. Maybe too small of a market?
Violet
Great thread title!
Richard Mayhew
@Central Planning: Me+1 dramatically differs if the Plus 1 is a kid or an adult.
Once a kid is over 1 year old (actually the inflection point is 3 months), kids are dirt cheap to cover. They use lots of primary care and lots of cheap prescriptions on average, but the things they use are CHEAP.
Adults have been alive long enough to either get pregnant or develope conditions that last long enough to be chronic and those things are expensive.
Mnemosyne (tablet)
We’re getting ready to put my laid-off spouse on my insurance rather than have him do COBRA. Our calculations show that if he does COBRA, it will cost $500 a month for insurance alone (and I’m not sure if that includes the 2% administrative fee). If we put him on my insurance instead, it will be about $425 a month for both of us to have medical, dental, and vision. My insurance is the company’s PPO, so it’s basically a Silver plan (deductible instead of copays for office visits, but copays for prescriptions, of which I have several).
Epicurus
I was just wondering, whatever happened to Baby Jane? (Sorry, I couldn’t resist; I’ll just show myself out.)
richard mayhew
@Mnemosyne (tablet): Have you looked at all at putting him on an off-Exchange QHP? He won’t qualify for subsidy as you get “affordable” coverage at work (that’s the family glitch) but there might be a good deal there.
richard mayhew
@Epicurus: Sleeping through the night and just figuring out that her feet are actually attached to her body and is amazed at that discovery.
docg
Let’s see. Premiums consistently go up, co-pays go up, deductibles go up. The only “Silver” lining to all of this is that the bastards will finally “cost save” themselves out of business. Eventually companies will no longer pay health insurance for employees, the consumer costs will be so high, no one will be able to afford health insurance covered health services. The cost/benefit lines will converge and goodbye one more corporate “profit center” with all the goodie squeezed out. God bless America!