From yesterday’s post concerning a very odd mapping of an auto-renewal option from what looked like a Gold plan to a Bronze plan, I was confused as to how this could happen and what the regulations regarding mapping was. I also had a very productive discussion on Twitter about a couple of other issues regarding this type of mapping strategy.
A twitter correspondant pointed out the relevant set of regulations:
— sthfrk2008 (@sthfrk2008) November 17, 2015
155.335 (J)(1) is the auto-renewal feature for plans that exist year over year. 155.335(j)(2) is the regulation concerning replacement of plans and auto-renewal. This is the relevant one. The rule set is as follows.
- Exchange plan most similar in the same metal band if available (not sure how “similar” is defined).
- If #1 is not available, then at the insurers’ choice, an Exchange plan plus or minus one metal band
- If #1 and #2 are not relevant, the insurer can assign an enrollee to any plan (on or off Exchange) that the insurer offers.
I have two thoughts as to how the assignment into a very high deductible, off Exchange plan could occur under these regulations. The first one is that rule #3 was in effect. I don’t think that was likely. According to Healthsherpa.com, Highmark, the insurer, is offering all metal bands for the zip code of the town mentioned in the article. The other one is that the couple was in an 87% Actuarial Value Cost Sharing Reduction (CSR) Silver plan instead of a gold plan and since CSR only applies to exchange plans, the “similar” Silver for rule #1 would be a massive deductible plus 40% co-insurance plan. I don’t buy that either as none of the Highmark Silvers on HealthSherpa have deductibles over $3,200 per person nor 40% co-insurance. I am still fairly positive the couple got mapped to a Bronze plan. This is odd. As a policy perspective I would want to change the rule on mapping. My proposed rule would be as follows.
- Exchange plan most similar at the same metal band with a solid definition of similar (same plan design HMO for HMO, EPO for EPO etc, minimal deviation from network size by either hospital count or claim payment volume etc)
- If #1 is not available, Exchange plan plus one actuarial value level (5 bands, 8 AV levels, go with AV if possible to maximize AV as the default
- If #1 and #2 are not available, Exchange plan minus one AV level.
- If #1, #2 and #3 are not available, any Exchange plan
- If there are no on-Exchange plans available, repeat steps 1 through 3 for off-Exchange but replace levels with bands)
- If no remaining map, default to any remaining plan issued by the incumbent insurer
- If choices come from decision rule #2 through 6, the insurer is obligated to send the insured individual a list of other plans with the following information
- Metal Band
- Monthly premium with and without subsidy amount
- Worst case scenario exposure
Now a few technical questions and musings below the fold: Why would Highmark want to move older people to a Bronze plan when they were most likely in a Gold plan for 2015?
This is a good question if and only if Highmark keeps these customers. Highmark lost a lot of money ($300 + million) in the individual market. They priced very low in 2014 to buy market share, and they got a lot of members and more importantly for this question, a lot of expensive to care for members.
There are two questions by Matthew Martins here. This could be a minor risk adjustment play of making the Gold or Silver (if they are CSR recipients) risk pool healthier by pushing some of the sicker people down to Bronze while making the Bronze pool sicker. The risk pool for risk adjustment is determined by metal band and state. An insurer could have a comparatively healthy Silver pool and an amazingly sick Gold pool. Furthermore, the higher the actuarial value purchased, the sicker, on average the average member will be in that pool. A Gold pool will be, on average, sicker than a Bronze pool as this is self-revealing information about personal assessment of risk and sickness. So it could be an internal transfer of risk between pools for a more favorable risk adjustment payment.
I don’t think this is the case, or at least not 90% of the reasoning behind the type of transfer.
We know that the subsidy eligible Exchange population is very price sensitive. Most people on Exchange who are newly insured for the first time on the individual market could not afford non-subsidized health insurance that actually covered anything. If the letter for autorenewal shows an amazingly ugly premium number for a non-subsidized, off-Exchange plan plus a hideous benefit package, the first reaction of most people to that letter will be to swear. The second reaction will be to look for something better. Something better means something subsidized and something on the Exchange. In this particular county, something better (for a baseline Silver plan) is offered by every other insurer. That means a decent proportion of the mapped to off-Exchange population will migrate from Highmark’s books to someone else which means the Highmark MLR decreases.