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 |
| Partner | 20,477 | 12,489 | 61% | 1% | 4,329 |
| Select | 13,297 | 6,817 | 51% | 2% | 3,400 |
| Premium | 15,825 | 8,655 | 55% | 1% | 3,637 |
| 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
joel hanes
There’s too much confusion
I can’t get no relief
Another Scott
Is this what you mean by HHI?:
Inquiring minds…
Thanks.
Cheers,
Scott.
painedumonde
@joel hanes: Well, the only person talkin’ ’bout love thy brother is the preacher
painedumonde
All the better to acquire the filthy lucre.
Buskertype
I try to read and understand these these posts, at least intermittently, but often my takeaway is simply that this system sucks and we’d be much better off with some version of single payer healthcare.
taumaturgo
These are the plans that centrist presidential candidates use to oppose M4A. “If you like your plan you can keep it.” What’s there to like? Bankruptcy? Unaffordable medication? Denied coverage? Postponing necessary treatment? Surprise billing? The greedy insurers as a middle man is a luxury that we can no longer afford. The time has come for M4A. Profits before care is fighting for its life knowing full well that the model is unsustainable. Health care is not a commodity and trying to squeeze profits at the point of extreme vulnerability is disgusting, to say the least.
David Anderson
@Another Scott: yes
David Anderson
@Buskertype: Tell me how to get 218-51-1-5 and keep that coalition together for four to six years for implementation to actually work well.
Once that happens, then kludges are far less attractive, but I am assuming that kludges are what we have.
Buskertype
Right, and in the meantime no one should ever mention that the emperor has no clothes
Buskertype
@David Anderson: you’re right of course, but nonetheless this system is shit and I reserve the right to say so.
tybee
@Another Scott:
Hilton Head Island
Another Scott
@tybee: Hookers and Blow and Hilton Head Island, also too. HBHII.
Hehe.
Cheers,
Scott.
J R in WV
@Another Scott:
Don’t you mean HBHHI rather than HBHII ??
;-)
Chris Johnson
@taumaturgo: I think you could fairly go with ‘something else’ or ‘moving towards something else’ as it is not a binary choice between this, and Bernie Sanders Medicare For All.
The actual path to sanity is likely to be something different while still leading away from all this.
jl
@David Anderson: Thanks for very interesting post. This info brings to mind the Rothschild-Stiglitz result, that plan differences that segregate out healthy versus unhealthy destroy insurance market equilibrium. To some extent, the concentration of the markets suggest substantial oligopoly effects, but that means more transfer payments in the form of higher insurance premiums are being sucked out of the consumer. The slogan ‘you can keep your plan if you like it’ as a sales pitch for current system doesn’t mean much of a chaotic market means benefit design and prices will change unpredictably from year to year..
Kludges may be all we have for now, but effective kludges that don’t fall apart quickly may be as hard to adopt as M4A. One kludge that works in Switzerland and Netherlands is to remove profit motive from insurance companies for basic comprehensive coverage. The insurance companies still get a disguised profit in the form of what is effectively a management fee, as occurs in the US when a self-insured corporation hires a health insurer for managing the claims. That has worked very well in those countries. But getting a coalition to pass that seems as hard as getting one for M4A.
Another Scott
@J R in WV: D’Oh!
Cheers,
Scott.