Yesterday, we looked at the variation in the minimal out of pocket limit for Gold plans on Healthcare.gov in 2020.
Very different alloys of Gold are available on Healthcare.gov.
There are low maximum out of pocket gold plans in North Jersey, Arkansas, central Atlantic coast Florida, Kansas, Wisconsin and a couple of other spots where the lowest out of pocket limit for a Gold plan is under $3,500. Structurally, most of the cost-sharing in these plans will be in the form of a deductible and there will be few exemptions from cost-sharing.
On the other hand, most of Texas and Oklahoma as well as big chunks of North Carolina and Virginia only offer Gold plans that have the maximum allowable out of pocket limit. These plans tend to have smaller deductibles and more services that are no cost-sharing.
A colleague of mine asked if there was anything going on with market characteristics. I ran two sets of analysis looking at the difference between the lowest gold out of pocket limit and the lowest bronze out of pocket limit. The first was whether or not a monopoly mattered? The second was a broader question if the number of insurers mattered more than 1 or not 1. I’ve included for this quick and dirty analysis, the benchmark premium for a single forty year old.
Market structures matter.
The Monopoly Analysis:And the non-monopoly, insurer count model is here:
| Difference between MOOP Gold and Bronze plans 2020 on Healthcare.gov (Monopoly Analysis) | ||||
| Coefficients | Standard Error | t Stat | P-value | |
| Intercept | -2793.93 | 107.20 | -26.06 | 0.00 |
| Monopoly | 780.20 | 61.15 | 12.76 | 0.00 |
| Benchmark Premium EHB | 3.32 | 0.20 | 16.88 | 0.00 |
Here is the number of insurers analysis:
| Difference between MOOP Gold and Bronze plans 2020 on Healthcare.gov (Number of insurers) | ||||
| Coefficients | Standard Error | t Stat | P-value | |
| Intercept | -1630.52 | 142.86 | -11.41 | 0.00 |
| Insurer Count | -324.89 | 24.05 | -13.51 | 0.00 |
| Benchmark Premium EHB | 2.91 | 0.20 | 14.24 | 0.00 |
In both cases, adding more insurers makes the spread between the lowest gold out of pocket limit and the lowest bronze out of pocket limit increase. Gold becomes noticeably different than bronze and attractive to different populations when there are more insurers in a county.
A full-on model would be adding in state fixed effects to pull out state wide policy (like in New Jersey and states with standardized plan options) and look at several years worth of data. But competition is probably related to making Gold plans more pragmatically valuable to individuals with high expected medical costs compared to counties where there is little to no competition.
Jake Gibson
Question about Medicaid rules, though it might not be in your wheelhouse.
A member of my family has a toddler covered by Medicaid. They have been trying to make an appointment with a dentist. It is hard to find one that will take Medicaid. The family offered to help pay for the appointment with cash upfront, but were told that would be Medicaid fraud. That makes no sense to me. That might only be a rule in Kentucky
Why would there be such a regulation?
David Anderson
@Jake Gibson: Medicaid has weird rules that vary tremendously by state.
There is nothing that stops a Medicaid beneficiary from paying the cash price for a dental service but there may be regulations that prevent Medicaid from later paying for part of the service(s).
TomatoQueen
My son has been covered by Medicaid in Florida, Connecticut, and Virginia. This scenario first arose for him in Florida (orthopedic braces), then in Connecticut (frequently-breaking tube feeding equipment), and more often in Virginia (dental service with anesthesia, orthopedic braces, office visits) because we’ve been here longer. I think calling it Medicaid fraud as such isn’t helpful because nobody is operating from an intention to commit fraud. The bottom line is it’s either/or, and it applies to all services: for covered services, either Medicaid pays for the entire cost, or the patient/guardian does, unlike a real insurance situation where there’s a copay, an insurance payment, and then an amount of zero to whatever. Now when Virginia went to Medicaid with an extra layer of useless bureaucracy (don’t get me started) called Managed Care, our PCP got a mite confused among all the plans, forgot to sign up for a few of them, and during the transition some of our office visits weren’t covered. I’m still paying on these even tho’ it was his office staff’s fault. They don’t chase me for the money and I pay when I remember, and ongoing the boy is covered. At least, it seems that way.
Harish Mandyam
I read this article in Washington Monthly:
https://washingtonmonthly.com/magazine/january-february-march-2020/how-to-end-the-democrats-health-care-demolition-derby/
The article implies that private insurance companies are extremely bad at negotiating provider prices. But, that seems odd to me. Aren’t insurance companies supposed to have the expertise and bargaining power to negotiate on price?
And… if this is true, then it shouldn’t apply to HMOs (who have the providers in-house)? But, when I look at exchange prices, I don’t see that much different between Kaiser-style HMOs and regular insurance plans (I might be incorrect on this).
Since I don’t have a background in health-care economics, I’m curious to see other people’s thoughts on the article.
David Anderson
This is a damn good point — and basically, Kaiser has to pay their in-house staff at rates close enough to market rates (determined by other insurers paying other provider organizations) to keep their employed staff still employed at Kaiser instead of walking across the street and opening up a new office that is contracting with Blue Cross etc.
Harish Mandyam
@David Anderson
Ok, for people (doctors, nurses, admin, billing personnel, etc.) that makes sense. What percentage of insurance co. expenses though are attributable to personnel expenses?
David Anderson
@Harish Mandyam:
Between direct services and pharmacy, that is most of the expenses.