Delaware is a small state. It is the only state on the ACA market this year with a single insurer, Highmark. The pricing portfolio makes absolutely no sense to me, and has not made sense to me for years. CMS has been releasing a lot of structural data over the past couple of days and I want to just gaze in befuddlement at two lines of data from Delaware.
Delaware had a competitive market from 2015-2017 with two corporate parents of three insurers. In 2018, it became a monopoly state.
From 2015-2017, Bronze was significantly discounted relative to benchmark because it has a a larger out of pocket limit. Not everyone who was subsidy eligible got a dirt cheap bronze, but a lot of people did. This make sense. Few people got a dirt cheap silver plan. In 2015, Highmark decided to spam the benchmark point with a $3 spread between the cheapest plan and the benchmark plan. This was a replication of Highmark strategy elsewhere to capture a lot of market share of a comparatively smaller market. Highmark and Aetna silverspammed each other over the next couple of years. In 2018, Aetna left the Delaware market. This created an opportunity for a strategy change.
Highmark did not significantly alter their strategy. The cheapest silver relative to benchmark for a single 40 year old non-smoker in these three years ranged from $18 to $27 cheaper. Individuals earning just a smidge too much for Medicaid expansion might get a dirt cheap CSR silver plan. Very few other people will see a zero or near zero dollar silver premium. The number of people who will see a zero or near zero dollar Bronze premium is also decreasing!
This makes no sense. Highmark has a monopoly. Highmark is a sophisticated, large, well capitalized entity that has been in the ACA markets since 2014. They should know how to design plans to hit price points. Highmark has no risk adjustment concerns. They are taking on full market risk as they are the monopolist. Their margin is a combination of how well can they manage the costs of individuals who know they are sick and expensive to cover and who will sign up no matter what, and how many price sensitive and reasonably healthy people who sign up.
A monopolist is able to generate premium spreads between their benchmark and their cheapest Bronze and Silver plans to make zero or at least <$10/month plans extraordinarily common. This is good for the enrollment pool as more healthy people come in, it is good for the bottom line and it is good for the actuaries’ ulcers as more healthy people removes variance from the projections.
So what exactly is Highmark thinking in Delaware?
Some bureaucrat in charge of the Delaware market doesn’t understand their market position? Or, they don’t want to admit they are a monopoly so they don’t act like one? Some sort of regulatory pressure to keep the status quo? Some sort of effort to avoid telling shareholders that they are a monopoly? Trying to avoid the cost of re-setting up their program in light of the new market conditions? Trying to keep out competitors by maintaining old pricing?
As someone who lives in Delaware (and has Highmark through my employer), Highmark sucks. I will say, it is better than Aetna, and the employer based Highmark is better than the market plans. But, it is expensive for the coverage — even through an employer.
Due to the small size of the state and the Delaware Way, change is slow and known stakeholders tend to be able to write their own tickets. When my employer switched to Highmark, there was a noticeable change in the cost of care — previously, it was Delaware BCBS.
There also is a monopoly hospital situation (Christiana). Christiana Health Systems reimbursement rate is high. A number of my doctors (specialists) sent me letters stating that they would no longer accept Highmark because the reimbursement rates were too low. These practitioners were through Christiana Health Systems, and I’ve heard that the expected reimbursement rate from Christiana was above market rates and that Highmark’s reimbursement rate was lower than market average.
There are few options for care, and many individuals in New Castle County (the northern part of the state) get their care in Pennsylvania/Philadelphia. When I started being told that my doctors would no longer accept HIghmark, I switched from the HMO plan to the PPO plan through my employer in order to have more care options. I have a family plan (spouse and children) and my monthly payment practically doubled. I am lucky enough to be able to afford the plan, but it was a shock when my first paycheck came in.
Since I happen to work in behavioral health, I also will say that behavioral health options are even fewer. And network providers are slim. The situation worsens the further south you go.
Highmark is understaffed?
Sorry, don’t know how to use links – srsly – but this is so psetting, and I wonder if BJers would know how to investigate if in the past year, Repug evangelicals have participated in an influx of brown baby adoptions: https://www.democraticunderground.com/100214328785
The WWE election. The story arc builds. Biden’ the hero, his son the heel, Rudy’s the heel, his daughter’s the hero. But…. are the stereotypes real? Tune into the climactic death cage match, where the truth will be revealed
Edit: I took it for granted that this story was a hoax, but looks like not. Or is Total Recall another prophecy? Get this year over with!
Edit: OOPW wrong thread sorry
Is this a Highmark subsidiary? Could the person running it be a whackjob conservative taking a ‘principled stand’ against offering decent subsidies or something?
You are not going to like to hear this. Nobody gives a shit about Delaware. It is a principality run by criminals.