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You are here: Home / Anderson On Health Insurance / Plan offering optionality on Healthcare.gov

Plan offering optionality on Healthcare.gov

by David Anderson|  November 19, 20209:51 am| 2 Comments

This post is in: Anderson On Health Insurance

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This is going to be geeky (even for me).

On Healthcare.gov, insurers are required to offer everyone a single plan if they are selling anything that is subsidy eligible.  Insurers are required to offer a gold plan somewhere within each rating area that they participate in.  A rating area is a geographic region where a particular plan has to be offered at the same premium.  A rating area can be a single county or it can be an entire state or anything in-between.  Most rating areas are several counties.  An insurer can elect to offer or not offer bronze and platinum plans at their discretion.

I am curious about the optionality that insurers exercise.  The unit of analysis is insurer (HIOS ID), County and metal level triad.  The maximum count is silver as any on-exchange insurer has to offer a silver plan everywhere.  Every other metal level has some degree of optionality.  The extreme was 2019 Holmes County, Ohio where a single silver plan was offered as the only choice.

County-Insurer-Metal triads on HC.Gov with optionality

Platinum is a rare beast.  It always had been lightly offered and now, it is very seldom offered in 2021.

Insurers are currently offering gold everywhere they offer silver on Healthcare.gov .  From 2016 to 2019, that was not the case, with a peak optionality-opt-out in 2017.

Bronze is a consistent modest opt-out.  Some insurers don’t want to offer low actuarial value plans and this seems to be mostly consistent across years.

Why does this matter?

Optionality implies the possibility of strategic decision making by insurers.  An insurer can look at a county and decided that beyond a single silver plan, the most profitable offering for County A could be Bronze, Gold and Platinum while net of risk adjustment profitability for County B is only silver.  This requires a degree of nimbleness that I am having a hard time seeing in the marketplace but optionality is valuable.

Optionality is also a way around pricing rules that could make some metal tiers less profitable than other tiers.  If a state has a rule that makes gold plans less profitable than silver net of risk adjustment, an aggressive insurer can significantly reduce their gold footprint to only offering gold in a the least unprofitable county in each rating area.

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2Comments

  1. 1.

    Another Scott

    November 19, 2020 at 10:37 am

    Interesting, but confusing. The Exchange geographic groupings seem to include the set “rating area” and the set Not “rating area”. E.g. Gold has to be offered somewhere in a rating area, but Silver has to be offered “everywhere” if they’re on the exchange.

    So, a rating area can be multiple counties, and insurers could only offer Gold in, say, one county in a multi-county rating area? But has to offer Silver in every county where they offer plans on the Exchange?

    How does Not-rating-area play into this? Are those just areas where the insurance company does not offer plans, or is that something else?

    Thanks for trying to make this simple for us.

    Cheers,
    Scott.

  2. 2.

    David Anderson

    November 19, 2020 at 11:55 am

    @Another Scott: Good breakdown.

    So let’s take a state with 2 rating areas.

    Rating Area 1 has counties, A, B, C

    Rating Area 2 has counites X, Y, Z

    An insurer can elect to participate fully across the state than that means Silver has to be offered in each of A,B,C and X,Y,Z and Gold has to be offered in 1 of (A,B,C) AND 1 of (X,Y,Z)

    An insurer can elect to only serve Rating Area 1 offering Silver has to be offered in each of A,B,C and Gold in at least 1 of (A,B,C)

    An insurer can elect to only serve 2 counties in a rating area so a silver has to be offered in A&B and Gold has to be offered in at least one of A OR B.

    An insurer can elect to serve only 1 county in a rating area, where silver and gold have to be offered.

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