At the end of September, just as the exchanges were about to open for business, HealthPocket created a comparison of the number of individual and family health insurance policies available in each state in 2013 and compared that with the number of policies that would be available in each state’s exchange in 2014. It’s an interesting read, but it could also give consumers the wrong impression about health insurance going forward. HealthPocket does note that health insurance will be quite a bit different in 2014 than it is today, but there’s more to it than that.
The data in the HealthPocket report is sound. There will not be as many individual policies available in the exchanges in 2014 as there are in the individual market in 2013. But keep in mind what’s not going to be in the market anymore in 2014: Skimpy, Swiss-cheese policies that leave consumers on the hook for six-figure medical bills even when they have so-called health insurance in place. In the past, even in states like Colorado that have strong regulations in the health insurance market, there has been a lot of flexibility in terms of plan that could be offered. Both in terms of coverage and value, some were great, some were average, and some were terrible. The truly terrible plans are not on the market anymore in 2014, which is good for consumers. I know that the HealthPocket report was neutral in the presentation of their findings, but I worry that people might see the total numbers (with an average of a third as many plans in the exchanges in 2014 as there are in the individual market in 2013) and assume that means that their choices are going to be severely restricted.
I don’t think that will be the case, and I’ll use Colorado’s health insurance market as an example. Even though Colorado has long had a very robust health insurance market, a quick glance at the sheer number of carriers and plans available here would tend to give people a skewed impression of just how robust it really is. In 2010, there were 392 companies that were offering at least one health insurance plan in Colorado. That’s an astounding number. And yet the top ten carriers accounted for more than 72% of the total market. That means that the other 382 carriers made up just over a quarter of the total market with all of their insureds combined. Even if Colorado were to switch to a scenario where only the top 20 carriers continued to offer policies, most people would be able to stick with their current carrier, because most people are already insured by one of those top 20 carriers. The point I’m making is that even a loss of a significant number of carriers in a state does not necessarily mean that the market will be destabilized or realistically any less robust… it all depends on what sort of market share was held by the carriers that are no longer participating.
There’s another important fact to keep in mind regarding the HealthPocket report. Their report is looking at plans available just within the exchanges in 2014. But the off-exchange market will also be a good alternative for a lot of people, and some well-known carriers are only offering individual plans off-exchange in 2014. For people who don’t qualify for premium or cost-sharing subsidies, the number of plans available is expanded by considering off-exchange plans as well (subsidies are only available in the exchanges, so people who qualify for subsidies should definitely stick to the exchange).
Another factor is that all policies, regardless of whether they’re in the exchange or out of it, will be guaranteed issue in 2014 (during open enrollment). For people with pre-existing conditions, this means that realistically, there are a lot more options available in 2014 than there were in the past. Even if there are a thousand different plans available, they don’t do you any good if you’ve got a pre-existing condition and all of those plans are medically underwritten. The 2014 plans are available to everyone, regardless of medical history. And with actuarial value requirements (the portion of claims covered by the carrier before your out-of-pocket cap is met) and out-of-pocket caps, consumers can know that the coverage they’re buying in 2014 – in or out of the exchange – is providing a true safety net.
This was not true of all of the plans that were available in 2013. So maybe the lower number of plans available in the exchanges when compared with the 2013 markets amounts to good riddance?