Obamacare Exchanges Aren't the Only Game in Town

[Duaine]

Americans who buy their own health insurance next year won't have to get coverage through their state-based exchange.

Many insurers will offer individual policies outside the Obamacare exchanges in 2014. Consumers can avoid the exchanges by buying plans directly from insurers or through brokers.

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But should they?

First, anyone earning less than 400% of the poverty line will be eligible for federal subsidies toward exchange-based plans, so going off the exchange would likely not make sense.

But those who make too much to qualify for subsidies should look both on and off the exchanges for a plan that best fits their needs, experts say.

Avoiding Obamacare exchanges - Sep. 5, 2013

 

[leevena]

I realize that you posted this and used their material, but the "first" comment made is not exactly true. The statement the author used was "ANYONE earning less than 400%" will be eligible.

To be eligible for the federal susidies that person must come from a household that earns less than the 400%. To use an example, take a husband/wife who together earn $120k, but one spouse earns $14,000, which is well below. That spouse cannot access the subsidy.

 

[RayNY]

It's also important to note, those under 100%FPL (or is it 138%, I forget) are not subsidy eligible because they are Medicaid eligible.

As for that last section, good to know that the public thinks brokers make it harder to compare plans... Yea, that's why we've been so successful for so long, we make it harder for them...

 

[yaknow1]

As for that last section, good to know that the public thinks brokers make it harder to compare plans... Yea, that's why we've been so successful for so long, we make it harder for them...

After reading your comment I knew exactly who wrote the article before clicking it. That reporter is a total hack and is biased for Obamacare.

I love this piece "I'm signing up for Obamacare" The lady is quoted as saying "I can get individual coverage, but it's very expensive because of my history. My premiums, copays and deductibles would be very high because of the risk." That would be very true, if she didn't live in New York, a GI state.

Because of the praise in that article she was invited to the White House where she dropped this gem, " "Women have a lot to do with setting up the Affordable Care Act, so we know it will get done well."

 

[AllenChicago]

Recent LUND REPORT verifies that (so far) most off-exchange plans are averaging 23% lower premiums than the on-exchange plans. Good news for those over 400% of FPL.

Story: Insurance Exchanges Losing Low-Cost Plans With Departure of Big Brands | The Lund Report

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[HealthGuy]

Allen..I thought that OFF exchange plans had to be designed just like on exchange plans and have similiar pricing? Isnt that the law?

 

[benwrigh]

Allen..I thought that OFF exchange plans had to be designed just like on exchange plans and have similiar pricing? Isnt that the law?

They do for the companies that are on and off the exchanges. The plans referenced in the article will not be offered on the exchange.

 

[FLM2]

I just read through the actual report, not the synopsis, and the comparison are rates between the current, 2013 plans offered by companies not participating in the exchanges and the premiums for Exchange plans in 2014.

This is a bogus comparison as you can't purchase the 2013 plans in 2014, it's like comparing apples to oranges.

All this is showing is that premiums are going up next year.

Here is the part of the report that states this:

Methodology

Results of the study were based on an analysis of 1,621 health insurance plans offered in the states of California, Connecticut, Colorado, Georgia, Maryland, Ohio, Oregon, South Dakota, Virginia, and Washington. Health plans were limited to the individual and family insurance market for consumers under the age of 65. Health plans from the Medicare, Medicaid, and employer-based health insurance markets were not included within this study.

The premium data used in this study was obtained from insurance records made public by the Department of Health & Human Services. The data was collected on September 3, 2013. Premium quotes were generated for a 35 year-old male nonsmoking applicant for each 2013 health plan within the government health insurance records. Redundant premium quotes were obtained for each plan using identical applicant profiles distinguished by geography (the two largest metropolitan regions within each state were used). The redundant quotes were averaged together for a single premium estimate for the health plan. Health plans within each state were then placed into two categories: 1) state off exchange and 2) remaining state health plans. Each category had all the premiums within the category averaged. Premium averages were not weighted for enrollment.

Here is a link to the full report, draw your own conclusions: Infostat: Off-Exchange Health Plans & Premium Competition

It is amazing to me how uninformed some of these writers are about what is going to happen and all it will do is introduce even more confusion.

 

[RayNY]

Yaknow, good catch. Do keep in mind, the general public knows more about casting wizard spells than health insurance. It's not surprising someone submitted inaccurate information.

Allen, they do love making reports analyzing the 10 best-case-scenario states that chose to release their rates and extrapolate it to the rest of the states that choose to hide them, don't they? Just a few more weeks till the real numbers come out and this BS can stop.

HealthGuy, Plans sold "on-exchange" are supposed to have an "off-exchange" mirror if the company is participating in both exchanges (they may participate in only one or the other). In addition, they may offer exclusive off-exchange ONLY product (we've been calling this "out" of exchange market in my office for clarity sake) that is unique in comparison to "on/off exchange" product.

This product may carry a different network, rates, plan design, cost sharing, etc. It still must comply with PPACA regs (be a QHP, meet EHB, have an AV +/- 2% from gold tiers, etc.). We expect this market to consist of more robust plans for those who make too much to get a subsidy.

FLM2, I considered everything in that report to be complete garbage when I realized they were comparing 2013 rates to 2014 rates for different plans. When I read your post and realized it was raw averages, un-weighted for enrollment, the entire article lost any sort of legitimacy.

C'mon, this is some highschool statistics 101. Why do they have so much trouble producing something statistically valid?

 

[Ann H]

RayNY, that is a great explanation of off/on/out. Many people still think a carrier participating in exchanges must offer an identical portfolio on & off exchange. It's not true. Some states have more stringent rules than the Federally Facilitated Exchanges, but for FFE it works like this

1. On exchange (I call this Exclusive Government Exchange/Marketplace), must offer at least one Silver and one Gold if you are going to participate in the exchange. A carrier can participate only on the exchange if they want and not have any off-exchange plans at all.

2. Both On & Off exchange (I call this Government Exchange/Marketplace for on-exchange and Private Market for off-exchange), This applies to a carrier participating BOTH on and off exchange. Still they must offer 1 silver and 1 gold. There are special rules about identical plans. If the plans are identical, they must be the same benefits, same rates, and same commissions. You could call these mirror-identical. Even changing the network makes plans not mirror-identical. However.... even though a carrier in an FFE could conceivably offer Plan 1 with narrow network on & off the exchange, then Plan 1a with a broad network off exchange only, they are unlikely to do so because some of the reinsurance rules require them to keep mirror-identical products. Exceptions are that catastrophic is on-exchange only, and that less stringent rules apply to SHOP, so there might be more off-exchange plans than SHOP plans for carriers that are participating both on & off exchange.

3. Out of exchange (I call this Exclusive Private Market) If the carrier does not participate at all on the exchange, they have broad latitude to offer a portfolio of products. I think RayNY was using the term Out of Exchange to describe these plans, and I like that term. The plan designs must still be QHP's like RayNY said. Even though the article referenced above was statistically illogical, it is reasonable to expect that there will be carriers that don't participate in the exchange at all, but have attractive products at rates less than the exchange's rates. Why? Number 1, the exchange charges a commission for its "insurance agency" function of comparing plans side-by-side where consumers can shop and enroll. (Shameless stab, there folks). Well, they don't call it a commission, they call it a fee of 3.5% (up to 6% in some states), but nonetheless it costs money to participate in the exchange. Number 2 Exchange plans come with extra admin costs for things like coordinating with the exchange on a variety of issues, collecting premium from 2 sources (subsidy & member-paid premium), allowing all sorts of payment options including credit card payments (which come with fees to the vendor), giving grace periods of 90 days for subsidized business, etc. Number 3 Exchanges will get more subsidy-eligible folks including very low-income folks with premium and cost-sharing subsidies. That attracts a less healthy crowd, riskier lifestyles, previously uninsured with pent-up demand, less likelihood of keeping the policy long-term, and more likelihood of overutilizing when their premium, copays and deductibles are sharply reduced. A lot of people thought the young and healthy would get big subsidies and therefore the exchanges would get a better risk, but since the subsidy is the difference between the member's share and the 2nd lowest cost silver plan for the member's demographics, then it turns out that the premium for young folks often is less than their member share, resulting in no subisdy. Therefore, the Out of Exchange / Exclusive Private Market (carriers not participating on the exchange at all) have less risk, no exchange fee and less admin costs. Hence, the price could be less.

Once again, that is for the FFE states. Some state run exchanges have instituted stricter rules for carrier participation and portfolio. And, that is to the best of my knowledge and belief. If anyone has studied the FFE rules on carrier participation and portfolio, please speak up and bring clarity on any issues I may have wrong.