GRAHAM-CASSIDY REPEAL BILL DEADLINE:

Time: D H M S

Total number of HC.gov plans down 12% for 2016, but it's not all bad news

CNBC's Dan Mangan reports:

HealthCare.gov is going to see some shrinkage in 2016.

The number of health insurance plans available on that huge federal Obamacare marketplace for 2016 is decreasing by up to 12 percent compared with this year, industry sources told CNBC.

And there will be an even sharper reduction — of more than 40 percent — in the number of health plans on HealthCare.gov known as PPO plans, which offer customers the most flexibility in where they can get medical services covered by their insurer, sources said.

At the same time, there will be a marked increase in the number of so-called HMO plans, which do not as a rule cover costs incurred by customers outside of the plan's network of health providers.

The decreases on HealthCare.gov — which serves residents of 37 states — come a year after federal officials boasted about a 25 percent increase in the number of insurers offering plans for 2015.

The drop in PPOs have been pretty obvious for awhile; I've noted that BCBS of Texas, Illinois and others have dropped their PPO plans from the exchanges...and as Mangan notes, this makes complete sense when you think about it:

The rollback in offerings may reflect the economic reality that insurers are facing in the Obamacare market, with existing customers costing plans more than had been anticipated.

But industry experts also said it could reinforce an existing trend in which Obamacare plans are often purchased by people with lower incomes, who benefit most from the subsidies and other assistance available on the government-run insurance exchanges. PPO plans are more likely to be purchased by people who earn more money, who tend to get less in subsidies or no subsidies at all.

Bingo. PPO plans are more expensive to begin with, so they're obviously going to attract those with higher incomes. Plus, now that I think of it, if you've never had insurance before anyway, you probably aren't going to be too fussy about having a "wide network" (since until now you've had no network at all).

He also notes that Moda Health has dropped out of Washington and California at the last minute, in addition to the CO-OP meltdowns, of course:

The overall trends reflect news in recent days: Oregon-based insurer Moda Health said it will stop selling Obamacare plans in Washington state, and it soon will exit the California exchange. And the number of Obamacare co-op insurers selling plans is shrinking even more, as the 10th such co-op announced it will close.

The total number of plans available nationally is still huge, however:

And the number of insurers on HealthCare.gov is "definitely going to be down," Smolek said, although he did not provide hard figures on insurers. Smolek said that according to data obtained by GoHealth, the number of plans on HealthCare.gov would shrink from 4,688 in 2015, to 4,125 for 2016.

The number of preferred provider organization plans available on HealthCare.gov is dropping from 1,899 this year, to 1,123 plans, Smolek said.

HMO, or health maintenance organization plans, are increasing from 2,008 this year to 2,181 for 2016, which represents a 9 percent rise, he said.

And extended provider organization plans are increasing by 42 percent, from 271 plans this year to 385 next year, he said. Like HMOs, EPOs tend not to cover services by providers outside of the plan's network, meaning that consumers have to foot the entire bill themselves for such services.

While this sounds negative overall, in some ways it actually could be good news. For instance, the Massachusetts exchange deliberately cut down on the number of plans available:

Consumers can expect at least two big changes this fall when they go shopping for their 2016 health insurance through the Massachusetts Health Connector: significantly fewer choices, and a new mechanism to find out which care networks include their doctors.

The Connector staff told the agency’s governing board Thursday that the number of plans offered next year will be no more than 81, down from the current 126.

The board had agreed in March that the Connector needed to simplify its offerings. The differences among the plans were described as too small to justify the confusion caused by so many options.

This is something I've actually been wondering about myself. Competition is good in general, and having lots of choices can be helpful...but it can also just confuse the hell out of people.

As an example of what I'm talking about, consider Steve Jobs' return to Apple nearly 20 years ago:

When Jobs took the reins as interim CEO in July of 1997, Apple was making more than 350 different products, many of which seemed redundant, expensive, and outdated. In order to get the company focused on making better products that made more sense to consumers, he cut that number down to just 10. He knew that in order for the company that he co-founded to survive, it needed to be leaner and more focused, than it had been under previous CEO Gil Amelio.

At the core of the new line-up were four products, a consumer laptop and desktop, as well as a laptop and desktop designed for professionals. Each of those computers had various configurations of course, but as far as Apple was concerned, the product line remained extremely streamlined and simple. This allowed the company to focus on new technology and design, which resulted in the first iMac, a computer that made waves due to its unique looks, and shift away from traditional IO ports in favor of USB – something that was radical at the time.

Obviously healthcare policies aren't computers, but the point is still valid: From the enrollee's POV, all of the different elements to consider (Premiums? Deductibles? Co-Pays? Networks? HMOs? PPOs? Coinsurance? Metal Levels?) are already confusing enough. Throw in a dozen other companies (in some areas) and it can scare the hell out of you.

Personally, I'd have no problem with each company on the exchange offering a total of 9 plans at most:

  • Bronze, Silver, Gold & Platinum HMOs
  • Bronze, Silver, Gold & Platinum PPOs
  • One Catastrophic plan

I dunno...perhaps have "Multi-State", "Optical" and "Dental Included" thrown in there as optional add-ons to each one, like hard drive or RAM upgrades on a laptop...

UPDATE: Richard Mayhew of Balloon Juice has a related post about carriers "spamming" the exchanges with virtually-identical policies.