HC.gov learned something from the state exchanges...and Steve Jobs

I wrote the following almost exactly 1 year ago, regarding news that the total number/variety of plans available via HC.gov was dropping from the previous year:

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CEO in July of 1997, Apple was making more than 350 different products, many of which seemed redundant, expensive, and outdated.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...

I also noted that Richard Mayhew of Balloon Juice has been writing about this issue from a different POV...he notes that the main reason for having so many plans which are barely distinguishable from each other (or "Silver spamming" as he calls it) is because carriers are attempting to game the "benchmark plan" system.

Whatever the reason for doing so, this has led to lots of confusion on the part of the enrollee. This year, of course, with so many major carriers (and a few minor ones) pulling out of the ACA exchanges altogether, it might be considered a case of "be careful what you wish for", but the point remains: Having a dozen different plans with slight variances in a dozen different variables just clutters things up and confuses the person trying to choose.

For the past few years, several of the state-based exchanges (CA, MA and NY, I believe) have addressed this issue by requiring "standardized" plans to one degree or another--mandating that all plans within a particular metal level keep most of their parameters identical. This allows them to still compete on premium rates, quality of service and some other factors, but also allows customers to do a true apples-to-apples comparison across the offerings.

Well, just a month or so after I wrote about this, CMS annoucned their proposed policy changes for 2017, and guess what?

Standardized Options: To simplify the shopping experience for consumers on the individual market Federally-facilitated Marketplaces, we propose to designate plans with certain standardized cost-sharing structures as “standardized options.” We have developed 6 specific recommended designs (1 silver, which would be coupled with 3 silver cost-sharing reduction variations, 1 bronze, and 1 gold). We propose making it optional for issuers to offer standardized options, and allowing issuers to offer nonstandardized plans as well. Plans with standardized cost-sharing structures will give consumers the opportunity to more easily compare plans offered by different issuers within a metal level, and can simplify the consumer shopping experience. We are considering ways that such plans could be displayed on HealthCare.gov in a manner that makes it easier for consumers to find and consider them.

Personally, I'd prefer that they make the standardized plans mandatory instead of optional, but it's a major step...and so far it looks like it's being taken up by at least some carriers this season:

West Virginia:

...In addition to gold, silver and bronze plans, CareSource has added two additional silver plans for 2017: “simple choice,” a federal standard plan, and “marketplace silver” with lower premiums.


ConnectCare (the largest carrier on the CT exchange) is jumping on the "standardized plan" bandwagon, by offering what they call "Passage" exchange plans:

  • HMO-style, $5 co-pay for Primary Care Physician (PCP) visits (pre-deductible)
  • The Silver "Passage" plan would have a flat $50specialist co-pay
  • High-quality PC network included
  • Simple/easy to understand standardized plans
  • also offering "Passage" plans to small group / Medicare enrollees

...all of which brings me to this feature story about the new program from Robert Pear of the NY Times:

When the Affordable Care Act’s health insurance marketplace opens in two weeks, many consumers will have a new option for the law’s fourth open-enrollment period: standardized health plans that cover basic services without a deductible.

...Federal officials say the new option will simplify shopping under the Affordable Care Act by reducing variation among plans, and consumer advocates like the idea. The standardized options will be identified on HealthCare.gov with the label “Simple Choice.”

...The standardized version of a midlevel silver plan has a $3,500 deductible, but primary care and specialty care visits, outpatient mental health services and prescription drugs are generally exempt from the deductible. In other words, consumers may face co-payments, but they do not have to meet the deductible before the insurance company starts to pay for such services.

...“All Simple Choice plans in the same category (like Silver) have exactly the same core benefits, deductibles and co-payments,” states a message to be displayed on the federal website. “When viewing Simple Choice plans, you can focus on other important features that may be different: monthly premiums, additional services covered, doctor and hospital networks.”

...Under the standardized version of a silver plan, co-payments would be $30 for a visit to a primary care doctor, $65 for a visit to a specialist, $15 for a generic prescription drug, $50 for a preferred brand-name drug and $100 for a nonpreferred brand-name drug. Consumers may be responsible for up to 40 percent of the cost of specialty drugs, including certain high-cost medicines for cancer, rheumatoid arthritisand multiple sclerosis.

According to the article, Connecticut, Oregon and Vermont also have standardized plans already, although I'm not sure whether they're mandatory or not.

Anyway, this strikes me as a positive development--it should reduce confusion and clutter while also hopefully nipping the "Silver spamming" issue in the bud. We'll see how it goes.