The data is not fully out yet, but, if my home area of Houston, Texas (Harris County) is representative, PPO plans that offer the greatest choice of doctors and that provide low cost sharing are extinct, as are POS plans that also offer more choice of medical practitioners. Platinum plans of any sort are on their way to its extinction.
In 2015, there were 19 PPOs available in Harris County, 12 from Blue Cross Blue Shield and 7 from Cigna Healthcare. In 2016, according to the preliminary data available on healthcare.gov and released Sunday, there are none. Nor does the matter improve my considering POS plans, which also offer a greater degree of choice of doctor than does an HMO. In 2015 there were17 such plans in Harris County, 10 from Aetna and 7 from Humana. Those are gone too in 2016. So, basically, it is no longer true in Harris County that you have a choice of doctor if you purchase an Obamacare plan. You get what the HMO or EPO gives you.
Platinum plans are now almost extinct. In 2015, there were three platinum plans available in Harris County, an HMO and POS offered by Humana and and EPO offered by United Healthcare. According to the preliminary information released Sunday, only the Humana HMO survives. Thus, you can get a plan that has minimal cost sharing, but no longer one that offers great choice of medical practitioners. The Humana POS and the United EPO are gone.
And it’s going to cost you a lot to put yourself in a pool in which cost sharing is low. In 2015, the gross premium for the Humana Platinum HMO (32673TX0640030) was $448 for an individual age 40 (non-smoker). In 2016, the gross premium for the same Humana plan was $551, an increase in gross premiums of 23%.
Net premium increases — the thing the insured actually pays — are likely to rise a similar amount for the one remaining platinum plan. The second lowest silver plan — the baseline for computation of subsidies — has increased in price by $34, from $222 in 2015 to $256 in 2016. Consider an individual eligible for a $150 subsidy in 2015. If they purchased the Humana Platinum HMO in 2015, their net price would be $298. If they purchased the same policy in 2016, yes, their subsidy might grow by $34 but their net price would still be $367, an increase of 23%.
All of this is the very predictable consequence of a design flaw in the ACA. It heralds an unraveling of the Obamacare market. Who is willing to pay the extra cost of a PPO: generally people who value a long term relationship with their physician. And those people are disproportionately less healthy than others. Hence, the PPO pool tends to be populated by people who are expensive to treat. Although insurers could, in theory, compensate for this by raising premiums to very high levels, in fact that does not work for long because, with premiums yet higher, only the least healthy of the least healthy persist, and the pressure on premium grows. Insurers, seeing the handwriting on the wall, thus kill off these plans before they technically implode.
It is the same problem with platinum plans. The people who most want low cost sharing tend to be the people who most have high costs. These plans are thus difficult to sustain where plans with lower cost sharing are available. The complex ecology of health insurance does not permit them to survive.
When the Obama administration releases its data in a form that is more susceptible to in depth analysis, we’ll be able to see if Harris County is representative or an anomaly. Although the trend may be stronger or weaker in other areas, I predict it will not show there is much special about the Houston, Texas area in its vulnerability to a death spiral.