I mentioned yesterday a new rule from the Arkansas Insurance Department that will help the Department of Human Services keep costs down for the private option in future years. The rule, included in a recently released bulletin to insurers from AID, requires that all carriers selling plans on the Arkansas Health Insurance Marketplace in 2015 offer at least one Silver level plan which only covers the ten essential health benefits (EHBs) mandated by the law (plans are divided into metallic levels based on coverage, with Silver medium-level).
Important clarification from officials at AID: Ambetter wasn’t the only plan which offered Silver-level plans with benefits beyond the EHB – all of the carriers did. In fact, there was only one plan on the entire Marketplace that was EHB-only in 2014, and as it happens, it was one offered by Ambetter.
Read this post for the background, but I focused on Ambetter (offered by St. Louis-based Centene) because of a clever maneuver the company used on the Marketplace in 2014. Ambetter offered plans with dental and vision benefits as part of the comprehensive benefits package. Private option beneficiaries could shop for any Silver-level plan, with their premiums fully covered by Medicaid funds. Since they weren’t footing the bill, they unsurprisingly often chose Ambetter plans that were listed as “+Vision + Dental.” Those add-ons go beyond the benefits guaranteed by Medicaid, so the private option doesn’t chip in for co-pays — but the feds, funding the private option, were on the hook for the higher premiums when beneficiaries picked those plans. The result was higher per-person costs for the private option in 2014.
Whether you think of this as innovation or gaming the system is a matter of perspective, but Ambetter played by the rules and it worked: Ambetter did very well among private option customers in the three areas it offered plans. The state decided against using some form of competitive bidding in the private option’s first year, and didn’t include anything to make beneficiaries price sensitive in 2014 as they selected among every Silver-level plan available. That likely made something like this inevitable, as Adrianna McIntyre of the Incidental Economist points out:
Ambetter was the only company that used this particular strategy, and it was the priciest hit against the private option. However, all of the carriers included benefits beyond the EHBs in their plans, most commonly adult vision screening, TMJ, and hearing aids. Again, every single plan on the Marketplace, according to AID, had non-EHB benefits, with the exception of one plan offered by Ambetter.
Starting next year, every carrier will have to have at least one EHB-only Silver plan. And DHS plans to institute a rule next year that the private option will only purchase those EHB-only plans. If they do, the biggest cost saver will likely be no longer purchasing the vision/dental Ambetter plans, but the private option could achieve smaller savings on every other plan it’s purchasing in the Marketplace too.