If Oregon’s recent decision to publish proposed rates is any indication, public insurance exchanges could force health plan operators to be more competitive — or at least spend more time cross-checking their math. Proposed prices for Bronze-level individual coverage ranged from $169 to $422, prompting at least one carrier to seek permission to go back to the drawing board. You can compare options at www.oregonhealthrates.org.
Ironically, Family Care Health Plans — a company that sells Medicaid and Medicare plans —proposed the highest rate for a commercial product it intends to sell on the exchange. The company’s leadership is now considering revising the proposal to be more competitive, a spokesperson told me. Providence Health Plan, which proposed a monthly rate of $290 for individual coverage, has formally requested adjustments.
In a telephone interview, a spokesperson from Oregon’s Dept. of Consumer and Business Services explained that carriers will be allowed to resubmit bids as long as they can demonstrate a change is justified. Any additional information provided by the carrier won’t supersede or replace information contained in the filing, and the division will not accept revised filing exhibits, such as rate tables or actuarial memoranda, reflecting changes other than corrections of errors, she told me. Final rate decisions will be made by the state on June 30.
Peter Rodes, vice president of strategy and consulting at KBM Group, says creating increased price competition through product standardization is exactly what the exchange has been designed to do. Fred Karutz, senior vice president of business development at ConnectedHealth, predicts that dominant carriers with large blocks of consumer business — and deep pools of claims data — will be positioned to submit the most accurate bids.
Carriers that propose low rates have likely made a strategic decision to grab market share early in the game, and might opt to adjust prices upward in the second year, suggests Rosemarie Day, president of Day Health Strategies in Somerville, Mass. Day helped launch and operate Massachusetts’ insurance exchange, the Commonwealth Connector, in 2006. In the early days of the Connector, she says carriers were asked to “sharpen their pencils” when they submitted their initial proposals, but they didn’t see their competitor’s prices until they were posted online much later in the process. “At that point, they had to live with their own prices for a month,” but they could re-price things when they submitted their rates for the following month — as long as they stayed within the Dept. of Insurance’s guidelines, Day recalls. But adjusting prices after the first month won’t be allowed under the federal reform law, which has a limited open-enrollment period.
Can exchanges help create a more competitive marketplace by posting rates for standardized products?