Exchanges Appear to Be Fueling PPO Contraction, HMO Revival

By Steve Davis - November 5, 2015

 

With the third open-enrollment period for public health insurance exchanges underway, news reports have focused on rate hikes for coverage. Nationally, monthly premiums for the second lowest-cost silver-tier plans sold on federally run exchanges are up an average of 7.5%. In some states, such as Alaska, New Mexico and Oklahoma, the average increase topped 25%. In a few states, such as Maine and Indiana, benchmark plans actually are less expensive this year. And in most cases, the 2016 benchmark is different than the 2015 benchmark, and consumers will need to switch plans to get the best deal.

What’s not getting much attention are deductibles, which have decreased substantially in some markets, according to a recent AIS analysis. Part of the reason could be tied to fewer PPOs and more HMOs being sold on the exchanges.

Humana Inc., for example, trimmed its annual deductibles by as much as $800 for most of its silver-tier products. For 2015, deductibles ranged from $3,200 to $4,600. For 2016, deductibles are $800 for most of Humana’s silver plans. Blues plan operator Anthem, Inc. boosted deductibles slightly or not at all, and Aetna Inc. cut deductibles nearly in half in a few states where they had been as high as $5,000.

For the 2016 plan year, two-thirds of carriers that sold PPOs on exchanges for 2015 have either reduced the number of PPOs or eliminated them entirely for 2016, according to an analysis released Nov. 3 by the Robert Wood Johnson Foundation. “It seems like some of the carriers are trying to reduce their costs through tighter control of networks and pretty much doing everything they can to eliminate out of network care,” Katherine Hempstead, Ph.D., who directs RWJF’s work on health insurance coverage, told me in a recent email. According to the report, 93 carriers offered PPO plans in 48 states for the 2015 plan year. In 22 states, all silver-tier PPO plans offered in 2015 were either reduced or eliminated in 2016, according to RWJF.

An Avalere analysis released Nov. 5 notes that from 2014 to 2016, the percentage of plans offering PPO networks dropped by nearly one-third.

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