In the Virginia small group health insurance market, there are nearly 400 plans offered by 7 carriers, with each carrier offering dozens of plans. At Clearview Logix, we spend a lot of time organizing this plan data, both so that our decision support algorithms precisely calculates recommendations, and so that our broker quoting tool provides our clients with error-free quotes. We get to know this data all too well.
Despite our experience and expertise with benefit plans, we're not quite sure why there are so many plan options. Geographic preference probably explains some of the expansion: our sense is that carriers respond to employer/broker feedback about plans they’d like to see, encouraging growth in numbers. Carriers also introduce new plans with cost-sharing and other features more quickly than they sunset existing plans. Clearly, it must not cost a carrier much to administer a long menu of plan options. Perhaps this type of evolution results in plan proliferation.
But we think that the resulting breadth of options leads to employer/broker/consumer inertia, more than anything else. Most small group brokers we know focus on a “matrix” of preferred plans--ten or twenty at most--and don’t bother with the others. In that scenario, wouldn’t ten or twelve plans per carrier cover the range of needs? One hundred plans across all carriers could provide the market with a broad range in price and coverage options, from bronze to platinum. Fewer choices would still satisfy the market, while reducing cost and evaluation fatigue.
Perhaps another good step could be to stop the introduction of new plan design quirks that make it impossible for anyone to evaluate a plan on its face. Benefits like: “3 office visit copays then deductible then coinsurance”, or “embedded deductible but not-embedded OOP max”, are unnecessarily complex and not at all consumer-friendly. I know the carriers are trying to make their plans look appealing (while masking the unpleasant patient pay exposure), but from employer and consumer perspectives, we think they’d much prefer to understand the basic characteristics of a plan, even if it means 25% coinsurance instead of 20%.
While we're on our plan design soapbox, it would also be great for brokers and employers if the plan data was freely available and organized electronically for administration and evaluation. It now takes a team akin to a bunch of cryptocurrency miners to organize and compare plan data. For most brokers, electronic, plain-text plan data would vastly reduce the amount of work needed to present plan options to employers. Instead of entering in the same data into countless spreadsheets and enrollment systems, electronically organized plan data would facilitate quicker and better evaluations, streamlined administration, and effective consumer choice.
Clearly, if the market set some standards, we could save time and money, and allow employers and their advisors time to get at real issues: like employee education, communication, and engagement... with fewer and simpler plans!