The Multi-State Plan program created under the Affordable Care Act may actually lead to further consolidation of the health insurance industry rather than increase competition through the public exchanges.
The MSP option arguably gives a competitive advantage to large insurers, which already dominate health insurance markets, wrote Robert Emmet Moffit of the Heritage Foundations Center for Health Policy Studies and Neil R. Meredith of West Texas A&M Universitys College of Business in a new white paper. They also contend that MSPs failure to increase competition may motivate a new effort for a public health insurance option.
Since last year, the ACA has required the phased-in offering of at least two national health plans in the exchanges, one of which must be a nonprofit and one not covering abortion. MSP options contracted through the U.S. Office of Personnel Management must be available in all 50 states and the District of Columbia by the end of 2017.
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There were 154 options in 2014 from the Blue Cross and Blue Shield Association in 30 states and the District of Columbia. The goal for 2015 was to add five more states and at least one new issuer whose options offer meaningful differences from existing plans.
Frank Coyne, who oversees the Blue Cross and Blue Shield Associations MSP participation, testified before a House subcommittee last year that the program is part of the groups longstanding commitment to providing consumers with a variety of health plan choices so that they have access to affordable plans that best meet their health care needs. The association represents 37 independent carriers that collectively serve 100 million members.
The MSP program white papers suggestions drew a mixed reaction from Katherine Hempstead, who directs the Robert Wood Johnson Foundations work on health insurance coverage.
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She agrees, for example, with the premise that the MSP gives large carriers a competitive advantage over smaller players. Size matters in regulated industries with standardized products, including health insurance, she observes.
But as far as I can tell, Hempstead hastens to add, the program has been kind of a non-event, noting how MSPs are hardly taking the market by storm by covering just 283,783 individuals. The consolidation, such as it is, already existed, she says. In fact, the private marketplace is already addressing concerns about under-served markets, according to Hempstead, noting how major carriers have expanded their offerings within the past year right alongside Blues plans.
Hempstead challenges the contention by Moffit and Meredith that MSPs shortcomings may lead to a public health insurance option. I interpret public option to mean the actual issuer is some kind of public or governmental entity, and I dont see that happening at all, she says. While noting the MSP hasnt done much to foster competition thus far, she says there arent any calls for a public option given an enormous amount of [marketplace] entry from private carriers.
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Hempstead describes consumer operated and oriented plans known as CO-OPs as the closest attempt at a public option a model that reflects the disadvantage that small carriers face in the market. They basically didnt have any other lines of business to offset losses against, she explains. Theyre all losing money, except the one in Maine.
One issue that wasnt addressed in the white paper within the MSP context that she deems significant is the notion of buying plans that are sold in other states. While it may be appealing in theory, Hempstead notes the difficulty of establishing provider networks unless the states are very close and small, as well as dealing with different levels of insurance regulation in states that may be adjoining.
