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'Ghost Plans' Exist on Exchanges But Insurers Don't Market Them

Analysis  |  By Gregory A. Freeman  
   July 25, 2018

Insurers try to avoid signing up consumers for some health plans even though they are officially counted as options under the ACA. The result is less freedom to choose.

The health plan choices available to consumers have dwindled since the start of the Affordable Care Act, frustrating consumers and becoming a key indicator of the law's decline, but the problem could be worse than it appears.

Insurance companies sometimes avoid marketing certain "ghost plans" that are technically offered under the ACA.

Carriers adopt this strategy to minimize risk from certain demographics and geographic areas in which they do not fully understand the risk pool, says Michael Levin, CEO and cofounder of Vericred, a healthcare data services company in New York City that works directly with insurers. They also may understand the risk and worry a certain plan would prove unprofitable.

The carriers' strategy results in less choice for consumers seeking health plans, he says.

"There is a lot of talk about choice in the market leading up to open enrollment, how many carriers are participating, and what plans are available. What's lost—because it's not understood outside of this work with the carriers—is that health plans are being suppressed by the carriers," Levin says.

"If a carrier normally offers 10 plans but is suppressing nine of those 10 plans, how much choice are they really offering in that market?" he says.

More Ghost Plans Coming?

There was concern that insurers might use this strategy more in the coming year because of increasing uncertainty about how they would fare economically without the risk adjustment payments provided under the ACA.

Earlier this month, the Trump administration froze the payments, designed to compensate insurers for making coverage available to lower-income and high-risk consumers. But the administration resumed the payments Tuesday, perhaps motivated to address the issue before the midterm elections.

"For the first half of this year, we were very excited about how the market was filling out. There seemed to be more stability, with more certainty about what the regulations were going to be, and carriers were entering the markets, adding more choices," Levin says.

The decision to halt the risk payments could have prompted carriers to create more ghost plans, resulting in even less choice for consumers, he says.

Related: ACA Risk-Adjustment Payments Unfrozen

Under the Affordable Care Act, individuals can buy a health plan either by going through one of the state exchanges—their only option if they are eligible for subsidies—or use brokers—either human or web-based—to help them find the right ACA health plan.

"Using a broker is becoming more popular because there are people creating new experiences that offer better decision support than," Levin says.

The selection is not always the same, however. Some plans are available only on the exchanges, some only through brokers, and some are available from both, Levin explains.

"Last year we saw a number of carriers saying they had a number of plans available, but they didn't want to actively market them. Some didn't even put those plans on their websites, and some wanted them actively suppressed from digital brokers," Levin says.

"We think it was born out of the craziness leading up to the open enrollment and the defunding of the cost-sharing reductions," he says.  

Practice Undermines ACA

Carriers sometimes say they take this approach to protect the consumer, Levin explains. They say, for instance, that some plans are best sold through their own websites where they can provide the proper explanation of benefits and help consumers make the right decision.

Those plans are less suited for digital brokers where consumers might not get the same level of decision support, carriers have told Levin.

But that is not the only motivation.

"We've also been told by carriers that they just don't want to build their membership in a certain market because it is too uncertain and they don't know the risk pool there," Levin says. "They say, 'We would rather not sell these plans, and we would rather not add members to our book of business.' Some have been very candid about that."

Some carriers avoid any explanation for the decision, just declaring that they are "not actively marketing these plans," Levin says. 

The practice undermines the goal of the ACA, Levin says.

"A primary goal of the Affordable Care Act is bringing choice to the consumer so they can select the right plan for themselves and their families, based on their own circumstances and needs," he says. "This makes that more difficult for the consumer, and it would be frustrating for them if they knew that other options were out there but they're just not being told about them."

Gregory A. Freeman is a contributing writer for HealthLeaders.

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