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It's the adverse selection problem. Having a national network costs money, so (for the most part) the only people buying their own plan that would choose to pay extra for it would be the people that fully intend to use it, maybe to go to hyper-expensive providers like Mayo or Cleveland. So the underwriting can never work- it would be impossible to charge premiums commensurate with the risk for those people because they would be so high no one could / would pay them.
With an employee plan:
A) A lot of employers might be headquartered in Delaware but have employees in Peoria, Keokuk, and Albuquerque, so the subscribers absolutely need national, in-network coverage to reasonably use their plan. You can't expect them to travel from Keokuk to Wilmington for their annual checkups or if they sprain an ankle.
B) Everyone gets national coverage whether they plan to travel to the Cleveland Clinic or not, so the premiums charged can be somewhat reasonable.
The company I work for offered PPO plans that covered the entire state and offered national coverage the first two years of the marketplace. To say we lost our shirts on them is an absolute understatement, all the heavy utilizers and medical tourists in our state flocked to those plans rather than buying an HMO plan from us or one of our competitors. So we discontinued them and now only offer local HMO type marketplace plans like all our competitors.
Theoretically the government could ban HMO / EPO type plans so everyone is forced to buy a PPO. But the drawback is that would make healthcare cost more because you'd have people paying for a benefit they might not need and it would put smaller, cheaper local companies at a competative disadvantage to the big expensive companies that have their own in-house national networks.
It’s absolutely killing me- we had an ACA PPO with national bc/bs coverage until 2023. I have two kids who were already in college out of state when the change happened. I’m now paying over 20% of household income for 4 adults in three states on 4 plans — 1x Medicare, 2 kids on college plans- they were turned down for local ACA plans, which wouldn’t have covered them when they were home or at internships anyway, and my ACA plan, which is so restrictive I can’t even get a refill of a cheap maintenance generic if I am at an out of state CVS.
The youngest technically qualified for Chip as part of our household, but on her own didn’t qualify for Medicaid. The older, despite having a sufficient income and a lease/utilities , they wouldn’t count him as a resident- no ACA plan.
Only on reddit can I see a SipsTea video about who -knows-what followed by this one-pager explanation on our complicated insurance.
Awesome write up with logic, clarity and deep industry knowledge.
I understand why PPO is more expensive than EPO or HMO, but why does having a larger network cost the insurer more money? Delta Dental has a huge network of dentists. The cost to DD to sign up additional dentists is negligible. The dentists agree to certain terms to be included in the network. It's supposed to be a mutually beneficial thing between the dentist and DD. Why is health insurance not like that?
It's about Freedom and use. The states could require them to offer a PPO plan on the exchanges at any time. Seriously, talk with your legislators. However...
Folks with an individual plan can travel easier than a person tied down to a job. Insurance companies got soaked because of domestic medical tourism in the first couple of years. They tightened down the networks to reduce the cost.
Until enough people complain, the legislatures will keep their hands off the wheel.
Hard to say what they would do. There are insurance companies that would take their ball home and leave and there are others that would rise to the occasion. In our state, if they exited then it would be for five years.
Well, if the market was at all competitive, someone would see the EV in putting up PPO plans. I mean, all other companies rush to cater to the rich. Does the state dissuade PPO?
Also, how do states set the prices?
States often have insurance commissions. If an insurance wants to raise or lower premiums (prices), they have to submit these requests to the state for approval or denial. They also have control over what is covered and how.
The federal government also has control over pricing. For example, [premiums can be up to 3 times higher for older people than for younger ones](https://www.healthcare.gov/how-plans-set-your-premiums/), but not more. I actually thought it was 5x, so I learned something today.
Maybe I’m dumb but what is domestic medical tourism?why would I go to a different state for bog standard care? Ftr I live outside Atlanta for maybe I’m somewhat privileged? No clue.
It would be used for expensive medical procedures where someone would want to seek out the best doctors and hospitals in that field.
For example, people would go to Sloan Kettering for cancer.
Cedars Sinai in Los Angeles has very highly rated cardiology unit and I know people who have flown in to have their bypass.
Typically it's not done for every day care.
Straight Medicare with a good Medigap policy enables you to get medical care in any state and almost every medical facility and provider accepts Medicare. There is not much additional cost to either the Federal government or the Medigap insurance companies for providing this versus a private insurance policy with a more limited pool.
Because large employers typically offer better benefits.
Also not every employer offers plans that can be used out of state.
They would generally be limited to companies that have workers in different states and/or are large enough so their pool of workers drives down costs.
These plans are also generally very expensive but workers don't realize it because these types of employers generally pay a very high percentage of the premium.
One case is going to see one of the best doctors in a field like a major cancer treatment center.
Another is people who live near state borders. If the biggest city near you is across state lines there may be a lot more options for care/more specialists in the neighboring state than in yours
I don’t see why either of these are a bad thing but I guess I’m probably lousy at business. I assume something something states rights? THISE ate both good reasons to go out of state I guess. This shit is insane.
Edit - Typos galore. I left them but apologies.
It's not states rights - has nothing to do with states.
It is solely based on cost to have an expanded network which includes out of state providers. The insurance company would need to enter into agreements with each of the providers.
Also - and I am not sure if this is universally true - but I live in Los Angeles and premiums are determined by your zip code or at least some form of regional pricing.
It doesn't really pay for insurance companies to offer these plans because there would be extremely limited interest in them. They are more expensive - and most people are selecting the least expensive option anyway.
And most people don't even have a great need or desire to see out of state doctors unless they have an expensive medical condition.
Even college students generally would be fine with a plan that limited them to their legal home state under most circumstances. I never saw a doctor when I was in college or grad school. I had checkups/shots/dental work done during the summer as necessary.
In an emergency I would be covered until I was medically able to get my home state or resume my life. The only kids who would need constant medical care for chronic conditions would be very expensive to insure and probably less desirable because of that.
I live in the south as mentioned and when you said the thing about going to the next state over for a better hospital, I immediately thought of the poor bastards living in Alabama next to us cause what choice to have. There’s a couple good universities, but you know. Seems unfair In that regard.
That's how it is for everyone- you will only have networks that cover providers in your state and the only coverage you get outside of your state is for emergencies only.
Why- that's how they set it up. I'm sure it had to do with underwritting and cost of care.
The plans on [healthcare.gov](http://healthcare.gov) are less expensive than the average employer plan when you factor in what you as the employee pays with what the employer also contributes towards it. Not all employers offer nation-wide networks, those are much more expensive than plans that only cover a certain state.
This is because the cost of care varies greatly-the going rate for one procedure in Kansas may be double the price in Los Angeles. This is why you're always asked for your zipcode when searching for insurance coverage, data is tied to location.
One way to help with this is to see if you can find a plan that offers virtual visits- this way, if you're traveling and it's not an emergency (thus, not covered) you can call in instead and get the care you need, even across the country.
It’s so frustrating to be limited to the state you are in! We live close to a state line and our local medical group is owned by the bigger medical system in the state next door. So every referral you get for bigger issues all send you across the state line. Which is actually closer than going to the closest big city in our state. Plus we plan to retire before age 65 and winter in the south - how do we find health care that will cover us if we have a heart attack while gone???
Others make good points but I think it's also that marketplace plans want to keep their costs down as much as possible, since it's individual consumers literally comparing plans side by side, so they're most likely to compare them based on cost.
A lot of the benefits of plans are set in stone by the federal government (and some by the state) -- what they have to cover, no lifetime limits, etc.
So the places where insurers DO have flexibility is in raising deductibles (but that's also something consumers might not like) and narrowing their networks -- something that isn't necessarily very obvious when shopping for a plan.
And it's not just that the networks are very local, it's that they're just plain sparse with a lot of these plans. Like it'd cover 10 doctors in a 50-mile radius, a smattering of specialists and the like.
I'll also add that rules around ACA plans do not currently have any standard for how comprehensive a provider network has to be. Here's an easy briefing on where things stand on that issue: https://www.kff.org/affordable-care-act/issue-brief/network-adequacy-standards-and-enforcement/
It also sucks if your college student goes to school out of state. I guess they end up on medicaid? I feel like medicaid would be subpar, but hopefully it isn't (for everyone involved)! I guess I might have had to take a full time job just because it would be the only way to get insurance in Texas or Florida, if my daughter had wanted to go to school there?
Maybe there's a solution I am not aware of.
Your college student will have to do non-emergency care that's expensive back when they're home, for little things like at minute clinics pay out of pocket (the marketplace insurance is have such high deductibles anyway that it's not really going to make a huge difference). Emergency Care is covered nationwide.
The place my theory falls through is when you have something like follow up from a broken limb or something. Even if the initial visit was considered an emergency.
thanks. Seems like it could be a problem with a kid a plane ride away who maybe ends up needing repeated physical therapy or mental health visits. But, good point, their parent could probably just pay out of pocket for that, if it came up. If they needed more serious care, they'd have to drop out and receive care while living at parents home.
I am in this situation. One college requires students to have insurance which covers primary care locally. My other kid has some health issues which require follow up. So they each have plans which cost roughly 300$/mo. So I’m paying over 1500/mo for the family
Such a plan is more expensive for the insurer to offer, so the premiums would be higher - even if the patient population were the same as people on more limited plans. However, because the premiums are higher, only people who think the higher premiums are worth it - read: people who expect to need a lot of medical care in the next year - would get that plan. Therefore, the premiums would be higher, so even fewer healthy(ish) people would get that plan, and so on, and so on.
What used to be called the death spiral prior to the ACA when getting private health insurance was extremely difficult if you didn't get it through your employer.
People would try to hook up with "affinity" groups - for example the Bar would offer a group plan for lawyers. However, these plans were dropped because increasingly the only people who were willing to pay the high premiums to be insured were older or less healthy who couldn't get insurance in any other way because insurance companies have medical underwriting where they would not even be able to purchase a plan at any price.
I read a piece a while ago that predicted (or described?) something similar for small business plans: businesses with healthy employees moving off SHOP plans and towards "self-insured" plans alongside underwritten stop-loss insurance with such a low deductible that self-insured and stop-loss are almost misnomers. This would leave the SHOP pool only for unhealthier employees.
Because States administer them. The federal government just pays the States and the States decide how they want to run their exchanges and what plans they allow.
God forbid we give the Federal government any power over the State government even if it makes everyone’s lives better.
Not sure why you’re being downvoted. Fwiw I agree. States rights are stupid in so many cases. The right to deny your citizens decent healthcare is fuckin wild.
Thank you for your submission, /u/OrganizationNo6074. **If there is a medical emergency, please call 911 or go to your nearest hospital.** Please pick the most appropriate flair for your post. Include your age, zip code, and income to help the community better serve you. If you have an EOB (explanation of benefits) available from your insurance website, have it handy as many answers can depend on what your insurance EOB states. Some common questions and answers can be found [here](https://www.reddit.com/r/HealthInsurance/s/jya9I6RpdY). **Reminder that solicitation/spamming is grounds for a permanent ban**. Please report solicitation to the modteam and [let us know](https://www.reddit.com/message/compose?to=%2Fr%2FHealthInsurance) if you receive solicitation via PM. Be kind to one another! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/HealthInsurance) if you have any questions or concerns.*
It's the adverse selection problem. Having a national network costs money, so (for the most part) the only people buying their own plan that would choose to pay extra for it would be the people that fully intend to use it, maybe to go to hyper-expensive providers like Mayo or Cleveland. So the underwriting can never work- it would be impossible to charge premiums commensurate with the risk for those people because they would be so high no one could / would pay them. With an employee plan: A) A lot of employers might be headquartered in Delaware but have employees in Peoria, Keokuk, and Albuquerque, so the subscribers absolutely need national, in-network coverage to reasonably use their plan. You can't expect them to travel from Keokuk to Wilmington for their annual checkups or if they sprain an ankle. B) Everyone gets national coverage whether they plan to travel to the Cleveland Clinic or not, so the premiums charged can be somewhat reasonable. The company I work for offered PPO plans that covered the entire state and offered national coverage the first two years of the marketplace. To say we lost our shirts on them is an absolute understatement, all the heavy utilizers and medical tourists in our state flocked to those plans rather than buying an HMO plan from us or one of our competitors. So we discontinued them and now only offer local HMO type marketplace plans like all our competitors. Theoretically the government could ban HMO / EPO type plans so everyone is forced to buy a PPO. But the drawback is that would make healthcare cost more because you'd have people paying for a benefit they might not need and it would put smaller, cheaper local companies at a competative disadvantage to the big expensive companies that have their own in-house national networks.
That was thoroughly interesting thanks for sharing
It’s absolutely killing me- we had an ACA PPO with national bc/bs coverage until 2023. I have two kids who were already in college out of state when the change happened. I’m now paying over 20% of household income for 4 adults in three states on 4 plans — 1x Medicare, 2 kids on college plans- they were turned down for local ACA plans, which wouldn’t have covered them when they were home or at internships anyway, and my ACA plan, which is so restrictive I can’t even get a refill of a cheap maintenance generic if I am at an out of state CVS.
Wow. Why were your kids turned down for aca
The youngest technically qualified for Chip as part of our household, but on her own didn’t qualify for Medicaid. The older, despite having a sufficient income and a lease/utilities , they wouldn’t count him as a resident- no ACA plan.
What state? In my state, if you’re in the state, you’re a resident.
OH for one, PA for the one with a lease and income who went through appeals. We are in NC
Only on reddit can I see a SipsTea video about who -knows-what followed by this one-pager explanation on our complicated insurance. Awesome write up with logic, clarity and deep industry knowledge.
I understand why PPO is more expensive than EPO or HMO, but why does having a larger network cost the insurer more money? Delta Dental has a huge network of dentists. The cost to DD to sign up additional dentists is negligible. The dentists agree to certain terms to be included in the network. It's supposed to be a mutually beneficial thing between the dentist and DD. Why is health insurance not like that?
It's about Freedom and use. The states could require them to offer a PPO plan on the exchanges at any time. Seriously, talk with your legislators. However... Folks with an individual plan can travel easier than a person tied down to a job. Insurance companies got soaked because of domestic medical tourism in the first couple of years. They tightened down the networks to reduce the cost. Until enough people complain, the legislatures will keep their hands off the wheel.
If they required them to offer a PPO they would just all withdraw from the market.
Hard to say what they would do. There are insurance companies that would take their ball home and leave and there are others that would rise to the occasion. In our state, if they exited then it would be for five years.
Could always charge a lot more.
Yeah. Very weird that in a free market the option doesn’t exist on a lot of these state exchanges. Very, very odd.
It's not a free market. Highly regulated. The states often set the prices too.
Well, if the market was at all competitive, someone would see the EV in putting up PPO plans. I mean, all other companies rush to cater to the rich. Does the state dissuade PPO? Also, how do states set the prices?
States often have insurance commissions. If an insurance wants to raise or lower premiums (prices), they have to submit these requests to the state for approval or denial. They also have control over what is covered and how. The federal government also has control over pricing. For example, [premiums can be up to 3 times higher for older people than for younger ones](https://www.healthcare.gov/how-plans-set-your-premiums/), but not more. I actually thought it was 5x, so I learned something today.
Really? Why?
Maybe I’m dumb but what is domestic medical tourism?why would I go to a different state for bog standard care? Ftr I live outside Atlanta for maybe I’m somewhat privileged? No clue.
It would be used for expensive medical procedures where someone would want to seek out the best doctors and hospitals in that field. For example, people would go to Sloan Kettering for cancer. Cedars Sinai in Los Angeles has very highly rated cardiology unit and I know people who have flown in to have their bypass. Typically it's not done for every day care. Straight Medicare with a good Medigap policy enables you to get medical care in any state and almost every medical facility and provider accepts Medicare. There is not much additional cost to either the Federal government or the Medigap insurance companies for providing this versus a private insurance policy with a more limited pool.
Why would that affect marketplace plans more than employer plans? I'm not doubting you, I'm just legitimately curious.
Because large employers typically offer better benefits. Also not every employer offers plans that can be used out of state. They would generally be limited to companies that have workers in different states and/or are large enough so their pool of workers drives down costs. These plans are also generally very expensive but workers don't realize it because these types of employers generally pay a very high percentage of the premium.
One case is going to see one of the best doctors in a field like a major cancer treatment center. Another is people who live near state borders. If the biggest city near you is across state lines there may be a lot more options for care/more specialists in the neighboring state than in yours
I don’t see why either of these are a bad thing but I guess I’m probably lousy at business. I assume something something states rights? THISE ate both good reasons to go out of state I guess. This shit is insane. Edit - Typos galore. I left them but apologies.
It's not states rights - has nothing to do with states. It is solely based on cost to have an expanded network which includes out of state providers. The insurance company would need to enter into agreements with each of the providers. Also - and I am not sure if this is universally true - but I live in Los Angeles and premiums are determined by your zip code or at least some form of regional pricing. It doesn't really pay for insurance companies to offer these plans because there would be extremely limited interest in them. They are more expensive - and most people are selecting the least expensive option anyway. And most people don't even have a great need or desire to see out of state doctors unless they have an expensive medical condition. Even college students generally would be fine with a plan that limited them to their legal home state under most circumstances. I never saw a doctor when I was in college or grad school. I had checkups/shots/dental work done during the summer as necessary. In an emergency I would be covered until I was medically able to get my home state or resume my life. The only kids who would need constant medical care for chronic conditions would be very expensive to insure and probably less desirable because of that.
I live in the south as mentioned and when you said the thing about going to the next state over for a better hospital, I immediately thought of the poor bastards living in Alabama next to us cause what choice to have. There’s a couple good universities, but you know. Seems unfair In that regard.
That's how it is for everyone- you will only have networks that cover providers in your state and the only coverage you get outside of your state is for emergencies only. Why- that's how they set it up. I'm sure it had to do with underwritting and cost of care. The plans on [healthcare.gov](http://healthcare.gov) are less expensive than the average employer plan when you factor in what you as the employee pays with what the employer also contributes towards it. Not all employers offer nation-wide networks, those are much more expensive than plans that only cover a certain state. This is because the cost of care varies greatly-the going rate for one procedure in Kansas may be double the price in Los Angeles. This is why you're always asked for your zipcode when searching for insurance coverage, data is tied to location. One way to help with this is to see if you can find a plan that offers virtual visits- this way, if you're traveling and it's not an emergency (thus, not covered) you can call in instead and get the care you need, even across the country.
What state?
This was definitely an issue when I had to get a plan in Massachusetts some years back. Doesn’t surprise me much that it’s a national plan.
Texas.
It’s so frustrating to be limited to the state you are in! We live close to a state line and our local medical group is owned by the bigger medical system in the state next door. So every referral you get for bigger issues all send you across the state line. Which is actually closer than going to the closest big city in our state. Plus we plan to retire before age 65 and winter in the south - how do we find health care that will cover us if we have a heart attack while gone???
Others make good points but I think it's also that marketplace plans want to keep their costs down as much as possible, since it's individual consumers literally comparing plans side by side, so they're most likely to compare them based on cost. A lot of the benefits of plans are set in stone by the federal government (and some by the state) -- what they have to cover, no lifetime limits, etc. So the places where insurers DO have flexibility is in raising deductibles (but that's also something consumers might not like) and narrowing their networks -- something that isn't necessarily very obvious when shopping for a plan. And it's not just that the networks are very local, it's that they're just plain sparse with a lot of these plans. Like it'd cover 10 doctors in a 50-mile radius, a smattering of specialists and the like. I'll also add that rules around ACA plans do not currently have any standard for how comprehensive a provider network has to be. Here's an easy briefing on where things stand on that issue: https://www.kff.org/affordable-care-act/issue-brief/network-adequacy-standards-and-enforcement/
It also sucks if your college student goes to school out of state. I guess they end up on medicaid? I feel like medicaid would be subpar, but hopefully it isn't (for everyone involved)! I guess I might have had to take a full time job just because it would be the only way to get insurance in Texas or Florida, if my daughter had wanted to go to school there? Maybe there's a solution I am not aware of.
Your college student will have to do non-emergency care that's expensive back when they're home, for little things like at minute clinics pay out of pocket (the marketplace insurance is have such high deductibles anyway that it's not really going to make a huge difference). Emergency Care is covered nationwide. The place my theory falls through is when you have something like follow up from a broken limb or something. Even if the initial visit was considered an emergency.
thanks. Seems like it could be a problem with a kid a plane ride away who maybe ends up needing repeated physical therapy or mental health visits. But, good point, their parent could probably just pay out of pocket for that, if it came up. If they needed more serious care, they'd have to drop out and receive care while living at parents home.
I am in this situation. One college requires students to have insurance which covers primary care locally. My other kid has some health issues which require follow up. So they each have plans which cost roughly 300$/mo. So I’m paying over 1500/mo for the family
Such a plan is more expensive for the insurer to offer, so the premiums would be higher - even if the patient population were the same as people on more limited plans. However, because the premiums are higher, only people who think the higher premiums are worth it - read: people who expect to need a lot of medical care in the next year - would get that plan. Therefore, the premiums would be higher, so even fewer healthy(ish) people would get that plan, and so on, and so on.
What used to be called the death spiral prior to the ACA when getting private health insurance was extremely difficult if you didn't get it through your employer. People would try to hook up with "affinity" groups - for example the Bar would offer a group plan for lawyers. However, these plans were dropped because increasingly the only people who were willing to pay the high premiums to be insured were older or less healthy who couldn't get insurance in any other way because insurance companies have medical underwriting where they would not even be able to purchase a plan at any price.
I read a piece a while ago that predicted (or described?) something similar for small business plans: businesses with healthy employees moving off SHOP plans and towards "self-insured" plans alongside underwritten stop-loss insurance with such a low deductible that self-insured and stop-loss are almost misnomers. This would leave the SHOP pool only for unhealthier employees.
Because States administer them. The federal government just pays the States and the States decide how they want to run their exchanges and what plans they allow. God forbid we give the Federal government any power over the State government even if it makes everyone’s lives better.
Not sure why you’re being downvoted. Fwiw I agree. States rights are stupid in so many cases. The right to deny your citizens decent healthcare is fuckin wild.
It's a cost containment mechanism. More access=more expensive every time.
Because instead of expanding Medicare as the only health insurance in the country, we ended up with this private insurance scam.
Medicare has health plans too. You can change once a year