Plan Efficiency Evaluation in Health Insurance Exchanges

Abstract

Objectives. To help individuals identify plans of potentially lesser value on health insurance exchanges (HIX) and inform a discussion with payers regarding plan efficiency based on competitive landscape.

Study Design. We propose a methodology based on linear regression to identify inefficient (dominated) plans in the exchanges based on plans’ attributes. We identify the excess premium by which certain plans are less competitive than others based on an analysis of plans’ features such as premiums and deductibles. We assign each health payer a letter grade based on the percentage of efficient (non-dominated) plans in its HIX portfolio.

Data Sources. We use HIX plan information in Pennsylvania and Massachusetts.

Principal Findings. Our approach documents wide variations in payers’ competitiveness and the role of the health payer (name) in driving premiums.

Conclusions. Our methodology provides a novel way to analyze HIX offerings. Payers should articulate more clearly the value proposition of plans labeled “inefficient” or “dominated” in our approach.