DRG - Hix by the Numbers

The collapse of numerous Consumer Oriented and Operated Plans (CO-OPs) and UnitedHealthcare’s 2017 exchange withdrawals sent ominous signals for the future of health exchanges.

Just don’t tell the innovators that. Startup plans continue to test the market with new models, including a few new names ready to try their hand in 2017.

One has challenged the market from its inception. New York-based startup Oscar, the first technology-driven health plan, started in the New York City market and now sells plans in New Jersey, California, and Texas, covering 140,000 people (Oscar Health statistics). The plan lost $105 million on New York and New Jersey business in 2015, leading to significant premium increases for 2017.

Still, Oscar plans to grow into other markets. The company has been successful at drawing investors, a roadblock HHS placed on CO-OPs that some say fatally wounded them. At AHIP Institute 2016 in Las Vegas, Oscar founder and CEO Mario Schlosser said the insurer’s investors are patient, understanding that a new insurer cannot take an Uber-like approach to growing market share.

Oscar can also boast an enviable patient mix – 31 percent of membership falls into the 26-35 age bracket, the young invincibles necessary to ward off adverse selection. The high-tech approach appeals heavily to younger demographics, and should boost Oscar as it grows into new markets.

One newcomer targeted Colorado for ultra-narrow-network plans built around a high-performing provider system. Minnesota-based Bright Health will enter the Colorado market in a partnership with Centura Health, using Colorado Health Neighborhoods, Centura’s clinically integrated network of 3,800 physicians, as its exclusive provider partner. The partnership could place Bright Health in competition with Colorado’s long-running integrated provider, Kaiser Foundation Health Plans. Its cost proposition and vertical integration have made Kaiser an exchange leader. Partnering with a similar health system could benefit Bright Health, so long as it remembers the pitfalls of pricing plans too low, which sank market-leading Colorado HealthOp in late 2015.

Another startup led by insurance veterans, Canopy Health, will debut in the Nevada and Wyoming markets in 2017. Exchange competition in both markets has been slim since their inceptions, with Wyoming down to a single carrier for 2016.  Whether they can succeed or not is debatable – insurance markets are resilient when faced with new competition, and both markets are fraught with challenges. UnitedHealth’s vertically integrated Health Plan of Nevada dominates Clark County, which accounts for 2 million of the state’s 2.7 million residents. Wyoming has always proven a thorny place to set up a provider network, since it has few providers and a small population. Canopy also plan to target young invincibles, which could hit in Vegas.

An unlikely national insurer is touting an innovative health approach – UnitedHealth. Despite its noisy exit from most exchange markets, UnitedHealth’s independent subsidiary Harken Health, which uses a narrow network and offers free primary care at Harken-owned clinics, operates in Chicago and Atlanta, with plans to expand into the Miami market and possibly others in 2017. CEO Tom Vanderheyden told the crowd at AHIP that Harken focuses on relationship-based care while pushing insurance to the background. In less than a year of operation, Harken grew to 35,000 members in its two markets, Vanderheyden noted.

While certain tactics won’t be returning to exchanges anytime soon (platinum plans, broad provider networks or PPOs), the new wave might catch on. The leaders of Oscar, Bright Health and Harken all say their backers see the long game in building new health insurance plans. As long as upstarts aren’t done bringing fresh ideas to the exchange markets, exchange markets might be healthier than early failures and departures indicate.

 

For more from AHIP, follow Bill Melville on Twitter: @BillMelvilleDRG

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