Health Plan Switching : A Case Study -- Implications for Private- and Public-Health-Insurance Exchanges and Increased Health Plan Choice

This paper examines the experience of a particular large employer, and a subset of its employees, with respect to a recent increase in the number of health plans that employees could choose. In 2014, this employer offered employees a choice of four health plans -- an HSA-eligible health plan (HSA plan), an exclusive provider organization (EPO), a preferred provider organization (PPO), and a health maintenance organization (HMO) -- all with the same carrier. In 2015, it added six new health-plan choices -- HSA-eligible plans, EPOs, and PPOs -- from two additional carriers. As a result, employees saw their plan choices increase from four to 10. The case study in this paper addresses one set of questions: Which workers switch health plans when an employer introduces more choices? Does the introduction of more choices contribute to adverse selection? One-third of health plan participants enrolled in both 2014 and 2015 switched health plans between 2014 and 2015. Workers enrolled in the HSA plan in 2014 were more likely to switch plans than other workers. One-half of HSA plan enrollees switched plans, compared with 27 percent among EPO enrollees, 24 percent among PPO enrollees, and 13 percent among HMO enrollees. About 88 percent of HSA plan enrollees in 2014 who did switch plans for 2015 chose an HSA-plan with a different carrier. Sixty-three percent of EPO enrollees in 2014 who did switch plans for 2015 switched to an EPO with a different carrier, and 72 percent of PPO enrollees switched to a PPO with a different carrier. Because only one HMO was offered in 2014 and 2015, 100 percent of the HMO enrollees who switched chose a different plan type with a different carrier. EPO and PPO enrollees in 2014 who switched health plan types were more likely than HSA plan enrollees to switch carriers. Twenty-four percent of EPO enrollees and 21 percent of PPO enrollees in 2014 who switched plans for 2015 switched to a different type of health plan with a different carrier, while 13 percent of EPO enrollees and 7 percent of PPO enrollees switched to a different type of health plan with the same carrier. In attempting to explain plan switching, certain demographics and prior use of health care services appear to be predictors of plan switching, but health status is not a strong predictor. For this employer, it appears that older workers were less likely to switch health plans than younger workers; and more actual use of office visits for both primary care physicians and specialists was linked to less plan switching