@timothyjlayton Just think it’s hard to imagine Medicaid-level rates becoming a permanent fixture of individual market.
— Loren Adler (@LorenAdler) October 4, 2016
Health care spending is a power law field. It is a Pareto field.
20% of the people have 80% of the total spending in the field concentrated on them. 5% of the population has 50% of the total spending. Conversely the bottom 50% of the curve contains people who spend a grand total of 3% of healthcare expenditures.
Why consumers won’t drive the #healthcare market. Most costs from high $ people who are beyond cost sharing. pic.twitter.com/buoAM00CPT
— (((Martin Gaynor))) (@MartinSGaynor) December 10, 2015
This is important because most of the time, most people are more likely to be rather healthy or at least low cost sick.
Most people, most of the time are buying insurance in case they get hit by a bus or a meteor. That means their priority is not breadth of network. It means their priority is not the ease of pre-authorization. It means their priority is not ease of getting a first appointment. It means their priority is spending as little money as possible (post subsidy) to get hit by a meteor coverage. If I was single and in my mid-twenties I would have found some value in getting insurance so that my mother would stop asking me about it but I would not have been shopping for expansive and expensive networks or PPO coverage. I would have bought the lowest price thing that did not obviously scream that it was a scam to me.
Carriers that offer narrow to hyper narrow networks and pay their providers Medicaid or Medicaid like rates and market heavily to very healthy people are able to craft very low cost plan designs. These plans are aimed at the subsidy eligible population that uses 3% to 5% of total healthcare resources for the entire subsidy eligible pool. Yes, a startlingly large proportion of premiums go out the door for risk adjustment to help support the plans with broader networks and more expensive costs per service that are chosen by people who know that they are sick but the value proposition is very attractive.
And this will remain the case as long as subsidies are tied to the second lowest Silver and there is minimal real meaningful difference regulation.
Barbara
I am surprised by the lack of regulation related to meaningful difference and churning. Proliferation of barely different plans was a problem in MA and CMS changed the rules to limit the number of plans of any particular type that could be offered in one county by the same company. This is a lesson that should not have needed to be learned all over again with the exchanges.
StringOnAStick
Part of that high benefits payout is my boss’s 18 yo son. He broke his neck in a diving accident in July; he told me the current bill is just under $2 million, and that’s before they had to buy a new home that is wheelchair accessible and start modifications. He gets out of rehab and goes home in 2 weeks and at this point can’t be left alone. The cost of all the care is incredible.
The Moar You Know
I was one of the bottom 50% until this year. I’m sure I’m in the top 20% this year, but nothing like a cancer patient, which would be the top 5. Hopefully for the next few years I can be down the ladder again, but this year was a very bad one healthwise.
The response of my insurance to my first actual real-life health crisis has not filled me full of confidence that we’ve got a handle on how to deal with healthcare as a nation, or even that we’ve done anything concrete to make it better. Increasing the number of insured was a crucial achievement; but I think we’ve gone about it in the most expensive and least helpful way possible. Of course, I know who’s to blame for that and it’s not Obama.
The Golux
My business partner is one of those “If only people had skin in the game” types. He just knows the Magic Of the Market will bring costs down. Because it ought to be true, therefore it is true.
Arclite
Sounds like a case for single payer. And I say that as someone who works for a healthcare insurance nonprofit.