@timothyjlayton Just think it’s hard to imagine Medicaid-level rates becoming a permanent fixture of individual market.
— Loren Adler (@LorenAdler) October 4, 2016
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.
— (((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.