UPDATE 5/2/18 I transcribed the Georgia Individual market RA score wrong and flipped the numbers. No state has an individual market risk score higher than the small group market. Image has been updated.
Being able to work 1,500 hours a year is one hell of a screen for health status.
CMS released the interim risk adjustment estimates for 2017. Each state has three lines: ACA metal individual market, catastrophic individual market and the ACA regulated small group fully insured market. Each line is risk adjusted only against itself. CMS produces a state wide average risk score (plan liability average score). This number varies by state. The higher the number, the sicker the population has been coded.
I want to highlight the differential spread between the individual market and the small group market risk scores. They both use the same risk adjustment scheme and the unit of analysis is the state. I have divided the small group average score by the individual market average score. If the number is greater than one, then the small group market is coded as sicker than the individual market. If the number is less than one, the small group market codes as healthier than the individual market.
One state has a small group market that is coded as sicker than the individual market in 2017. Two states have merged their small group and individual markets together into a common risk pool. And then the other forty eight nine states (including DC) see their individual markets are coded as sicker than the small group market.
There is significant variation in the health status of the small group market relative to the insurance market. One state small group market is 35% less sick than the small group market.
Being able to work 1,500 hours a year (30 hours a week/50 weeks a year) is one hell of a screen for good health. The individual market has a significant number of folks who also work at least 1,500 hours a year, but the individual market also contains a lot of people who have significant limitations that are functional barriers to nearly full time work. Those significant limitations are also likely to be expensive health conditions that have high risk adjustment scores.
Linking insurance to work is one hell of a health screening device.