AARP/UHC Community Rating (CR) is a farce

[MSLLC]

I just got done explaining for what must be the 500th time that despite what they have been told or read, AARP/UHC is only truly CR in a few states. Male rates are higher than female rates, and your rate goes up every birthday (via discount erosion) in addition to the annual rate change.
This is nowhere close to the definition of CR. Does anyone know how they keep getting away with being labeled this way?
I guess I am venting more than anything but does anyone else share this frustration or have any insight (other than the DOI just does not care)?

 

[BALDELMO]

Insurance company lobbyists is how

 

[annon123]

I just got done explaining for what must be the 500th time that despite what they have been told or read, AARP/UHC is only truly CR in a few states. Male rates are higher than female rates, and your rate goes up every birthday (via discount erosion) in addition to the annual rate change.
This is nowhere close to the definition of CR. Does anyone know how they keep getting away with being labeled this way?
I guess I am venting more than anything but does anyone else share this frustration or have any insight (other than the DOI just does not care)?

And the added frustration is that prior to 2022 the discount went away after 10 years or at 75. Now it is after 15 years or 80. So when clients look at rates on medicare.gov or the AARP/UHC site and are pre 2022 on medicare they wonder why their rates are significantly higher than what is shown on the website.

I am guessing they are claiming community rated within 4 subgroups (male/female/smoker or not). Certainly their "discounted rate" translates into an age attained model for price even if they are part of the same "community rated risk group" until 75 or 80 and then after that, within subgroups, rates are the same. What it basically translates into in a functional way is that if you live long enough (eg over 75 or 80) their rate is being subsidized by younger people to some degree. Up until that point the rate of older people is subsidizing the rate of younger people. The move to 80 for the discount to go away is awfully close to the average life expectancy (around 75 for men and around 80 for women).

So I'd agree with you the rates don't reflect community rated although the underlying risk group they are based on does presuming you are defining 4 different risk groups rather than all people regardless of sex. smoking or anything else are in one group. I think they instituted the discounts because they'd have trouble getting people to signup initially if everyone paid the same rate.

Certainly if everyone paid the same rate the "full price" rate would be lower, but it would be higher, initially, than the folks in the other two kinds of risk groups. As a result fewer would sign up at t65 as many don't look even ask what their rate would be at 80 when they first sign up. They only look at their rate right now.

Likely that is why AARP/UHC has a sort of hybrid model with rate (but not with their risk pool). I think likely they are getting away with calling it community rated because the risk pools (eg their 4 risk pools based on sex and smoking status) are age independent even though their rates are not (eg rates are based on age). The age attained risk pool both the risk pool and rate are based on age. That is likely why they can get away with calling it a community based risk pool since the focus for that is on risk pool they are using - not on rate charged based on age up to a certain age (using the weasel words rate discount).

And if the odds are high you will live past 75 or past 80+ (or even 90+ or 100+ even though only around 5% of the population lives past 90) depending on when you turned 65 then a community risk pool makes sense. If most of your family barely makes it past 70 then rates in other kinds of risk pools may well be cheaper

As an aside, research has documented that up through about 80 lifestyle has a fair bit, but certainly not everything, to do with longevity (genetics influences that too - on average, so there are always exceptions, people with "good" longevity genetics and a less healthy lifestyle will live longer than people with "poorer" longevity genetics and a healthy lifestyle). That research documented that living beyond 80 is mostly due to genetics and has very little to do with lifestyle.

So clients with tons of family members in multiple generations who life to a ripe old age likely would be better off in a community rated plan in the long run. Of course age related changes/damage to the frontal lobe makes it harder for people to connect long term consequences to decisions made now - they mostly are influenced by short term consequences of choices. Also people believe that they are "above average" (again research based) and so are likely to think they will "beat the odds" with using their health care to the max influences choices as well. Of course none of this really matters if people are dual eligible or have enough income they can afford their health care regardless of which plan they choose even if they eventually need to use their medicare to the MOOP.

 

[sshafran]

I just got done explaining for what must be the 500th time that despite what they have been told or read, AARP/UHC is only truly CR in a few states. Male rates are higher than female rates, and your rate goes up every birthday (via discount erosion) in addition to the annual rate change.
This is nowhere close to the definition of CR. Does anyone know how they keep getting away with being labeled this way?
I guess I am venting more than anything but does anyone else share this frustration or have any insight (other than the DOI just does not care)?

Very few clients care about that much detail.

Seriously - maybe 1 in 17 actually care. You think they care. You think it's important. We as agents do. But they do not.

Show them the price.

If they ask, "is this community rated?"

"Yes, it is - but the way they do it is similar to other companies with attained - it's no big deal. So, they're $124.67 and Aetna (or insert other) is $113.36 - which one do you want?"

End of story.

The only way it would matter is if for some reason you do not want to sell them - i.e. if you are selling "against" them. And even then, squashing the community rated demon is the last thing I'd bring up.

 

[MSLLC]

Very few clients care about that much detail.

Seriously - maybe 1 in 17 actually care. You think they care. You think it's important. We as agents do. But they do not.

Show them the price.

If they ask, "is this community rated?"

"Yes, it is - but the way they do it is similar to other companies with attained - it's no big deal. So, they're $124.67 and Aetna (or insert other) is $113.36 - which one do you want?"

End of story.

The only way it would matter is if for some reason you do not want to sell them - i.e. if you are selling "against" them. And even then, squashing the community rated demon is the last thing I'd bring up.

Thats is indeed how the conversation goes every time, but I just think it's deceptive and the DOI should call that out. NY is truly CR, everyone pays the same rate. Period.

 

[annon123]

Very few clients care about that much detail.

Seriously - maybe 1 in 17 actually care. You think they care. You think it's important. We as agents do. But they do not.

Show them the price.

If they ask, "is this community rated?"

"Yes, it is - but the way they do it is similar to other companies with attained - it's no big deal. So, they're $124.67 and Aetna (or insert other) is $113.36 - which one do you want?"

End of story.

The only way it would matter is if for some reason you do not want to sell them - i.e. if you are selling "against" them. And even then, squashing the community rated demon is the last thing I'd bring up.

Obviously as long as they know for sure they will pass medical underwriting or live in a state where they can change each year without having to go through that then choosing by price makes sense.

BUT in many states and for many people looking at choices current year's price isn't the only thing that needs to be considered. If they fail medical underwriting (or likely will do so in the future outside of living in some states where that is irrelevant with respect to changing once a year) and want to stay with OM with a Supp, when they are older, then the supp price when "old" will matter. And when "old" then community rated plans generally are cheaper. My state only has one community rated plan - UHC - and comparing prices for people over 80 it is usually cheaper - especially if the state they live in (like mine) is one that has UHC supps without the not so free "free extras" (The later costs significantly less than the "original" G they offer).

 

[MSLLC]

Very few clients care about that much detail.

Seriously - maybe 1 in 17 actually care. You think they care. You think it's important. We as agents do. But they do not.

Show them the price.

If they ask, "is this community rated?"

"Yes, it is - but the way they do it is similar to other companies with attained - it's no big deal. So, they're $124.67 and Aetna (or insert other) is $113.36 - which one do you want?"

End of story.

The only way it would matter is if for some reason you do not want to sell them - i.e. if you are selling "against" them. And even then, squashing the community rated demon is the last thing I'd bring up.

This is awesome and helps thanks. I still believe CR should be an option if people want it and it makes sense for them. Yes, you will pay more the first 10 years to get what will likely be more moderate rates the second 10 years you have the policy. Thats the principle behind the rating method. Be transparent is all. UHICA is their attained age option, let that be the option for people than want the lowest rate at 65.

 

[somarco]

USAA is the only one in Georgia that used "true" community rating and they apparently lost their shirt.

Now they use issue/entry age like all the other carriers, including UHC/ARP