ACA Government Co-Ops: Is This Experiment Working In Your State?
- Thread starter AllenChicago
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For 2015 LOLH undercut the premiums of BCBSIL's narrow network PPO plans by 20%, but utilized PHCS PPO..which most IL doctors/hospitals accept. That combo made Land of Lincoln Health very appealing, and put them at the top of the quote engines.
If the ratio of premiums-to-claims is proper (whatever that is), this coop should be OK through 2015.
Ah, the humor in this industry! In what other industry would it be so bad to set prices below every competitor, and see sudden growth at a great rate?
When I was in college there was a record store just off campus. Crazy Doug's Records.
He had the best prices anywhere.
The more records he sold, the lower his prices went.
He finally went out of business.
Seems he was selling the records below cost but thought he could make it up on volume.
I hear that general story all the time, but have never actually encountered anyone dumb enough to do it for real.
Anyone smart enough to open and run a business is smart enough to know you have to sell product for more than it costs you to buy.
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How should pricing be decided when the government gives you $200 million to start a health insurance business? You have no idea if you're going to attract too many heavy-utilization customers, or what percentage of your customers will pay their premiums. Can't call AETA, BCBS, etc. and ask for guidance.
2016 Premiums have to be submitted to the states by May 1st. That only gives our LOL coop Jan-Apr to look at premium receipts and claims history. (There were under 3,000 customer on the books at end of 2014) Will get on SERFF after 5/1 and see what their 2015 to 2016 premium adjustment request says. It will be very telling.
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It is easier to do than you think. Some people forget about their fixed costs when it comes to pricing and just look at cost of inventory.
Yep. Cost of inventory is but one piece of the puzzle. Generally the largest expense is payroll and you can never recoup that once it's paid.
Plenty of businesses will have a loss leader. For those of us crazy enough to still offer Medicare Part D, that is a great example of a loss leader in this business.
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