Peeing in the Obamacare Pool

somarco

GA Medicare Expert
5000 Post Club
37,678
Atlanta
A friend and fellow agent is looking at early renewal possibilities for his small group clients. Currently he has 49 of them and he put together a spread sheet to get an idea of what will happen in 2014.

Projected rate adjustments range from -20% (a rate reduction) to + 50%

Currently the small group plans are GI but carriers are allowed to make an adjustment to base rates following an underwriting review.

New to 2014 is the compressed age bands, unisex, new plan designs, no more pre-ex limits or waiting period, abolishing industry adjustments, etc.

The interesting thing about this analysis is this.

Older, sicker groups either have very small increases and many have a rate decrease.

Younger, healthier groups will have the larger rate increases.

Sounds like a winning formula.
 
Well, it's nice to see that the government accurately projected something for once.

This should be no surprise, there wasn't a whole lot of other ways this could have turned out (besides it costing more for everyone and older people seeing a smaller increase).
 
Definitely, this puts small group in a spiral. And, if enrollment from the young and healthy is lackluster, the whole thing blows up. Hmmmm... if rates for young people spike, is it reasonable to say they won't enroll en masse? Ah, subsidies apply, they say. Hmmmm again... Since the math calculation for the subsidies are heavily weighted toward the older folks and families, is it safe to say that young healthy single people won't enroll en masse, but those in childbearing stages will, along with older folks and folks with ongoing high cost medical conditions?

Road ahead - Adverse selection followed by death spiral
 
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