Sicker More Profitable?

[Dave020]

I was chatting with a carrier rep this afternoon about HCR and he mentioned that talks 'on high' indicate that carriers may experience higher profitability for insuring sicker people. I didn't have time to get into details but he suggested that the carriers would be paid more for sicker members. Anyone else heard this or care to expand on it?

I'll shoot him an e-mail and seek better clarification but he mentioned getting extra $ for the sicker people making them more profitable to the carrier.

 

[somarco]

Part of Alibamacare is a reinsurance pool, but it only lasts for a few years (4?) and somehow I doubt it will be enough.

Just look at how well PCIP worked. If they don't think there will be adverse selection under Alibamacare they are smoking something weird.

Here is my read on things to come.

Young folks will pay the penalty and won't buy. Those who would like to buy, but earn too much to qualify for a subsidy will not be able to afford coverage and won't participate.

That leaves the ones with free, or nearly free and the really sick ones that will jump in.

Carriers will miss out on the healthy folks that have to pay for coverage and won't get enough subsidized healthy ones to offset the claims of the sickies.

 

[AllenChicago]

Here is my read on things to come.
Carriers will miss out on the healthy folks that have to pay for coverage and won't get enough subsidized healthy ones to offset the claims of the sickies.

Unless HHS outlaws the major medical policies we're selling today, we can just keep selling these plans for companies that are not exchange-marketplace participants, which will be MOST carriers. Even when the IRS penalty-tax reaches its maximum in 2016, that penalty-tax, combined with the health insurance premium will be LOWER than the Major Medical policies of 2014, going forward, don't cha think?
-ac

 

[Dave020]

He mentioned something about getting an additional $1800 or so per head for the sicker people that would not be paid for the healthy people.

I'll ask for clarification.

 

[AllenChicago]

He mentioned something about getting an additional $1800 or so per head for the sicker people that would not be paid for the healthy people.

I'll ask for clarification.

I hope that's $1,800 per MONTH per head, and not per year. An extra $1,800 would cover at least one Chemotherapy session.

 

[Yagents]

Bob's right, it's part of a reinsurance program. Companies that end up with sicker people will get additional money from the companies that end up with the healthier people. They won't be more profitable, because they still have to meet the MLR, and the mandated profit levels that our dear leader demands. This will also make sure the insurance companies don't have an incentive to provide crappy service to sicker people and run them away.

 

[somarco]

He mentioned something about getting an additional $1800 or so per head for the sicker people that would not be paid for the healthy people.

Similar to the MAPD model.

Allen's right. An extra $1800 per year is not enough to cover many situations.

The "good" thing about covering 65+ with serious illness is they are usually short timers.

Contrast that to premie's, spinal cord injuries, long term coma (Karen Quinlan), burns, etc.

These are typically a "young person's" condition that can go on for years. If you start with a relatively healthy body it is not unusual at all to have someone go through $500k per year for palliative treatment.

Of course all this changes when the govt (via Medicare, Medicaid) is paying the bill . . .

 

[Dave020]

It's the premium risk adjustment program from HHS. Includes transitional reinsurance program, temporary risk corridor programs and permanent risk adjustment program. Addresses premium stabilization.


http://cciio.cms.gov/resources/files/ppfm-risk-adj-bul.pdf

 

[somarco]

Thanks for the update, Dave. Given the govt track record on estimating health care costs, I would not anticipate it will be sufficient given potential for adverse selection in this group.

Age 65+ have two choices. Medicare or MAPD and everyone is covered by one or the other.

In spite of the mandate, there are going to be a substantial number of non-particpants in Alibamacare.

 

[Yagents]

Risk adjustment.....yah that's it. If it doesn't affect my clients or me, I tend to ignore it if it's on the back end.