Insurers continue to game the ACA

[eridani]

The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323300004578559371986794206.html

Since insurers can no longer pick and choose their customers, they will employ a range of subtler tools, including marketing campaigns and carefully designed plans aimed at the customers the insurers most want.

"They want to attract the right risk," said Siva Namasivayam, chief executive of SCIO Health Analytics Inc. His firm helps insurers identify customer types, such as "entry-level singles" and "healthy baby boomers," each with projections on likely costs. The firm pinpoints, by ZIP Code, where the different types tend to live, so the insurer can target its marketing geographically.

Highmark Inc., a Pittsburgh, insurer, said it has around 100 targeted campaigns aimed at particular types of consumers, including recent college graduates and retirees not yet eligible for Medicare. It sends walk-in
tractor-trailers to college campuses and sets up booths at community events such as charity walks. "We have to be more one-to-one than we were historically," said Steven Nelson, a senior vice president at Highmark.

Blue Cross & Blue Shield of Rhode Island also plans to aim at certain populations, including young men. Last year, the insurer promoted one of its low-cost plans with a campaign that included posters on the walls of men's bathrooms in bars. "You don't need beer goggles to fall in love with this health plan," one slogan said.

Comment by Don McCanne of PNHP: One of the great advantages of the Affordable Care Act was that it would finally bring an end to insurance company chicanery in which they were able to selectively insure more profitable healthy individuals while keeping the more costly sick individuals out of their plans. At least, that's what the new requirements for guaranteed issue (they must sell the plans to everyone, not only the healthy) and community rating (they cannot charge higher rates for the sick) were supposed to do. But insurers have a much larger bag of tricks.

Although insurers can no longer reject applicants who fail medical underwriting standards, they have learned to selectively market their plans to healthier populations, and they will continue to do so. They intensify their targeting to younger, healthier individuals while avoiding marketing to higher cost individuals. As this article indicates, an industry has arisen to help insurers select their targets for marketing, based on the health of selected groups or on the average health in geographical regions (ZIP Codes). This adds yet more administrative costs to our system already tremendously overburdened with administrative waste.

Not only do insurers market selectively to the healthier, they also are taking advantage of risk adjustment. Since insurers who take on clients with greater medical problems are paid more through these adjustments, it is to their advantage to include individuals with unfavorable diagnoses but whose health care needs are actually quite minimal. An individual might technically be diagnosed as a diabetic but require very little care, and yet the insurer can receive adjustments that are designed for a more severe diabetic with multiple complications. So it is to their advantage to enroll patients with just a touch of bad disease. They are already doing this in the private Medicare Advantage plans.

If an insurer misjudges and ends up with higher cost risk pools, they can no longer dump only those with greater needs, but they can pull their plans from the regions where they are experiencing high spending.

Insurers are masters at innovation. No matter how many laws and regulations they face, they will always find other ways to work the system. That's just plain old good business. And that is the problem. We don't want our health care defined by what is good for the industry; we want it defined by what is good for patients. We won't get that until we establish our own public system dedicated to the primacy of patients.

And about that Blue Cross & Blue Shield of Rhode Island campaign that included posters on the walls of men's bathrooms in bars with the slogan, "You don't need beer goggles to fall in love with this health plan." Although there are ten categories of essential health benefits, insurers are allowed flexibility within each category. Those young men would be well advised to read their plans carefully to see if they exclude sexually transmitted diseases and injuries while intoxicated. Insurers know no boundaries.

[Laelth]

1. k&r for exposure. n/t

-Laelth

[Laura PourMeADrink]

2. Ah, the old repuke mantra at work "Let the free market fix the problem"

What is going on with the state pools, anyway?

Will there be just one? Guess I pictured XYZ company saying, Ok, we won the pool bid for California, and for an individual, the cost will be $x, for a family $y

I have kind of put this out of my mind since it infuriates me so much that we have allowed the right to define ACA and for years have created all the negative public opinion.

Why the Obama administration hasn't created an aggressive public education program on ACA is beyond me

[xchrom]

3. du rec.

[Hoyt]

4. Fortunately, all the plans have to compete on the exchanges where we can make decisions

without their targeted marketing bull.

I do agree that a public option is the way I would go, if it had been part of ACA.