POLICY: talking about the inefficiencies of the insurance market…

A Commonwealth Fund study from HSC in the latest Health Affairs reminds us that employees in small firms pay 18% more for health insurance when adjusted for value of plan adjusted premiums.  Here’s the full Health Affairs study

Meanwhile, to the surprise of absolutely nobody that’s been paying attention, another study in the same Health Affairs shows that increased competition in the  Medicare risk/Advantage program (i.e. the private plan part of it) is associated with greater use of advertising targeting healthier patients. More from PNHP’s Don McCanne on that.

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  1. The MA risk selection article wreaks a bit of Ateev-come-lately’s trying to get an article published. I say this because the data presented in their paper is just not that impressive for (at least) three reasons:
    1.) The findings are far from powerful, with the most compelling info being that just under 40% of ads in MSAs with moderate and high market penetration had “attract health” characteristics. So what? That means just over 60% of the ads were at worst neutral, and besides, no marketing firm will send a frail, sickly actor/actress to push any client when they could send a relatively healthy one.
    2.) As you mentioned, this is nothing new, but it’s particularly old news to researchers. I’ll point to Mello, Stearns et. al. from HSR 38:3 (2003). It has a fine literature review that suggests we’ve been studying this since the early 80s.
    3.) We’re 7 months away from MA plans being paid completely with risk adjusted payments (thanks to all previous research, the AAPCC was thrown out in favor of the HCC-DCG-inspired CMS-HCC model.) Now since this is being phased in (with MA plans payments based 100% on risk-adjustment starting this january), the jury is out on whether or not it will be effective. But either way, doing research on info from 2000 (before RA was a factor in payment) is, at least to me, a couple minutes late and a few bucks short.

  2. I don’t know when we are going to realize that we’re all in the same pool. I opted out of my wifes insurance plan for an individual one because I could get same or better coverage with the SAME insurer (BCBS) for half of what I would pay in my wifes plan. Under her plan she gets her coverage free and any family coverage for about $400/mth. So if you have one husband, it’s $400, or if you have seven kids it’s $400. Does this make any sense???? Competition can be extremely benifical, but for healthcare it’s destructive and wasteful when done by providers.