KFF has some new reports out. The first is a Comparison of Expenditures in Nongroup and Employer-Sponsored Insurance. Here’s what the press release says:

The first Snapshot examines the differences in costs associated with individual, nongroup insurance and employer-sponsored insurance. Premiums for nongroup health insurance available from online brokers or reported by insurance industry surveys are much lower than premiums observed for employer-sponsored coverage. This is surprising to some because nongroup health insurance has higher administrative costs. The paper uses data from the Medical Expenditure Panel Survey and finds that people covered by individual insurance have much lower health care spending on average than people who have employer-sponsored insurance, but pay a greater share of that spending out-of-pocket. It also shows that those with individual insurance are significantly more likely than those with employer-sponsored insurance to report that they are in excellent physical and mental health. These findings may help explain why premiums for individual coverage are actually lower than group coverage. The analysis suggests that proposals to extend coverage to lower income people through lower cost nongroup health insurance need to account for the higher out-of-pocket costs associated with these policies.

In other words when someone tells you that eHealthInsurance.com is selling a product cheaper  than employers buy it for (as the Galen folks and David Gratzer’s book have recently done), you need to understand that they’re not only selling something different (lower benefits) but that they’re refusing to sell it to people who might actually use it.

The second is a little more subtle. It’s about the ratio of sick people to healthy people in an insurance pool, and the impact on the pools overall cost (premiums). Again from the press release:

The second Snapshot examines the sensitivity of health insurance premiums to enrollment shifts by high cost enrollees – a process often referred to as adverse selection. The introduction of high-deductible, consumer directed health plans has raised concern about their potential to attract younger and healthier people away from more traditional insurance plans, which could increase the costs of those plans. The public discussions of this possibility are often phrased in rather extreme terms – for example, that consumer directed health plans attract primarily the young and healthy. The new report shows that extreme selection behavior is not needed to produce real premium differences between insurance pools, and that the shift of even a small percentage of high spenders from one risk pool to another can have a dramatic impact on average costs – and, therefore, premiums – in the pools

In other words, you only need to avoid a very few sick people to make your pool cost much less. This is something that Medicare Advantage plans (and the GAO) as well as those in the individually underwritten market have known for years. And it’s why the only rational policy outcome (note I said rational, not likely) is a single national pool.

CODA: This is too funny. The very next email into my inbox after the KFF one was the charlatans at Consumers for Health Care Choices (Greg Scandlen) promoting a dinner for Pat (loony) Rooney–the guy who founded Golden Rule and pushed HSAs, and basically is more responsible than anyone else for fracturing what was left of the nation’s insurance pool, and causing all the problems that KFF is explaining!