Tuesday, January 20, 2015

Insurers slam patients with underwriting cycle

The New York Times
January 19, 2015
In Colorado, Disparity in Health Plan Prices Underscores Ambitions, and
Limits, of Affordable Care Act
By Reed Abelson and Agustin Armendariz

An analysis by The New York Times shows that the cost of one midlevel
silver plan in Colorado rose 36 percent west of the Rocky Mountains this
year, while another dropped nearly 40 percent in the northeastern plains.

The law was intended to drive prices lower and broaden coverage through
competition. While 10 insurers offer plans to individuals in Colorado
through the state's online marketplace, the law does not require
insurers to offer all plans in all regions of a state.

The wild disparity in prices results from many insurers trying to
attract more customers by pricing plans as low as they can. But it is
not at all clear that the low prices will be sustainable, so prices may
well swing sharply upward as time goes on.

The variations in premium prices are also a direct result of what the
insurer-friendly health care law permits. Insurers can target
territories, choosing areas within a given market where they can attract
enough members and put together provider networks that will negotiate on
price. In addition, insurers were given some protection by the federal
government to reduce possible losses in the early years, so some are
experimenting with very low prices that may not be sustainable over the
long term.

And no one expects premium costs to stabilize anytime soon. Because
buyers are so sensitive to price, the markets may experience cycles in
which insurers alternately offer low premiums to attract customers and
sharply raise them in later years to cover costs, experts said.



Comment by Don McCanne

Although medical underwriting for preexisting disorders supposedly has
been eliminated, the insurers apparently are still taking advantage of
the "underwriting cycle" - capturing the market by selling plans at a
loss and then jacking up rates after the competition has been thinned
out. This volatility results in uncertainties for patients in both their
insurance costs and in the composition of the networks of covered providers.

And under single payer? Costs would be stable and fair since they are
based on ability to pay, and provider choice would be assured. So do we
leave the system under the control of the cutthroat insurers, or do we
finally place our own public stewards in charge?

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