BAC Medical Marketing
  • Home
  • Who we are ▷
    • Mission statement
    • Meet the team
    • We attract new patients
    • More for less
  • What we do ▷
    • Services offered
    • IdentityFind
    • MEDShield
    • Project samples
  • How we work ▷
    • Workflow process
    • BACMM affiliate program
    • Clients
    • Glossary
  • Why we're different ▷
    • Search engine optimization
    • Case studies
    • Letter from the President
    • Spotlighted products
  • When we're needed ▷
    • Consultancy compensation
    • Marketing tips
    • BACMM Blog
    • FAQs
  • Contact ▷
    • News you can use
    • Testimonials
    • Online resources
    • Jobs at BACMM
Call Today: 800.240.9473

obamacare exchanges are self-destructing

3/15/2017

0 Comments

 
Obamacare was self-destructing the day before Donald Trump was elected, and the Republican victory, with their talk of "repeal and replace," has only accelerated things.

Aetna's CEO recently said that the Obamacare insurance exchanges are in a "death spiral."

Cynthia Cox, of the "non-partisan" Kaiser Family Foundation responded that the insurance exchanges "are not really in a death spiral yet." She would know more than the Aetna CEO whose company lost $450 million in the Obamacare individual market last year.
I have avoided the term "death spiral" because it has become an overly politicized term most often used by people who don't really understand it.

A "death spiral" is a technical term that comes from the days when carriers could underwrite risk and exclude sick people from their programs and is analogous to the process of an airplane climbing to a high altitude, losing control, and, being unable to regain lift, spiraling down to the ground.

It describes a failing block of business:
  • That grew quickly (gained altitude) likely because it was underpriced relative to the competition;
  • Then had to receive big rate increases in order to be properly priced;
  • Whereupon the healthiest, who could move because they could clear another company's underwriting, quit it and joined a lower priced program that charged the healthy less;
  • Leaving an even sicker block locked into it because they couldn't qualify for another plan;
  • While each successive annual rate increase saw more and more healthy people leave while the sickest stayed (the spiral); 
  • Until the block crashed and had to be abandoned.
But, some of the analogy does apply to the Obamacare insurance exchanges.

The following chart shows the percentage of subsidy eligible people who signed up for coverage in the first year––2014––broken down by their income as a percentage of the federal poverty level (FPL).

Remember, insurance companies ideally want to see 75% of an eligible group sign up in order to have enough healthy people paying premium to pay for the sick.

For 2017, the Obamacare exchange enrollment was flat on a national basis––so this picture hasn't gotten any better or any worse since the 2016 election.

Comparing the two charts you can see two things:
  • The Obamacare insurance exchanges started out in 2014 with an enrollment for the poorest––100% to 150% of the federal poverty level––in great shape with 76% of the eligible signing up and growing to 81% in 2016, attributable to the lowest premiums and out-of-pocket costs these people are eligible for. This little corner of Obamacare is a healthy and sustainable block of business.
  • But between 151% and 400% of the FPL, only about 30% of the eligible signed up in 2014 and that number hardly budged by 2016––the exchange enrollment in these brackets never approached a sustainable level. 
What Kaiser's Ms. Cox doesn't understand about this block is that it never gained altitude in the first place in order to come spiraling down! So, I guess she is technically right to say this isn't a death spiral.

I am reminded of this February 2014 Politico headline describing the first open enrollment: "Obamacare finally clears the tower." Actually, Obamacare never cleared the tower much less gained enough altitude to come spiraling down!

When the Obamacare exchanges launched in 2014, the first year enrollment already looked like the end of a death spiral. Any new block that only signed up 30% of the eligible would have been immediately shut down as a failure if a single insurance company had operated it.

Ms. Cox also said, "there isn't evidence that the pool of people is getting sicker." Ms. Cox, with only 30% of the eligible ever signing up between 151% and 400% of the FPL, this block was already about as sick as it could get!

You can fault the Republicans for adding fuel to the already burning Obamacare fire, but you can't claim this program was sustainable before November 8th, 2016.

But even this analysis misses the other half of the market.

In 2016, virtually half of the market was purchased off of the exchanges––Obamacare compliant on and off exchange plans all have to be designed and rated the same.

We have seen the disastrous carrier by carrier 2015 results from the federal reinsurance program that included both off-exchange and on-exchange business. We also know the off-exchange results were bad enough to produce the big 2017 rate increases. And, we do know that these off-exchange people don't get a subsidy and have to pay the full price these big rate increases developed for 2017. The easy prediction is to say that those increases have to be pushing a lot of healthy people, who don't now use their insurance, off of their coverage.

0 Comments



Leave a Reply.

    Author

    Bruce A. Cadkin, MBA President                          BAC Medical Marketing

    Archives

    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010
    December 2009
    November 2009
    October 2009
    September 2009
    August 2009
    July 2009
    June 2009
    May 2009

    Categories

    All
    Advertising
    Affiliate Marketing
    Affiliate Program
    Anna Deavere Smith
    Avoiding Malpractice Suits
    Best Practices
    Blogs
    Branding
    Cash Only Medical Practice
    Concierge Medical Practice
    Crisalix Estetix
    Customer Service
    Defensive Medicine
    Dental Practice Marketing
    Developing Physician Leaders
    Electronic Medical Records
    Emwave Products
    Expert Panels
    Facts And Figures
    Gene Smart Wellness
    Going Dutch
    Gum Disease
    Healthcare Reform
    Heartmath
    Holiday Poems
    Ingenio Expert Advice
    Internet Marketing
    In The News
    Let Me Down Easy
    Liveperson Expert Advice
    Managing By The Numbers
    Marketing Momentum
    Marketing Strategies
    Martin Luther King
    Medical Marketing
    Medical Tourism
    Meta Tags
    Mobile Marketing
    Money Driven Medicine
    Most Influential Physicians
    Omega 3 Index
    Online Reviews
    Patient Advocate
    Patrick Soon-Shiong
    Physicians At Funerals
    Practice Advertising
    Prayer Over Treatment
    Pro Football Head Trauma
    Psychographics
    Public Relations
    Referral Marketing
    Search Engine Optimization
    Social Media Marketing
    Solution To Medicare
    Staff Training Programs
    Steve Jobs
    The Art Of Apology
    Top Medical
    Web Site Design
    Web Site Marketing

    Bookmark and Share

    RSS Feed

    Picture

    I'm an expert on Maven!

    Consult with me on Maven



    Zintro Expert
    zintro.com/expert/Marketing-Maven

    Ingenio Expert

    Picture
    Liveperson Expert

    Reuters Insight Expert

    Which of the following changes in your practice most accurately reflect your goal? (Check all that apply) I would like to...
     
    pollcode.com free polls
    YouTube
    Twitter
    Code Of Ethics
    Medical Blog Award
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Dosie Award
    Weblog Award
    AlleyDog Award
    Best Blog Contest Award
    Blogtrepreneur Award
    Top 100 Blog Award
    Blogger's Choice Award
    Blogger's Choice Award
    Blog Advertising - Advertise on blogs with SponsoredReviews.com
Privacy Policy & Cookies Policy -- Terms & Conditions of Use -- Site Map 
                
      BAC Medical Marketing, BACMM and BAC / BACMM logos are trademarks of BAC Medical Marketing.


           © Copyright 2005 - 2019 BAC Medical Marketing. All rights reserved.


Picture

Protected by Copyscape Duplicate Content Detector
Website designed by Black Mamba