Surprise, surprise! Exchange customers are price sensitive

Uh oh. Another big national health plan, Aetna has decided to pull back from the individual health insurance marketplaces (aka exchanges) deciding they can’t make money because customers are focusing on price, not brand name. The headlines give a sense of it: Cost, Not Choice, Is Top Concern of Health Insurance Customers —New York Times Customers’ Laser-Like Focus on Plan Prices Is Causing Concerns in Health Insurance Market – Kaiser Health News The articles quote insurance executive and experts claiming that “price competition has turned out to be much more cutthroat than anyone expected” and that “people signing up for [broad network, big employer style coverage offered by the big name national health plans] are less healthy –and more expensive to treat– than anticipated.” Hah! As I have written before (Good riddance: United finally gives up on ACA marketplaces): Health plans thinking of competing in the marketplaces should say this to themselves a few times before diving in: “Exchange business is price sensitive business. If we can’t compete on price we might as well stay home.” The exchanges do have problems. For example, insurers are limited to charging older people 3x what they charge younger ones, whereas actuarially it should be more like 5x. The problems are eminently fixable, except that opponents of the law still want it to fail. As for Aetna, specifically, it seems they are retaliating agains...
Source: Health Business Blog - Category: Health Management Authors: Tags: Economics Health plans Uncategorized Source Type: blogs