Retrospective outcomes in underwriting

Hannah Eichner (someone you should follow on Twitter by the way) makes the critical point about my post on low risk individuals in  underwritten plans.  They are great only if very little happens:

I completely agree.

The retrospective outcomes will look something like the following picture:

Most people won’t have much happening to them medically speaking.  The bottom 50% of the population spends 3% of all healthcare dollars.  That is a PCP appointment, an urgent care visit, a few generic pills and a flu shot utilization pattern.  If the health insurers’ actuaries are awake, they can screen so that most of the pool will have this utilization pattern.  Some people will get hit by a bus, some people will break a leg, some people will have one off bad luck that creates a spike in claims that quickly fades.

Even within a well-screened pool, someone will a major catastrophic event that either is not covered or will lead them to be underwritten out of the pool at the end of the policy year.  These are the people who Hannah is correctly identifying as the people who will be hurt in an underwritten system.

I think the critical question is choosing the right baseline.  Against current law, the danger and utility loss is high for this subgroup, but against 2009 pre-ACA, the existence of the ACA Exchanges in a split pool environment that works as a quasi-high cost risk pool with adequate funding for people who earn between 100% and 400% Federal Poverty Line, the safety net is far better.


14 replies
  1. 1
    itstrue says:

    Big shout-out to Hannah. I’m the ‘anonymous government employee’ who sat directly behind your cube at OPAE. Good to see your name pop up. I’m sure it won’t be the last time.

  2. 2
    Sab says:

    My RWNJ brother voted for some third party candidate because Hillary was a war monger (and he is richer than God but still wants his tax breaks).He knew I had several pre-existing conditions and that the ACA was literally a life saver, but he didn’t care. Any advice on how to interact with him. He IS my brother although he is also a monster. I have a hard time being civil.

  3. 3

    @Sab: <snark>Ask him for money when you need help with medical expenses. Keep on asking him as the bills mount. </snark>

  4. 4

    Many people over 50 would be rejected and, I think, most people over 60.

    Does being a woman of child-bearing age get you rejected?

  5. 5
    Villago Delenda Est says:

    Exqueeze me, but the point is not to provide health care. It’s to cut taxes on the parasites like Sab’s brother who lack empathy even for their own flesh and blood.

    They need to stop begging to be given tumbrel rides…or they’ll get them.

  6. 6
    d58826 says:

    OT but though that this was interesting from the aclu:

    The Supreme Court ruled back in 1943 that students don’t have to stand for the Pledge of Allegiance. Still the law.

    Doesn’t seem like a real stretch that kneeling for the national anthem is also protected speech.

  7. 7
    Jeffro says:

    Trumpov is tweeting about how the economy is doing totes awesome; therefore of course we need massive tax cuts to get the economy going. Um…

  8. 8

    @d58826: The government cannot make students stand for the Pledge of Allegiance. The government also cannot make football players stand for the Star Spangled Banner. However, a private employer is perfectly within its rights to do so. There is no First Amendment protection from your employer, so I have no idea what the ACLU is dribbling about here.

    What there is, however, is a collective bargaining agreement. It’s possible that the language in the CBA is broad enough to allow the NFL to impose a requirement that players stand for the anthem or be fined or suspended. It’s also possible that it isn’t. That might end up being litigated.

  9. 9
    Jeffro says:

    Also, how is reporting that Trumpov wants a huge increase in nukes “made up to demean” him? I mean, I know frickin’ EVERYTHING is a dominance ritual for this clown, but seriously: reporting that he wants more nukes is somehow “demeaning”?

  10. 10
    Sab says:

    @Villago Delenda Est: n@Raven Onthill: When I got out of high school in 1972 being a woman got you rejected. I went ten years with major major medical: 100,000 coverage, 5,000 deductible, 5,000 year premium. Needless to say, I didn’t have enough disposable cash to actually see a doctor in that period. Planned Parenthood was my primary care, and that was for checkups, not birth control.

  11. 11
    Another Scott says:

    @Sab: It took me a long time to recognize that it was a cop-out to vote 3rd party. But it is.

    Maybe point out to him that there are (for the foreseeable future) only 2 choices in national general elections. And your vote is a reflection of your values. If you cannot see that by not actively supporting a candidate that better reflects your values than one that is actively hostile to them that you are actually advancing those who are working against you. If you cannot see that, well, you’re just deceiving yourself. No candidate is perfect – one simply has to man-up and choose the better one.

    It’s not somehow being “smart” or “moral” to let people who want to punch down and hurt others have more power. It’s being immature and hurtful.

    We only have so many days on this (still) beautiful planet. We should make the most of it, including by not making things worse for those less fortunate.

    Or, alternatively, you could just ask him how he would feel if he had no health insurance for his family. Or why Members of Congress have excellent health care plans. Or why the 0.01% have gold-plated plans. It’s not because it’s no big deal…

    Is he religious? Matthew 19:24 is always a good one.


    Good luck, and hang in there.


  12. 12

    It seems worth stressing that Trump’s health plan is misogynistic. Even the women analysts aren’t doing that. It might even reach Trump supporters to say that his plan will be bad for mothers and daughters.

  13. 13
    Ohio Mom says:

    @Sab: I am sorry for you, it always hurt when we are betrayed. What other reaction could we have when someone we trusted shows us they were not worthy of our trust?

    There are several people in my life I am doing my damnedest to never find out their political leanings. I suspect the worst and don’t want to know.

    I do have two nephews who went third party but because they are in their early twenties, I just shake my head and tell them they will figure it out. But in ten years, if they are still so stupid…

    I can’t tell you how to be nice to your brother, I wouldn’t be able to. In my experience, people like him are too defended against cognitive dissonance to allow them to absorb anything I might say.

    I greatly doubt he will get a tax cut — the little I’ve seen so far indicates that the upper-middle class will get hit pretty hard. If and when they do, you can call him and say in your most syrupy voice how much you feel for him. Rub some salt into his wounds. It won’t kill him.

  14. 14
    AnneWith says:

    @Sab: I can’t find the blog post where I first read this, but I’ve been inadequately paraphrasing it ever since: Voting 3rd party or not voting basically means that you’re saying, “The rest of you decide who will be President. I have no preference,” because that’s the practical outcome. Only twice since 1804 has a 3rd party presidential candidate received more than 20% of the vote: 1856 (Millard Fillmore, 21.6%) & 1912 (Theodore Roosevelt, 27.4%).

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