Worrying about naked counties

Aisling McDonough made a very good point last night:


In 2017 and 2018, the calculus for insurers entering a bare county was that they would have monopoly pricing power which would allow them to choose their own risk pool. High premiums could cushion the risk of the insurer only getting the very sick non-subsidized people in a county while subsidies guaranteed that a reasonably healthy mixture could be attracted below 400% Federal Poverty Level (FPL). There were non-ACA outlets for people but they were fairly restrictive in the health sharing ministries, three month limited duration plans or non-coverage with mandate penalties.

I was never too worried about naked counties because of the logic above. A monopoly insurer should be able to print money as long as their actuaries were vaguely competent.

That might not be the case any more. The outflow channels to year long underwritten plans and no mandate penalty will unpredictably suck out a lot of the good risk in the bare county. The risk pool is going to be very sick for ACA plans. Rural counties are much more likely to have expensive provider contracts so the same person in a rural area will be much more expensive to treat than that person in an urban area where narrow networks are plausible. The big question is how much sicker will the ACA risk pool in potentially bare counties be?

Will they be 20% sicker? Will they be 50% more morbid? Will they be 100% more morbid? This is a huge risk to take for insurers. Some of the last counties to be covered last year had fewer than 1,000 covered lives in them. Insurers don’t like taking big risks for small upsides; it gives them hives. Walking away from bare counties is a viable business strategy especially as there is little political upside to making the ACA work.

Aisling is worried, therefore I am worried.

8 replies
  1. 1
    Steeplejack says:

    “Naked counties”? Sounds like someplace Baud would like to live.

  2. 2
    Mike S says:

    Yet, somehow the MAGAts it will KNOW it’s Obama’s fault (or maybe Nancy Pelosi’s) when the Farm bureau rejects their application for underwritten insurance because they have a chronic condition.

  3. 3
    Butch says:

    The thought of having to obtain private health insurance is the only thing that’s keeping me in my current job.

  4. 4
    Villago Delenda Est says:

    @Mike S: The MAGAts are all utter idiots, and are beyond redemption.

  5. 5
    Yarrow says:

    @Butch: Healthcare handcuffs, just like the bad old days. It’s terrifying outside of employer-based health insurance. I am so angry about what our healthcare situation has become that it’s almost impossible for me to talk about it. It did not have to be like this.

  6. 6
    Butch says:

    @Yarrow: It didn’t. The Upper Peninsula is underserved anyway; the quotes I’ve obtained so far basically mean that I’d be buying a premium.

  7. 7
    🌷 Martin says:

    My stepfather in Iowa is losing his policy after this year. He’s pretty sure he won’t have an option for next year and he’s a few years away from Medicare age. Far from being a peasant, he’s a retired health care exec (C-level) with a pre-existing condition (degenerative inherited disease). They’re considering moving, which is something they can thankfully afford.

    Iowa is pretty representative of what David describes. 99 counties and everyone lives in about 4 of them. The other 95 each have about 1000 people in them. The GOP demands that policies be sold across state lines, but they still support dividing them up by county, because it remains a good way to segregate the undesirables.

  8. 8
    Kelly says:

    The first couple years of Obamacare we had around 10 health insurers on the exchange here in Marion County Oregon. We now have three. I blame reneging on risk corridor and CSR payments for killing a promising, very competitive market here. Republicans do not support competitive markets in anything.

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