Tuesday, September 24, 2013

The new Medical Underwriting?

There are some interesting ideas in this NY Times piece.  One is that if you want cheap health insurance you have to accept seeing cheap doctors.  No matter how thrifty the administration an insurer can't keep overall costs down by just working on admin, they have to hit the 80%+ of premium that goes to medical care.  That means playing hardball with providers and telling those who can't keep costs down to take a hike.

But you would think insurers would welcome those providers who could keep costs down with arms wide open.  So I was surprised to read this:
Daniel R. Hawkins Jr., a senior vice president of the National Association of Community Health Centers, which represents 9,000 clinics around the country, said: “We serve the very population that will gain coverage — low-income, working class uninsured people. But insurers have shown little interest in including us in their provider networks.”
Dr. Bruce Siegel, the president of America’s Essential Hospitals, formerly known as the National Association of Public Hospitals and Health Systems, said insurers were telling his members: “We don’t want you in our network. We are worried about having your patients, who are sick and have complicated conditions.”
Now maybe that's just jawboning, seeking political pressure to force insurers to pay more, but maybe it isn't.  Insurers are very good at underwriting, at classifying things and figuring out what they cost.  They can't underwrite patients based on their medical profile, but what's to say they aren't underwriting providers based not on cost but on the expected profile of their patients?  Helping people who want cheap insurance find cheap providers is a good thing, helping people who want cheap insurance find providers with cheap patients is not. 

It strikes me that the competitive nature of exchanges might change the market a lot more than people bargained for.  We've been so worried that rates would go up that we may have overlooked what might happen if they go down, and in particular that they might go down for reasons at cross purposes to reform efforts (such as finding new ways to exclude the sick).  

Whether it's jawboning or something else, it will be interesting to see how states react.

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