Insurers slam patients with underwriting cycle

In Colorado, Disparity in Health Plan Prices Underscores Ambitions, and Limits, of Affordable Care Act

By Reed Abelson and Agustin Armendariz
The New York Times, January 19, 2015

An analysis by The New York Times shows that the cost of one midlevel silver plan in Colorado rose 36 percent west of the Rocky Mountains this year, while another dropped nearly 40 percent in the northeastern plains.

The law was intended to drive prices lower and broaden coverage through competition. While 10 insurers offer plans to individuals in Colorado through the state’s online marketplace, the law does not require insurers to offer all plans in all regions of a state.

The wild disparity in prices results from many insurers trying to attract more customers by pricing plans as low as they can. But it is not at all clear that the low prices will be sustainable, so prices may well swing sharply upward as time goes on.

The variations in premium prices are also a direct result of what the insurer-friendly health care law permits. Insurers can target territories, choosing areas within a given market where they can attract enough members and put together provider networks that will negotiate on price. In addition, insurers were given some protection by the federal government to reduce possible losses in the early years, so some are experimenting with very low prices that may not be sustainable over the long term.

And no one expects premium costs to stabilize anytime soon. Because buyers are so sensitive to price, the markets may experience cycles in which insurers alternately offer low premiums to attract customers and sharply raise them in later years to cover costs, experts said.



By Don McCanne, MD

Although medical underwriting for preexisting disorders supposedly has been eliminated, the insurers apparently are still taking advantage of the “underwriting cycle” - capturing the market by selling plans at a loss and then jacking up rates after the competition has been thinned out. This volatility results in uncertainties for patients in both their insurance costs and in the composition of the networks of covered providers.

And under single payer? Costs would be stable and fair since they are based on ability to pay, and provider choice would be assured. So do we leave the system under the control of the cutthroat insurers, or do we finally place our own public stewards in charge?