The Patient Protection and Affordable Care Act’s reforms of the individual health insurance market are intended to create a large, risk diversified pool with the individual mandate and prohibition on health plan medical underwriting. A related goal is to enhance competition among health plan issuers based on value and price rather than risk selection – selecting for populations more likely to have lower medical utilization. In addition, the Affordable Care Act’s risk adjustment mechanism — whereby health plan issuers with plans having fewer members with high risk chronic health conditions transfer funds to those with higher numbers of members with such conditions – is designed to disincentive selecting members who tend toward lower medical utilization.
However, as this Money item suggests, market forces may be in play that could work against shifting the market away from risk selection as a means of competition. How? By creating a health plan bundled with a consumer friendly front end primary/urgent care clinic that targets Millennials and young families. These plans – Zoom and UnitedHealth’s Harken Health unit — compete by offering a superior primary and urgent care consumer experience. Along with convenience and transparency and more personalized care and healthy lifestyle support. Since their target demographic is less likely to be suffering from costly chronic health conditions or require hospitalization, the overall risk profile of their plan memberships will likely be superior to those of other health plan issuers.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email