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Wed Dec 9, 2015, 09:12 AM

Insurance companies don't like gold and platinum plans


What we know is if [a patient is] asthmatic and more actively managed, the health outcomes and therefore the affordability can be quite different. This is a case where if you have a chronic illness, you need to be in a management program.”

Question: What is Cigna’s concern with gold products?

“Adverse selection. [It’s not that policyholders] are necessarily older or sicker. The whole way the benefits are configured and the way marketplace is working — the performance of those plans — is much less reasonable than all the other plans. Either there will be more flexibility to configure them in a way to make them sustainable or there won’t be gold plans.”

Comment by Don McCanne of PNHP: Skimming through the comments of Cigna CEO David Cordani, it comes as no surprise that, with the Anthem/Cigna merger (approved by the shareholders last week), plans are being laid to enhance the business advantages of the corporation to the detriment of the plan participants.

Squeezing enrollment (favoring the healthy), reconfiguring provider networks (impairing access for the sick), reducing spending on Medi/Medi dual-eligibles, selling more patient management programs, and using benefit design to fragment risk pools are the types of policies that we have come to expect from the private insurers. Works well for them.

In this interview, there are a couple of points that demonstrate the problem described in yesterday’s Quote of the Day on information frictions and how they impact adverse selection (concentrating high-risk individuals in a single plan). The more information the purchaser of an insurance plan has, the much greater is the possibility that it will lead to adverse selection.

Cordani says that the market must have a focus on transparency for consumers. With greater transparency, patients with high health care needs will select plans that have the greatest actuarial value - plans that pay the highest percentage of the health care costs. In the exchanges, those are the gold plans. They pay 80 percent of the costs, as opposed to 60 or 70 percent for the bronze and silver plans respectively.

As we learned yesterday, it is essential to have effective risk-adjustment transfers to correct for adverse selection that results from patients understanding the benefits of the plans that they purchase. Well informed, high-risk patients will be concentrated in the gold plans, but since we do not have tools that adjust risk adequately, the insurers will be exposed to the greater risk of adverse selection impacting the gold plans.

So what is Cordani’s solution? Either provide “more flexibility to configure them in a way to make them sustainable,” or eliminate them. Configuring them to make them sustainable is, of course, code language for screwing up the benefits so they it becomes more difficult for patients to access the care that they need. If they can’t screw them up enough, then just get rid of them.

Yesterday’s message on information frictions was a challenging read, but it does show that academics with a heart, such as Benjamin Handel and his colleagues, do have something to offer the policy community. Those who might be interested but passed over yesterday’s message because of its complexity may want to take another stab at reading it. It’s an important concept to understand. It is posted at:


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Reply Insurance companies don't like gold and platinum plans (Original post)
eridani Dec 2015 OP
peacebird Dec 2015 #1
eridani Dec 2015 #2
BlueJazz Dec 2015 #3
1939 Dec 2015 #4

Response to eridani (Original post)

Wed Dec 9, 2015, 09:18 AM

1. We are supposed to limit our accessing health care because we have to pay a higher percentage

But at the same time, you cannot comparison shop prices of procedures you need to have done. For example Dr A does appendectomy at the hospital - what is the total cost?
Dr B does it at the surgery center, what is the cost? And are both Drs in your plan?

There is no way to know. You have cancer And Dr C is a highly respected pro, Dr D is fresh out of medical school. Which do you choose? The pro or the less expensive fresh out? And this ASSUMES you could find out what each one would charge before seeing them.

We need to get profit out of health care, go to single payer.

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Response to peacebird (Reply #1)

Wed Dec 9, 2015, 09:26 AM

2. Agreed. Everybody in and nobody out. n/t

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Response to eridani (Original post)

Wed Dec 9, 2015, 10:07 AM

3. I dated a well-spoken nice lady a few years ago. She had quit her job as an evaluator/underwriter.


I asked her once why she quit XXX insurance and she says:

"I don't cuss much but the answer to your question is because they're all fucking sociopathic cockroaches"

I thought to myself.. Damn!!

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Response to eridani (Original post)

Wed Dec 9, 2015, 10:28 AM

4. Problem is that people want "paid health care"

and not insurance but ACA is set up on an insurance model and not on a paid health care model.

Catastrophic health care could be insurance, but the only way to work day-to-day health care is single payer.

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