Lessons in Healthcare
Seun Ijose
Anjelic Owens
Alyssa Panzarella
Aaron Puntriano
Innovation Consulting Community Research Project
Do low-risk and high-risk
individuals affect each other?
Health Care Cost Analysis
and Comparison
Health Care Cost Analysis
and Comparison
Health Care Cost Analysis
and Comparison
Biggest Issues With the
United States Healthcare System
Cost Containment: how
expensive health insurance is,
and how much the government
spends on it but the people are
not receiving quality care
Improved Access: easy
access to healthcare but so
many people are uninsured
What does the payer have to do
to incentivize the young low-risk
people to enter the pool?
Low-Risk Insurance Plan
• Offer a flexible benefit program
• Lower premiums and out-of-pocket costs
• Gatekeeper
• Preventative care provider
Premium: an amount to
be paid for an insurance
policy
Out-of-pockets costs: expenses
for medical care that are not
reimbursed by insurance.
Includes: deductibles,
coinsurance, and copayments for
covered services plus all costs for
services that are not covered
Gatekeeper: Patients
choose from a list of
primary care providers
and can only see that
doctor
High-Risk Insurance Plan
• Contains pre-existing
condition waiting periods to
prevent adverse selection
• Higher premiums
•Copay charges
• Can see doctors outside of
plan
• If you go outside of the
network- you have to meet the
deductible and pay
coinsurance based on higher
charges
Pre-existing condition: any
condition for which the
patient has already received
medical treatment prior to
enrollment in a new medical
insurance plan
Adverse selection: when a
person buys health
insurance only after they
have had a medical problem
that will require the use of
benefits
Copay: a payment by a
beneficiary for health
services in addition to
that made by an insurer
Deductible: a specified amount of
money that the insured must pay
before an insurance company will
pay a claim
Coinsurance: a type of insurance in
which the insured pays a share of the
payment made against a claim
Insurance Goals
Low-Risk
• Appealing to
younger/healthier
people
• Help subsidize the
older/sick people
Subsidy: is a benefit given by
the government to groups or
individuals, usually in the form
of a cash payment or a tax
reduction; typically given to
remove some type of burden
High-Risk
• Limited to keep in
the pool
• Freedom to
choose doctor
• Pay more to get
more benefits
The Sick (High-Risk)
Traditional High Risk Pool:
enrolles are moved into a
seperately run insurance pool
• People with pre existing condition
• sometimes seen as medically uninsurable
• Our high risk pool will be similar to a traditional
high risk pool.
• The demographics of individuals in a high risk
pool is older individuals. Across all HRPs,
members of high risk pools in 2008:
HRP
Average
Age
Percent
Employed
Percent
Unemploye
d
percent
Retired
Average
household
income of
new
enrollees
Percent
male
Average
length of
enrollment
(in months)
Across all
49
47
32
9
$41,136
47
36
Every state had a way to fund
high risk individuals through
high risk pools. These
numbers are based on total
data from those pools.
Pre-existing Condition: a
medical condition that started
before a person’s health
insurance went into effect.
Traditional High Risk
Pool Components
• Premiums above standard non-group market
rates
• Pre-existing condition exclusions for up to 12
months
• Lifetime and annual limits
• high deductibles and premiums
• tend to be very restrictive to control costs
Stay In The Pool
• They need it because high risk individuals are
typically very sick
• If they were not a part of the plan their
deductible would be even higher than it already
is
• Subsidized costs
Subsidized costs: pooling
risks together allows the
cost of those at higher risk of
high medical costs to be
subsidized by those at a
lower risk
Leave The Pool
• High out of pocket costs and capped coverage
• In some states only eligible when you’ve been
turned down by other companies
• Waiting period to keep costs down that often
delay treatment of preexisting condition
• High costs for prescriptions and medications are
difficult to afford
Why so expensive? they
concentrate people with a
myriad of health conditions
into a single pool.
Why is this important? this
pool didn’t have any healthy
low risk individuals to offset
the costs of the sick
Ours will be different!!!
Leave The Pool
High risk has more claims and
there going to be more severe
• High risk pools are operated at a net loss
Total expenses by pool- 2011:
State
Paid Claims
Admins
Total Expenses
Illinois
$212,989,927
$11,006,503
$223,996,430
Indiana
129,559,528
4,662,119
134,221,647
Missouri
45,611,791
3,662,323
49,274,114
Total revenue by pool- 2011:
State
Premiums
Assessments
Other
Total revenue
Illinois
$118,904,474
$59,593,600
$35,248,882
$213,746,953
Indiana
64,207,997
68,529,556
1,754,098
134,491,651
Missouri
33,867,828
16,901,675
2,406,458
53,175,961
Leave The Pool
• the risk pool must be restrictive in order to maintain a healthy
equilibrium composed of low risk individuals and high risk individuals.
• therefore many high risk individuals with pre-existing conditions will be
excluded
• Many of the components of a high risk pool act as barriers that can
depress the amount of high individuals enrolling.
HRP
Total HRP Enrollees
Total HRP Enrollees and
Dependents
Estimated number of
individuals potentially eligible
for HRP enrollment
IL
16,063
16,063
218,610
Across all HRP
186,643
199,418
3,968,748
The Healthy (Low-Risk)
• The primary parameters for a low-risk person
can be seen within the millennial demographic
• Born within the age of 1980 and 1996 at
about 76.6 million
• Purchasing power of about 1.68 trillion
• 1 and 4 have a college degree
• An average household income is about
60,000
Stay In The Pool
• Lower premium
rates for insurance
• The mandate
reduces
premium costs
and taxes
Stay In The Pool
• Offsets the risk of
the elderly and ill
Say In The Pool
• Better Quality of Life
• Preventative health care
• Decreases chronic illness
• Relieves the emergency room services for
actual emergencies
Leave The Pool
• Charged/Fined
• If said person refuses to have minimum essential coverage
then they will be dealt a penalty fine.
Leave The Pool
• Increases overall premiums for insurance
companies
• “Death Spiral”
• Higher taxes
• Subsidies
• Medicare/Medicaid
Death spiral: less healthy, more costly
individuals would be more likely to
enroll in coverage and would make up
the insurance risk pool. This “adverse
selection” would drive premiums up,
which in turn would cause even more
healthy individuals to drop their
coverage
Medicare: the federal health insurance
program for people who are 65 or older,
certain younger people with disabilities,
and people with End-Stage Renal
Disease.
Medicaid: is a jointly funded, FederalState health insurance program for lowincome and needy people. It covers
children, the aged, blind and/or disabled
and other people who are eligible to
receive federally assisted income
maintenance payments
Take Away
• Looking back
• High risk plan
• Low risk plan
• Rules governing health insurance attempt to
balance the tradeoffs between access to coverage
and premium affordability
• Proposals to implement alternative risk pooling
arrangements need to maximize the enrollment of
healthy risks, while not pricing the unhealthy risks
out of that market
“Nobody knew healthcare
could be so complicated”
-Donald Trump
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