Marketing Gimmicks Work for Insurers
The New England Journal of Medicine (find it here)
January 12, 2012
Fitness Memberships and Favorable Selection in Medicare Advantage Plans
By Alicia L. Cooper, M.P.H., and Amal N. Trivedi, M.D., M.P.H.
This study examined the consequences of adding a fitness-membership benefit on the self-reported health status of enrollees in Medicare Advantage plans. Using a quasi-experimental design, we found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit. These patterns persisted in the analyses of 2-year follow-up responses for all measures except self-reported general health. Our findings suggest that there is an association between the adoption of fitness-membership benefits in Medicare Advantage plans and the enrollment of healthier Medicare beneficiaries.
Risk-adjusted payments are designed to reduce incentives for plans to avoid high-cost patients. However, the enhanced Medicare risk-adjustment model has the power to explain only 11% of the total variation in health spending. Furthermore, the model overpredicts costs for persons in good health and underpredicts costs for persons in poor health, yielding overpayments for healthy enrollees and underpayments for less-healthy enrollees. Therefore, the continued limitations of the CMS payment model may not discourage Medicare Advantage plans from engaging in risk-selective activities. Our findings are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted.
The private, for-profit health insurance business model depends upon enrolling relatively healthy individuals while excluding those with greater health problems. When insurers take a look at the Medicare population, they try to figure out which of the elderly are among those 20% who will experience 80% of the health care costs in the near term, and leave them off of enrollment. They attract the relatively health with advertising gimmicks, like membership in a fitness club, take the government's too generous payment for the monthly fee to cover these individuals, and then make sure that actually getting expensive care is so difficult that any enrolled senior with real health problems will disenroll and go back to traditional Medicare.
When will you be ready to politically fight to rid our health system of the parasitic private for-profit health insurance business model?
Dr. Joe Jarvis