Howard Covtiz – Switching Health Insurers

This one is by Howard Covitz…


Just read The bad economics of switching health-care plans from Slate’s Dismal Science section.

20-30 percent of policy-holders switch carriers every year. This wreaks havoc on preventative care, both in terms of incentive to provide it and, more significantly, on successfully sustaining care for chronic conditions. The turnover rate over time has probably gone up due to increased job turnover (the old adage that a worker nowadays will have x times as many jobs in their life as a typical worker did x years ago), but also (more problematic for economic theory?) as competition increases among health plans to attract customers (with modern benefit documents looking more complex than cellphone policies).

Half of all turnover comes from employer groups switching among insurers, not from employees switching jobs.

I worked for some time as a web developer for a small business health insurance brokerage, and the goal of their website was to provide an easy to look at grid of the difference among health care plans available. Eventually the insurance carriers stepped in and prohibited us from putting them on such a grid, with some justification, as the simplification would unequally hurt more or less complicated plans. But there was also an element of the economic advantage of obfuscation.


This one was by Howard Covitz.