Tuesday, November 30, 2010

Incentives matter -- dump your sick employees into the govt. exchange

Marginal Revolution blogs that President Obama's health care bill gives employers incentives to offer healthcare plans that are designed to induce ONLY THE LEAST HEALTHY employees to opt for coverage on the exchange. Employers would find this profitable because:
(i) they would avoid any penalty under the "employer mandate,"
(ii) their health care costs would decrease substantially by virtue of reducing coverage and shedding high-cost employees,
(iii) high-cost employees would not be much worse off, as they could acquire coverage on the exchange with no medical underwriting or preexisting conditions.

Based on the plan designs I have seen, this looks like what employers are demanding from the insurance companies.

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