.Between 15% and 20% of both privately and publicly insured individuals experience coverage disruptions or change plans each year. (Photo: Bigstock)
Given how likely it is consumers will re-enroll in a commercial health plan with a particular insurer when switching coverage, it's in insurance companies' best interest to take a long-term approach to health care and cover more preventive services.
That's the takeaway from a new study published in JAMA Network Open. Between 15% and 20% of both privately and publicly insured individuals experience coverage disruptions or change plans each year, researchers noted.
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"Turnover, especially within commercial insurance, has implications for the long-term health of insured populations in the U.S.," they wrote. "From a single insurer's perspective, turnover may occur internally across their menu of plan offerings — often without any gaps in coverage — or externally when a member leaves the insurer entirely. External turnover can be negatively associated with the affordability of insurance when insurers must continuously use resources to attract and enroll new members."
Additionally, as the study emphasized, "external turnover reduces insurer incentives to invest in preventive care for which benefits accrue over longer time horizons; as such, benefits may not necessarily accrue to the same insurer making the investment." This turnover can result in employers often underinvesting in their employees' health during working years, which in turn leads to higher health care expenditures in retirement.
In their study — led by Hanming Fang, chair of the Department of Economics at the University of Pennsylvania — researchers determined that while external turnover is significant in the commercial health insurance market, many individuals also reenrolled with the same insurer within five years.
Specifically, disenrollment at one large national insurer was common between 2006 and 2018. In that case, one-quarter of the members remained with the insurer for five years before disenrolling, and 34% returned within five years. External turnover and subsequent re-enrollment at another large insurer were similar.
Researchers say the findings imply that it may be useful for insurers to focus on the long-term health of individuals because many members will return to the same insurer. To that end, they stress the importance of weighing the upfront costs of preventive care, screenings, and treatments against the likelihood that any future cost-savings will be realized while a member is still enrolled.
"When upfront investment costs are low relative to eventual cost savings, an insurer may find it in their best interest to cover a service at an earlier time so long as a sufficiently large share of members are expected to be covered at the time when savings will be realized," researchers concluded. "A higher rate of re-enrollment upon disenrollment may reduce the leakage of the cost-saving benefits of preventive care investments by the insurer, thus better incentivizing the insurer to offer such benefits."
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