Monday, February 18, 2008

Where is the value legislators suggest can be gained by pooling medical insurance?

The idea being floated around the Connecticut General Assembly of “pooling” various organizations together in a medical insurance pool does not gain anything.

This statement is not an opinion but based on the conclusions in an American Academy of Actuaries Sept. 2006 Issue Brief.

The Actuaries concluded little administrative savings will be gained when the employees of various organizations are brought together into a new medical insurance pool. Why?

• The organization running the pool will have to interact with all the various

organizations which might join and thus no real admin. savings.

• Employees have already been pooled by their current medical insurance

JCP Note: Many of the medical pools of Conn. medical insurance companies
are much bigger than all possible participants in this proposed pool. Thus, no
“pooling” savings will be gained by putting them in a new pool.

• As time moves on pools made up of non-related groups tend to have higher claim

costs which quickly results in higher rates than in the commercial market.

Another important point to keep in mind is the make up of total claim costs. According to the Center for Medicare & Medicaid Services only about 15% of costs come from admin. related activities. All the attention and effort being put into the idea of “pooling” does nothing to address the 85% of claim cost, which is the real issue we face today.

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