Wednesday, November 28, 2007

What is the value of bringing together small employers into a "pool".

Proposals to improve health insurance coverage often include the idea of bringing employers together into a large "pool". The idea - it will lower costs. However, that is not the case and this note shares two points about such pooling:

First: Bringing together a natural group of individuals e.g. all working for the same organization will initially save some amount of administrative costs. On the other hand studies show when you bring together separate organizations the savings go away since the pooling organization still has to interact with each of the individual organizations.

Second: Connecticut Business Industry Association has developed a video on health care reform. It is an informative discussion of health care reform and includes some points about the problems with pooling .