Module 1: Health Insurance

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# Module 1: Health Insurance
## Part 0: Motivation
### Ian McCarthy | Emory University
### Econ 372

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# Airport Idea:

Our "big picture" idea for this module is:

**Firms also face uncertainty**

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# An Example from Real Life

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# Humana exits the ACA exchanges
In 2018, Humana exited the ACA exchanges due to an "unbalanced risk pool based on the results of the 2017 open enrollment period". [CNN Money Article](https://money.cnn.com/2017/02/14/news/economy/humana-obamacare-insurer)<br>

Fun fact: Humana and Aetna's merger deal had just been blocked. [NPR Article](https://www.npr.org/sections/thetwo-way/2017/02/14/515167491/aetna-and-humana-call-off-merger-after-court-decision)

???
- Before we go too much further, how many of you are familiar with "the exchanges"? Do you know what I mean when I say that?
- What do you think an "unbalanced risk pool" means?
- What is the underlying business reason for Humana to exit the exchanges?

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# Managing risk is really important

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  ![](pics/meps-visits.png)
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  ![](pics/meps-expenditure.png)
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<div class="smalltext">Source: <a href="https://meps.ahrq.gov/mepstrends/hc_use/">Medical Expenditure Panel Survey</a></div>

???
These graphs show that expenditures are closely linked to health. That means insurers need to be aware of their customers. The way we describe the health of an insurer's customers is by something called a "risk pool". Managing the risk pool is really hard but very important.