๐ฃ๐ฎ๐ฟ๐ ๐ฑ โ ๐ช๐ต๐ ๐๐ฒ๐บ๐ฎ๐ป๐ฑ-๐ฆ๐ถ๐ฑ๐ฒ ๐๐ฎ๐ถ๐น๐๐ฟ๐ฒ๐ ๐๐ฒ๐ฐ๐ฎ๐บ๐ฒ ๐๐ป๐๐ฟ๐ฒ๐ป๐ฐ๐ต๐ฒ๐ฑ
By now, most health plan leaders know the truth.
Theyโve watched utilization suppression backfire.
Theyโve watched gap closure campaigns collapse under their own weight.
Theyโve watched administrative spend climb while margins erode.
They know the demand-side model doesnโt work.
Yet they canโt stop running it.
This isnโt ignorance. Itโs entrenchment. And itโs structural.
๐๐ผ๐บ๐ฝ๐น๐ถ๐ฎ๐ป๐ฐ๐ฒ ๐ฎ๐ ๐ฎ ๐๐ฎ๐ด๐ฒ
The Affordable Care Act didnโt just create incentives. It created non-optional mandates that welded demand-side infrastructure into place.
The MLR rule forces plans to spend the bulk of revenue on โclinicalโ or โquality improvementโ projects, which almost always means Stars and gap closure.
Stars Ratings and QBP dollars became such a large share of MA plan revenue that any dip threatens solvency.
Risk adjustment revenue has been baked into financial projections for years. Pull it out, and the math collapses.
Even if executives know these systems donโt produce durable economics, turning them off would look like negligence to regulators, boards, and investors.
What began as incentives are now shackles.
๐๐ฑ๐บ๐ถ๐ป ๐๐บ๐ฝ๐ถ๐ฟ๐ฒ๐ ๐ฎ๐ป๐ฑ ๐๐ป๐๐ฒ๐ฟ๐ป๐ฎ๐น ๐ฃ๐ผ๐น๐ถ๐๐ถ๐ฐ๐
Once Stars, risk, and gap closure became lifelines, health plans staffed up to match.
Entire Stars departments were built.
Risk adjustment teams grew larger than primary care divisions.
Vendor ecosystems sprawled across multiple business units.
Now these functions have become internal power centers. No one in the C-suite wants to be the person who โkilled Starsโ or โcut risk adjustmentโ if performance dips.
Executives may privately know the ROI isnโt there, but the political cost of unwinding these structures is higher than the financial drag of keeping them.
๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐ ๐ผ๐ฑ๐ฒ๐น๐ ๐๐๐ถ๐น๐ ๐ผ๐ป ๐๐ถ๐ฐ๐๐ถ๐ผ๐ป
Every pricing model and five-year forecast in the industry assumes these demand-side levers work.
Bids in Medicare Advantage count on risk score lift.
Medicaid managed care contracts assume gap closure will improve quality scores.
Employer sales decks promise lower trend from utilization controls.
If plans admit those levers donโt deliver, they must also admit their entire pricing architecture is wrong.
So they double down instead.
This is why CFOs describe the treadmill as โtoo big to fail.โ Itโs not hyperbole. The math would break.
๐ก๐ผ ๐ ๐ผ๐ฟ๐ฒ ๐๐๐ฐ๐ฎ๐ฝ๐ฒ ๐ฉ๐ฎ๐น๐๐ฒ๐
Historically, when demand-side levers failed, plans had escape valves:
โข Underprice premiums to buy time.
โข Push cost to employers or members.
โข Squeeze networks to extract savings.
Those levers are gone. Pricing power is gone. Regulators are watching. Employers are resisting. Networks are brittle.
Whatโs left is a treadmill no one believes in โ but no one can stop.
๐ง๐ต๐ฒ ๐๐ผ๐ป๐๐ฒ๐พ๐๐ฒ๐ป๐ฐ๐ฒ: ๐๐ฒ๐ฎ๐ฟ๐ป๐ฒ๐ฑ ๐๐ฒ๐น๐ฝ๐น๐ฒ๐๐๐ป๐ฒ๐๐ ๐ฎ๐ ๐ฆ๐ฐ๐ฎ๐น๐ฒ
This is the most dangerous part.
Health plans arenโt just stuck mechanically. Theyโre stuck psychologically.
Executives who once talked about innovation now talk about compliance.
Actuaries who once modeled risk now model Star Ratings.
Clinical leaders who once fought to improve outcomes now fight to preserve documentation.
Demand-side economics didnโt just fail. It rewired the mindset of the industry to accept margin erosion as inevitable.
๐ง๐ต๐ฒ ๐ช๐ฎ๐ ๐ข๐๐
Breaking out wonโt come from optimizing the treadmill. It will come from stepping off it entirely and building a supply-side engine โ a continuous stream of real-time risk data that creates new inputs, new visibility, and new economics.
The future wonโt belong to the plans that get the best at closing gaps.
It will belong to the plans that make gaps irrelevant.
