𝗣𝗮𝗿𝘁 𝟱 — 𝗪𝗵𝘆 𝗗𝗲𝗺𝗮𝗻𝗱-𝗦𝗶𝗱𝗲 𝗙𝗮𝗶𝗹𝘂𝗿𝗲𝘀 𝗕𝗲𝗰𝗮𝗺𝗲 𝗘𝗻𝘁𝗿𝗲𝗻𝗰𝗵𝗲𝗱
By now, most health plan leaders know the truth.
They’ve watched utilization suppression backfire.
They’ve watched gap closure campaigns collapse under their own weight.
They’ve watched administrative spend climb while margins erode.
They know the demand-side model doesn’t work.
Yet they can’t stop running it.
This isn’t ignorance. It’s entrenchment. And it’s structural.
𝗖𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗮𝘀 𝗮 𝗖𝗮𝗴𝗲
The Affordable Care Act didn’t 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 “clinical” or “quality improvement” 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 don’t produce durable economics, turning them off would look like negligence to regulators, boards, and investors.
What began as incentives are now shackles.
𝗔𝗱𝗺𝗶𝗻 𝗘𝗺𝗽𝗶𝗿𝗲𝘀 𝗮𝗻𝗱 𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗣𝗼𝗹𝗶𝘁𝗶𝗰𝘀
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 “killed Stars” or “cut risk adjustment” if performance dips.
Executives may privately know the ROI isn’t there, but the political cost of unwinding these structures is higher than the financial drag of keeping them.
𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗠𝗼𝗱𝗲𝗹𝘀 𝗕𝘂𝗶𝗹𝘁 𝗼𝗻 𝗙𝗶𝗰𝘁𝗶𝗼𝗻
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 don’t deliver, they must also admit their entire pricing architecture is wrong.
So they double down instead.
This is why CFOs describe the treadmill as “too big to fail.” It’s not hyperbole. The math would break.
𝗡𝗼 𝗠𝗼𝗿𝗲 𝗘𝘀𝗰𝗮𝗽𝗲 𝗩𝗮𝗹𝘃𝗲𝘀
Historically, when demand-side levers failed, plans had escape valves:
• Underprice premiums to buy time.
• Push cost to employers or members.
• Squeeze networks to extract savings.
Those levers are gone. Pricing power is gone. Regulators are watching. Employers are resisting. Networks are brittle.
What’s left is a treadmill no one believes in — but no one can stop.
𝗧𝗵𝗲 𝗖𝗼𝗻𝘀𝗲𝗾𝘂𝗲𝗻𝗰𝗲: 𝗟𝗲𝗮𝗿𝗻𝗲𝗱 𝗛𝗲𝗹𝗽𝗹𝗲𝘀𝘀𝗻𝗲𝘀𝘀 𝗮𝘁 𝗦𝗰𝗮𝗹𝗲
This is the most dangerous part.
Health plans aren’t just stuck mechanically. They’re 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 didn’t just fail. It rewired the mindset of the industry to accept margin erosion as inevitable.
𝗧𝗵𝗲 𝗪𝗮𝘆 𝗢𝘂𝘁
Breaking out won’t come from optimizing the treadmill. It will come from stepping off it entirely and building a supply-side engine — a continuous stream of real-time risk data that creates new inputs, new visibility, and new economics.
The future won’t belong to the plans that get the best at closing gaps.
It will belong to the plans that make gaps irrelevant.
MyRoad.io provides Targeted, Relevant, and Timely Data. Schedule a consultation to integrate into your sales funnel.
