Insurance Churn Reduces Prevention Investment, Worsening U.S. Health Outcomes

In the United States, health insurance churn refers to the frequent changes in insurance coverage experienced by individuals due to employment, income variations, or other factors. This phenomenon affects a significant portion of the insured population across Medicaid, ACA exchanges, employer-sponsored plans, and Medicare Advantage, with annual churn rates ranging between 12% and 26% depending on the coverage type.

Churn leads to several operational challenges including higher marketing, broker, and administrative costs, as well as disrupting continuity of care due to network changes. Critically, churn undermines insurers' financial incentives to invest in preventive care and chronic disease management, as the benefits of these investments accrue over longer time horizons than the typical duration of an individual's coverage with a single insurer.

The underinvestment in prevention contributes to poor utilization rates of cost-effective services such as vaccinations, cancer screenings, and chronic illness treatments, exacerbating health outcomes and increasing long-term healthcare costs. For example, substantial portions of adults with high blood pressure and diabetes are either undiagnosed or have poorly controlled conditions, despite the availability of effective treatments. Proposed strategies to address churn's negative impact include mandating preventive services at no cost to patients, financially incentivizing quality improvements, and most notably, extending enrollment periods to five years to align insurer and patient health horizons better.

Longer enrollment periods could enable insurers to justify greater upfront investments in prevention, potentially lowering healthcare costs and improving patient outcomes. However, policy changes such as the 2025 tax bill introducing significant Medicaid and marketplace cuts are expected to intensify churn, leading to coverage losses and access barriers. The article emphasizes the need to reform enrollment practices and incentives to reduce churn and support sustained preventive care investments within the fragmented U.S. health insurance system.