What does "churning" mean in health insurance?

The concept of "churning" in health insurance refers to the practice of maximizing benefits by frequently switching plans. This behavior is often motivated by a desire to take advantage of new benefits or lower premiums that may be offered by different insurance providers. Churning can lead to a constant cycle of enrollment and disenrollment, which affects the overall risk pools for insurance companies and can disrupt continuity of care for the insured individuals.

This practice is generally viewed negatively by insurance companies and regulators because it can drive up costs and lead to instability within the insurance market. Insurance carriers may implement measures to discourage churning, such as waiting periods for certain benefits or limitations on when an individual can switch plans, to promote more stable and consistent utilization of their insurance products.

Understanding this term is essential for both consumers and providers to navigate the health insurance landscape responsibly and to ensure that they are making informed decisions that do not unintentionally lead to negative repercussions.