Resource Center: Health Plan Member Disenrollment and Retention What Is a Loyal Member Worth? Member value increases the longer he/she remains with a health plan. Loyal members are worth more and cost less in "upkeep" than new members. It is worth the investment to ensure that members are loyal, not just satisfied. A satisfied member is not necessarily a loyal member. When members leave, health plans lose. Members take action when things aren't right. They leave. Over time, voluntary disenrollment adds up to huge costs to a health plan in: Lost premiums New member acquisition costs Administrative expenses What does disenrollment cost your plan annually? Following is a simple formula for calculating the total annual cost to a health plan of unhappy members who choose to leave:

    1.  Determine annual disenrollment rate.            SAMPLE CALCULATION		
	     (Number of disenrolled members)                     4,900	 
	     -------------------------------                    ------ = 14%
	        Average annual membership                       35,000		

    2.  If disenrollment rate is known, but total 
	    number of voluntary disenrollees is not, 
	    calculate this number.

	       (Total members X disenrollment % )       35,000 X .14 = 4,900

    3.  Calculate premium loss per member per year.  	
	         (Monthly premium per member X 12)        $400 X 12 = $4,800		

    4.  Calculate total lost revenues per year from 
        lost premiums.                                  
                                                         4,900 X $4,800 = 
	(Total disenrollees X annual premium per member)         $23,520,000

    5.  Estimate acquisition cost (sales and  
        marketing expense).                              
                                                           4,900 X $350 = 
	(Disenrollees/year  X sales and marketing                 $1,715,000  
	expense per member) 	 

    6.  Add total lost revenue (Step 4) and 
        acquisition cost (Step 5) to arrive at total 
        annual cost to the health plan of voluntary         
        disenrollment.                                         $23,520,000
                                                                 1,715,000
                                                               -----------
        ANNUAL VOLUNTARY DISENROLLMENT COST:                   $25,235,000  

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