Aspirations and acceptability

When we look at insurance company filings and rate requests, we need to make a clear distinction between aspirations and acceptable.

For instance, this weekend, my aspirational fitness goal in a non-constrained universe would be a really good lift this evening, an eight mile run tomorrow morning and then a really good sprint series on Sunday morning. However, I have kids who want to do things when I’m home, and my wife has been on kid duty for the past couple of nights as I had work and social obligations in the evenings this week. This means my acceptable goal set is very different from my aspirational goals. I’ll be happy if I can get a home workout consisting of push-ups, reverse push-ups, toddler curls, piggy back stair climbs, big girl shoulder presses and double kid squats this evening, three or four miles tomorrow morning before I take the kids to the dentist, and a water sprint work-out when we go to the pool on Sunday. If I can get that in this weekend, I will have fit my minimal fitness improvement goals this weekend.

There is a big difference between what I would aspire to in a non-constrained universe and what I think is acceptable.

We face those trade-offs every day. Insurance company rate requests are similar. There is a number they would love to get, and a number that works well enough for the product to be offered. Most of the time those two numbers are very different during the early stages of the rate request negoatiation cycle.

We have seen insurance companies submit requests for 10%, 19% or 35% rate increases. We’ve seen companies ask for rate drops. We have seen companies ask for rate increases at or less than nominal GDP growth. Rate request changes are all over the place. From a predictive point of view, there is a modest correlation between initial ask and final approval. Insurance companies know this and they’ll ask for as much as they can get in order to anchor their end of the negoatiation in the most favorable position. However, it is extremely rare for the initial request to be the same or lower than final rates. Final rates for Exchange products will be available in late October.

Charles Gaba is showing this at ACASignups.net.

Mississippi:

This is the third 2015 rate change update today; I had already reported on the 25% drop on one of the companies operating on Mississippi’s exchange a few weeks ago, but this makes it official, and also reveals that the 2nd provider (there’s only 2 on MS’s exchange) is only requesting to raise their rates by 6.5%…
Add them up and Mississippi’s weighted average appears to be roughly a 2% decrease…which also sounds about right since the article specifically states that the 25% drop & 6.5% increase will “close the gap” between the two anyway.

California: via Covered California

The vast majority of Covered California consumers will see low increases in their health insurance premiums for 2015, and many consumers will see no increase or even a decrease. The statewide weighted average* came in at 4.2 percent, with some plans offering weighted average rates that are 8.5 percent lower than current pricing.

Connecticut:

In the case of Anthem Blue Cross and Blue Shield, the department deemed the proposal to raise rates by an average of 12.5 percent to be excessive, and directed the carrier to submit new rate proposals for review.

Similarly, the department asked UnitedHealthcare to submit new proposals for plans it intends to sell in 2015. The company doesn’t sell policies in the state’s individual market this year.

The department turned down the request by ConnectiCare Benefits Inc. to raise rates by an average of 12.8 percent, but approved a rate hike averaging 3.1 percent.

And regulators will allow HealthyCT to lower its rates by 8.5 percent, slightly less than the company initially proposed.

In this case, the regulators thought the rate cuts for HealthyCT were too deep, and ordered a slightly higher rate.

Remember, the pricing that we are seeing for most state run exchanges is still aspirational pricing by insurance companies and not acceptable pricing. All Federal Exchange pricing is still insurance company aspirational pricing, so the hyperventilation about premium shock (let’s forget about subsidy mechanisms for the moment) is about as realistic concerning actual pricing as Shark Week is on the dangers of man-eating sharks.






16 replies
  1. 1
    Baud says:

    Right. It’s like I aspire to Scarlett Johansson, but I would find Natalie Portman acceptable.

  2. 2
    Xantar says:

    Why exactly would it concern Connecticut regulators that one of the providers asked for a rate decrease that was too much? Is it because the regulators don’t want HealthyCT to have to ask for a big rate hike in 2016?

  3. 3
    JPL says:

    OT One of the Americans stricken with the ebola virus is being transported to Emory Hospital in Atlanta. From the comments posted on the AJC.com, it’s easy to deduce that our country is made up of willfully ignorant f..ksticks. (must credit Bill Weir of CNN for that statement).
    Many are going to blame the President for any change in rates.

  4. 4
    Richard Mayhew says:

    @Xantar: The regulators are charged with making sure the companies have sufficient revenue to pay claims in a fairly unlikely set of scenarios, so too much of a cut could have placed that ability in doubt.

  5. 5
    JGabriel says:

    For instance, this weekend, my aspirational fitness goal in a non-constrained universe would be a really good lift this evening, an eight mile run tomorrow morning and then a really good sprint series on Sunday morning.

    We have very different aspirations.

    I mean, that just sounds painful. But then I’m someone whose response to No pain, no gain is No pain, no pain.

  6. 6
    Eric U. says:

    wingnuts are touting 88% rate hikes in CA, I assume that was fairly creative calculation. Zerohedge was the source, apparently

  7. 7
    Yatsuno says:

    @Eric U.:

    Zerohedge was the source, apparently

    I believe vee haf located the problem, Keptin!

  8. 8
    Eric U. says:

    tracked it down. The number is made up by someone, as you can imagine. It’s part of an argument against prop 45, which is about regulating rates

  9. 9
    MomSense says:

    Anyone have any thoughts on the new polling about the ACA which is being billed as “more unpopular than ever”. It is strange since just last month I think the polling showed that the ACA was in the positive for the first time. Is it just the constant negative messaging from Republicans and pundits?

  10. 10
    Eric U. says:

    new round of discussion of rate hikes, no doubt. The negativity has been unrelenting, no wonder it’s unpopular in the abstract.

  11. 11
    Richard Mayhew says:

    @JGabriel: I have to get and keep in soccer shape — that has paid the mortgage more than once, so I need the miles

  12. 12
    Davis X. Machina says:

    @MomSense: Constant repetition.

    This is the same process that has persuaded generations of Americans that Velveeta is actually cheese.

  13. 13
    Roger Moore says:

    @Richard Mayhew:
    The other aspect is that once you are in shape, those things are a lot less painful. And, of course, there’s the knowledge that it’s a lot less painful to stay in shape than to get back into shape if you let yourself go. The net is that you know perfectly well that you’re minimizing the long-term pain by working out now rather than slacking off and having to work extra hard to get back in shape later.

  14. 14
    Ella in New Mexico says:

    I really don’t give a crap about rate increases at this point. 10% of $300 dollars a month is mere Starbucks change.

    What is killing me and all of us who have insurance? Ridiculously high Deductibles, Out-of-Pocket Caps and Coinsurance and the failure to standardize and make transparent the actual costs for the healthcare we need.

    The fact that almost NOBODY has the ability to determine what a hospital or doctor charges, particularly for emergency or non-elective medical charges, is a huge issue right now that is not being hammered in all the discussions about Obama care. Because we must now pay the difference between what they charge and what our shitty insurance company is willing to pay.

    Here’s a real “Do the Maths”: 20% of a $12500 hospital bill for “elective” outpatient knee surgery after an accidental injury, which your employer provided BCBS says should cost only $8000 will result in a bill to you of the full $6350 out-of-pocket maximum allowed. Even if you make only 35K per year and can barely pay the rent, much less have that amount in savings. And BCBS will still try to deny coverage for anything outside that $6350 because, WTF are you going to do about it anyway, sucker?

    This is how too many insurance plans sucked so frigging bad back a couple of decades ago, unless you were fortunate enough to work for a state or Federal government agency, or a business that was large enough to create a decent risk pool thus offer good health insurance to it’s employees–and things actually got better over the years until the ACA created these new loopholes for insurers and hospitals to ream the average American.

    We are talking about thousands and thousands of dollars in medical charges being dumped on the backs of the consumer right now that did not used to fly with their former insurance plans. And it’s killing middle class wage earners and making the entire nation HATE Obama care.

    I want the uninsured to get insurance, but not this shitty crap.

  15. 15
    Ella in New Mexico says:

    @MomSense:

    See my rant above. From talking to people in real life, it’s that so many of us have seen a decline in the quality of benefits and a shifting of costs to our budgets.

  16. 16
    JGabriel says:

    @Richard Mayhew:

    I have to get and keep in soccer shape — that has paid the mortgage more than once, so I need the miles

    Ah. Well that’s understandable then.

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