• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

And we’re all out of bubblegum.

They traffic in fear. it is their only currency. if we are fearful, they are winning.

Not all heroes wear capes.

It’s the corruption, stupid.

It’s always darkest before the other shoe drops.

I personally stopped the public option…

The willow is too close to the house.

Let’s delete this post and never speak of this again.

No one could have predicted…

Wow, you are pre-disappointed. How surprising.

‘Forty-two’ said Deep Thought, with infinite majesty and calm.

Let there be snark.

Come for the politics, stay for the snark.

I’m going back to the respite thread.

I see no possible difficulties whatsoever with this fool-proof plan.

Where tasty lettuce and good mustard aren’t elitist.

They are all Michael Cohen now.

Sitting here in limbo waiting for the dice to roll

Proof that we need a blogger ethics panel.

Usually wrong but never in doubt

If you tweet it in all caps, that makes it true!

Militantly superior in their own minds…

Four legs? good! two legs? we’re not so sure…

There’s some extremely good trouble headed their way.

Mobile Menu

  • Look Forward & Back
  • Balloon Juice 2021 Pet Calendar
  • Site Feedback
  • All 2020 Fundraising
  • I Voted!
  • Take Action: Things We Can Do
  • Team Claire, and Family
  • Submit Photos to On the Road
  • BJ PayPal Donations
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • Nature & Respite
  • Information As Power
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • On The Road
  • Garden Chats
  • Nature & Respite
  • Look Forward & Back
You are here: Home / Anderson On Health Insurance / Arizona, MLR and pay-fors?

Arizona, MLR and pay-fors?

by David Anderson|  September 10, 20197:32 am| 7 Comments

This post is in: Anderson On Health Insurance

Facebook0Tweet0Email0

Charles Gaba is pulling estimates for Medical Loss Ratio rebates in all states. He posted some eye-popping numbers from Arizona.

Individual market MLR rebates skyrocketed from 101,000 enrollees receiving $16.2 million last year to 96,000 receiving a whoping $92.3 million…averaging $959 apiece!
Nearly all of this comes from Health Net of Arizona…operating under the “Ambetter from Arizona Complete Health” (Ambetter, aka Centene, bought out Health Net last year…confused yet?).

It is a single insurer, Centene/Ambetter/HealthNet, that is driving almost all of the Medical Loss Ratio rebates for 2016-2018 that are currently being paid out now. Some folks will be getting checks back that are much larger than the net of subsidy premiums that they paid in.

  • Medical Loss Ratio can be seen as the difference between how an insurer priced and how it should have priced with perfect information
  • MLR rebates to subsidized buyers can be seen as a double dip on top of premium tax credits
  • Switching the landing spot of MLR rebates for subsidized folks to the US Treasury could be a significant pay-for

MLR rebates are paid to policy holders who had a plan during the last year of the three year cycle.  The rebate is a gap filler between the actual claims expense ratio to the floor ratio of 80% in the individual and small group markets.  The rebates are sent to each policy holder in proportion to the total gross premium that they generated for the insurer.  Older buyers with large families who bought more expensive plans get a larger rebate check than a single twenty two year old buying the cheapest plan possible.

This does weird things that we need to think about.

MLR rebates are a post-facto correction for actuarial errors.  MLR rebates are paid out when the insurer significantly overpriced their premiums relative to claims.  The rebate brings the net collected premium back to within the normal range.  There is a significant delay and the distribution is funky, but this is the fundamental mechanic occuring when an insurer pays out MLR rebates.

Advanced premium tax credits (APTC) are paid out to the 100-400% Federal Poverty Level (FPL) insured in order to allow them to buy “affordable” insurance.  The APTC is calculated based on the premiums that the insured saw at the purchasing decision point.  If an insurer is sending out significant MLR rebate checks, that means the MLR check recipient, if subsidized, may have had their APTC based on over-inflated premiums.  They already benefited from higher than real APTC payments through no fault of their own.  An MLR check to someone who received APTC is a legal, double dip.

Non-subsidized enrollees who receive an MLR check are merely being made whole from paying too high of a premium completely out of their own pocket.

I think there is a good policy argument that the US Treasury should be at least a beneficiary of MLR rebates that are earned to individuals who receive APTC subsidies.  The Treasury paid too much in APTC on the original round of insurance choice.  Rejiggering the rebate formula so that MLR rebates are distributed in proportion to total paid premium by source could generate several hundred million dollars in pay-fors for the US Treasury.  A half billion dollar pay-for is a decent size downpayment for national reinsurance for catastrophic, multi-million dollar claims that are likely to become more common in the future.

When MLR was orginally designed, it was primarily intended to function as both a heavy club to beat up on the worse operators in the underwritten insurance space, seem to be a populist measure of beating up on all evil bastard insurers, and then from a more realistic point of view, pick up a little bit of actuarial/statistical noise every year.  The 2018 initiation of Silverloading was a major pricing shock combined with incredible policy uncertainty led to the proliferation of the possibilities of zero and net negative premiums.  Those consequences are unintended, weird and introduce potentially distortions to the market.   Congressional action to reroute MLR rebates as a function of net payment would remove some of the potential distortions.

 

Facebook0Tweet0Email0
Previous Post: « On The Road
Next Post: Respite Open Thread: Maysie and Tux Update Respite Open Thread: Maysie and Tux Update 1»

Reader Interactions

7Comments

  1. 1.

    dnfree

    September 10, 2019 at 8:35 am

    Good point on subsidized buyers.

  2. 2.

    p.a.

    September 10, 2019 at 9:05 am

    We know MLR and ACA as a whole will need tweaks in perpetuity while there is a political party based from Planet Zippy. They will always try to sabotage by means direct and indirect, forever. Still trying to destroy Social Security what, 5 generations on.
    On a personal note, if the Treasury can get some relief I’m ok with it, but if the subsidized continue to get a little extra dip into the well, I’m ok with some wealth redistribution in THAT direction for a change.

  3. 3.

    David Anderson

    September 10, 2019 at 9:32 am

    @p.a.: I can see everything you are saying. Negative Premium Plans just seem weird to me and quite distortive to functional markets.

  4. 4.

    Yutsano

    September 10, 2019 at 9:50 am

    Okay, I might be missing something, but based upon what you’re saying the Treasury is already recouping at least some of the overpayment of the premium tax credit. If the taxpayer uses more than the allowed PTC for their insurance policy, they’re required to pay back the difference within the repayment limitations. I’m going by the form 8962 (which is a complicated mess and should be shot into the sun) which has the TP calculate that themselves. Am I missing something you’re talking about here?

  5. 5.

    David Anderson

    September 10, 2019 at 10:03 am

    @Yutsano: Slightly different thing. Form 8962 comes into play when a tax payer mis-estimates their income and gets more APTC than they are entitled to. That is recouped on the back-end when the tax payer files a return.

    What I’m talking about here is when a tax payer correctly estimates their income but the insurer effectively over-estimates the amount of premiums needed to cover claims. The APTC is driven off of the interaction of the income estimate and the premium. Currently, if the premium estimate is really off, all of the refunds flow to the policy holders and not the policy payers.

  6. 6.

    Starfish

    September 10, 2019 at 11:22 am

    I know people might be excited about these rebate checks, but people not being able to afford both their co-pays and their insurance prices is a problem that is going to have people forgoing necessary care potentially making people worse off. There should be a way to encourage insurance companies to be better at math.

  7. 7.

    Jack

    September 17, 2019 at 5:44 pm

    Poor folks who did the responsible thing and being the beneficiary of unearned luck! OH THE HUMANITY!

    I guess we’ll have to go to Medicare-For-All so that these Lucky Duckies don’t get anything!

Comments are closed.

Primary Sidebar

Do Something!

Call Your Senators & Representatives
Directory of US Senators
Directory of US Representatives

Vaccine Venting Here!
I Got the Shot!  (Month 2)
I Got the Shot!

 

🎈Ways to Support Our Site

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal
Shop Amazon via this link to support Balloon Juice ⬇  

Recent Comments

  • prostratedragon on Late Night Open Thread: Our Failed Media Mudlarks (Mar 5, 2021 @ 4:04am)
  • Keith P. on Late Night Open Thread: Our Failed Media Mudlarks (Mar 5, 2021 @ 3:44am)
  • SectionH on I Think You Need Some Respite (Mar 5, 2021 @ 3:32am)
  • opiejeanne on Late Night Open Thread: Our Failed Media Mudlarks (Mar 5, 2021 @ 2:59am)
  • joel hanes on Late Night Open Thread: Our Failed Media Mudlarks (Mar 5, 2021 @ 2:49am)

Team Claire, and Family

Claire Updates
Claire is Home!

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year

Featuring

John Cole
Silverman on Security
COVID-19 Coronavirus
Medium Cool with BGinCHI
Furry Friends

Calling All Jackals

Site Feedback
Submit Photos to On the Road
Nominate a Rotating Tag
Meetups: Proof of Life
2021 Pets of Balloon Juice Calendar

Culture: Books, Film, TV, Music, Games, Podcasts

Noir: Favorites in Film, Books, TV
Book Recommendations & Indy Recs
Mystery Recommendations
Netflix Favorites
Amazon Prime Favorites
Netflix Suggestions in July
Longmire & Netflix Suggestions

Twitter

John Cole’s Twitter

[custom-twitter-feeds]

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2021 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!