I was flipping a coin between this and the Kevin Bacon Animal House All is Well memes.
Open thread
I am a student in the doctoral program at the Duke University Department of Population Health Sciences. I am working towards my my doctorate in Health Services Research with a policy focus. I am fundamentally fascinated by insurance markets, consumer choice and the navigation of complex choice environments. I'm currently RA-ing at the Duke Margolis Center for Health Policy.
I used to be Richard Mayhew, a mid-level bureaucrat at UPMC Health Plan. I started writing here and have not found a reason to stop.
Conflicts of interest: Previously employed at UPMC Health Plan until 12/31/16. I also worked full time as a research associate at the Duke University Margolis Center for Health Policy. I have received direct funding from the National Institute for Healthcare Management, and I have been on projects funded by the Rockefeller Foundation, Kate B. Reynolds Charitable Trust, Gordan and Betty Moore Foundation, Duke University Health System, CMMI, and various value based payment consortiums. I serve as a consultant on a grant from the Commonwealth Fund and have acted as a consultant to several ACA insurers.
Research Production is here: https://scholar.google.com/citations?user=zof9b4IAAAAJ&hl=en
David Anderson has been a Balloon Juice writer since 2013.
by David Anderson| 41 Comments
This post is in: Open Threads, Organizing & Resistance, Politics, Our Failed Media Experiment, Our Failed Political Establishment
I was flipping a coin between this and the Kevin Bacon Animal House All is Well memes.
Open thread
This post is in: Anderson On Health Insurance
Charles Gaba is doing his usual exceptional work of tracking rate increase requests from insurers that want to sell plans on Exchange. He recently highlighted Oregon’s initial requests. As I was reading through the actuarial summaries, the different insurers modeled sabotage risk differently. Two carriers effectively discounted it. The rest are extremely concerned. I will highlight a few key elements to show how an actuarial shows significant concern about sabotage.
First is Bridgespan. They are projecting a rate increase of 17.2%. There are two lines of interest in their summary.
The first line is they projected an 8.5% increase in medical trend. This is the cost of services. 8.5% is a bit high but not unusually so. In the alternative counterfactual universe of a Hillary Clinton presidency, 8.5% would be the vast majority of the requested rate hike. But that is not the universe we’re in. Trend makes up less than half of the increase.
The second line explains the thinking Bridgespan has in their rate increase. They think that the non-enforcement of the mandate or at least the perception that the individual mandate is gone will lead to a sicker covered population. Individuals with cancer will still sign up, individuals who are in good health and see a doctor once every couple of years won’t sign up in the same numbers.
Kaiser in Oregon wants a 12.5% increase. They break down the components that drive premium changes in the following handy table:
The key assumption here is morbidity. They are assuming that their covered population will be significantly sicker in 2018 than it is in 2016 and early 2017 claims. Mechanically, the pathway is again simple. They are projecting that the perceived lack of an individual mandate will more frequently discourage relatively healthy and low cost individuals from signing up in 2018.
All of the insurers in Oregon that filed and broke out their pricing assumptions had a morbidity increase of various sizes. Everyone is expecting a sicker population on the 2018 guarantee issued, community rated plans. The typical drivers of change in rates are changes in the prices paid (trend) and morbidity. One-off adjustments such as the health insurance tax are pretty much a uniform requirement and administrative expenses. Trend is easy to prove. Regulators can ask to see provider contracts, networks and utilization patterns. Morbidity is fuzzier. Morbidity is where insurers will put their policy uncertainty risk in their rate filings.
Finally, there is a side note on optimism. Optimism on the behavioral impacts of perceived mandate non-enforcement is a big bet for actuaries to make. The most optimistic projection of low morbidity increases will lead to higher enrollment. If there is no behavioral change from the perception of a lack of mandate enforcement, the optimistic company will do very well although it would be leaving money on the table if it is too optimistic. If there is significant behavioral response to perceived or actual non-enforcement of the mandate, the most optimistic company will lose a massive amount of money as it will have attracted a significant proportion of the somewhat expensive and expensive without the counterweight of the very healthy to balance and fund their care.
by David Anderson| 26 Comments
This post is in: Open Threads, Sports
Let’s avoid talking about the newest round of crazy that has been dropped on us by the Orange Gibbon and enjoy a great hockey game tonight! **
** This post written on Monday evening with no knowledge of what the cray-cray will be but high confidence that there will be said crazy.
Open Thread
by David Anderson| 225 Comments
This post is in: Election 2016, Hail to the Hairpiece, All we want is life beyond the thunderdome, Both Sides Do It!
BREAKING: DOJ appoints former FBI director Robert Mueller as special counsel to investigate Trump-Russia ties https://t.co/xBIBWBXc3p pic.twitter.com/KXaKPvfjsa
— HuffPost (@HuffPost) May 17, 2017
Oh yeah, the Majority Leader in the House is arguing that his statement on tape that the statement he made that the current President and a senior member of his caucus were paid by the Russians in 2016 is just a joke.
That never happened
[finds out there's audio]Take us neither literally nor seriouslyhttps://t.co/E1fq7kz79x pic.twitter.com/8XRTttZ4OB
— Adam Cancryn (@adamcancryn) May 17, 2017
Things are getting real, and they are getting weirder than ever….
Oh boy… now it is getting real and weirdPost + Comments (225)
This post is in: Anderson On Health Insurance, C.R.E.A.M.
Zachary Tracer at Bloomberg recently reported on Oscar’s first quarter results. They are mixed. They are only losing $25 million dollars this quarter instead of almost $50 million dollars.
The privately held health insurer, created to sell plans under the Affordable Care Act, lost $25.8 million across three states in the first three months of this year, compared with a loss of $48.5 million a year earlier, according to regulatory filings Tuesday. The company is beginning to get a handle on its medical costs, as the premiums it collected exceeded what it spent on health services…
The company’s membership fell this year to 90,171 people as of March 31 from 106,000 across the three states a year earlier, weighing on revenue. The decision to exit markets including New Jersey and part of Texas also slowed growth. Here are the company’s results in its three states:…
Let’s look at what the financials are telling us. All are first quarter 2016 and 2017 with my own calculations.
The overall picture is still Meh. But looking deeper there are two distinct stories. Texas is a pretty good story for Oscar.
Oscar’s strategy change goes MehPost + Comments (4)
Texas is a story where I can see the combination of a narrow network with lower provider rates and increasingly effective admin cost control leads to at least break-even in Q1 2018.
Oscar Texas seems to have their hospital expense under control. Their MLR is under 100% so their premiums are contributing to the actual cost of running the plan. The admin expense is still high and it increased to $93 per member per month (PMPM). A $93 PMPM admin implies a premium of $465 PMPM for an 80% Medical Loss ratio. Their current premium supports an admin cost of $59 PMPM at 80% MLR. Admin has to come down. I would be very curious as to what is going on with their pharmacy expenses as well.
California is still a start up market. Their story is closer to to Texas than New York’s story, but it is too early and too small to say much.
New York now is still scarily unimpressive. Revenue does not cover claims. It is improving but Oscar is still giving away medical care at a loss and has been for four years in a market where they should have some ability to stabilize. They have adapted a narrow network strategy that their Comms Director claims is truly unique (I’m not convinced) where they get lower rates and more data control. But their cost per hospitalization is still extraordinarily high at $195,000/hospital admission (Q7) despite having slightly fewer days per hospitalization than Texas.
The good news for Oscar New York is their hospitalization PMPM and admin PMPM are decreasing but the bad news is their admin PMPM is still ungodly high.
Furthermore, there is something very interesting in the trend in revenue per member. It went down in New York and Texas. This is odd as Oscar asked for and received significant premium hikes for 2017.
Last summer Oscar received approval to increase their premiums by roughly 20% in New York state.
Oscar Health, the insurance startup and Silicon Valley darling, and Independent Health Benefits Corporation, will have individual rates increase by about 20 percent, also in line with what they had requested.
So the sticker price went up but PMPM revenue went down. How could this happen?
There are two mechanical points that could do this. They could be independent or operate in conjunction. The first is the average age of Oscar buyers went down dramatically. A 21 year old replacing a 45 year old would produce this type of effect given a 20% index rate premium hike. This could explain part of the story in Texas but not in New York. New York has strict community rating with no age banding.
The other mechanical solution is to drop actuarial value. This makes a good deal of sense. As I mentioned in March, Oscar is shifting its membership composition towards an off-exchange strategy. An off-exchange member is more likely to buy a lower actuarial value plan. Andrew Sprung estimated off-Exchange actuarial value at just under 69% while, Kaiser Family Foundation estimated that the actuarial value of plans sold off Exchange is just under 66%. On-Exchange actuarial value from these two sources is approximately 79%.
Why does this matter?
A younger population on lower actuarial value plans means very high risk adjustment outflows. Oscar New York already was sending 25% of revenue out the door for risk adjustment. That number will probably increase. If Oscar projects the increased risk adjustment outflow right, they’ll be fine but this could be a source of surprise for them.
Overall, I still don’t see anything special in what Oscar is doing. Their best story is still a money losing with a reasonable probability of near term profitability story. Their story in the market they have been in the longest still has incredibly high administrative costs and an MLR over 100%. All of this is after moving towards a lower cost and narrower network.
Q1 New York financials are linked here:
Q1 Texas filings are linked here:
by David Anderson| 29 Comments
This post is in: Anderson On Health Insurance
Just saw this tweet from a reporter at the Hill:
Durbin tells me it's ok for Dems to meet with Cassidy/Collins on healthcare b/c those 2 are "beyond repeal" https://t.co/F0RBQb8GvR pic.twitter.com/recMUqHDm3
— Peter Sullivan (@PeterSullivan4) May 16, 2017
When I read through Cassidy-Collins in January, my impression was that this was the contours of a deal or at least the start of a discussion on a deal:
The bill actually grapples with trade-offs. As a starting point of discussion for replace, this bill is worthwhile as it mostly focuses on further decentralizing the US health finance system to the states in the individual market and very little else. It does not do anything too controversial on non-germane subjects. It can be seen as a technical corrections bill with a conservative slant to the ACA…. A critical question will be what is the counterfactual? The counterfactual is critical in evaluating the quality of the outcomes of this bill.
It is a healthcare bill. It is a conservative healthcare bill.
Again, it is a healthcare bill. It is not a tax bill.
It is also sponsored by four Republicans which is one more than the minimally viable blocking coalition. It is a pitch to restore healthcare politics back into the realm of normal politics. That was my read on it in January and that seems to be the read Democratic Senators in seats that are not at risk in 2018 have on it now.
The most critical question on evaluating Cassidy-Collins is what is our counterfactual. Is our counterfactual a smooth and fully operational ACA? Is it a monkeywrenched ACA? Is it the AHCA minus 10% of the worst? What is the counterfactual will determine a lot of your analysis.
by David Anderson| 14 Comments
This post is in: Anderson On Health Insurance, Open Threads
In other news, 9% of Americans were uninsured in 2016, down from 16% in 2010 (pre-ACA) and the lowest rate ever.https://t.co/sFOVlUi1Cc
— Larry Levitt (@larry_levitt) May 16, 2017
Open thread