Is this a valuable core competency?

I admit it, I can not figure out why Oscar is a media darling.  I might be an old fuddy duddy stuck to the ways of a dinosaur industry but I can’t figure out what they are doing that is so vastly superior to what my former co-workers (who work at a profitable entity by the way) do. And then I read this write-up on Oscar in BackChannel and I know what their core competency is; getting the tech press to write fawning write-ups.  Is that truly a market breaking and market making core competency with sustainable value?

I just want to pull out a few things that had me wait the weekend to write this as I just couldn’t go into an immediate critique.

(By the way, “members” is Oscar’s preferred term for its users — “customers” sounds too meretricious, and “patients” implies that they are sick. Oscar thinks of itself as a wellness machine.)

Members is fairly standard language at every health insurer I have ever talked to, worked for or been covered by.  If I am talking with actuaries or the finance department, I’ll hear the term covered lives as well.  Per Member Per Month (PMPM) is a nearly universal metric for first pass cost analysis.  Quora had an answer for PMPM from 2011.

The collaboration with Mount Sinai is part of Oscar’s new “narrow network” in New York City. This term refers to a tightly bounded but high quality set of medical services, and is a key component of Oscars full-stack approach.

Everyone is doing a narrow network these days.  My previous insurance was through an IDN’s narrow network.  My new job’s insurance is through a narrow network.  Smart insurers use narrow networks to drive both pricing down and quality up.  This would have been innovative in 2004.  Now it is normal.  Penn’s LDI has a great brief on the evolution of QHP narrow networks.  

The numbers on Schlosser’s screen marking Oscar’s subscribers don’t seem game changing— some thousands in each age group; the largest chunk in the 26 to 35 bracket. It’s not surprising that young adults are susceptible to a health care insurer with the vibe of an internet startup; after all, Oscar has been called the “Hipster Health Insurer.” But there are both older and younger signups as well, even some people over 65. “It’s exactly on target,’” says Schlosser of the mix, his English heavily accented by his native German. As for the numbers themselves, Oscar had about 120,000 members last year and may not (because it left two markets) have many more this year

What I see in this paragraph is massive risk adjustment outflows.   Read more

The CSR sword of Damocles

I need to start morning drinking after the following exchange this morning.

It started with Politico reviewing what some carriers are thinking about doing if the Cost Sharing Reduction subsidies are pulled if the Trump Administration drops an appeal a loss to the Court of Appeals.

That lawsuit challenged the Obama administration’s authority to fund those subsidies, and prevailed in a federal district court ruling last spring. The Obama administration appealed that decision. But if the Trump White House doesn’t continue that appeal, and Congress fails to appropriate funding, the subsidies would end.

Insurers would likely bolt from the health law’s markets if that happens because they’d still be on the hook for providing reduced costs to their customers, but with no guarantee they’d ever be reimbursed by the federal government, say experts….

Ken Janda, CEO of Community Health Choice, a Houston-based nonprofit health plan with nearly 150,000 customers, said the insurer would shift customers into less robust coverage that wouldn’t trigger the subsidies if the funding disappears. But that would mean that Obamacare customers with incomes below 150 percent of the federal poverty level — or less than $18,000 for an individual — would go from paying nothing to see a doctor or get a prescription, to having a $1,500 deductible before most of their insurance kicks in

How I read this (along with a few other tweeps) is that CHC would try to move people who had Silver 94 or Silver 87  with CSR to Gold plans after they pull their Silver plans from the market.  CMS in their 2017 QHP contracts allowed carriers to pull products from the market if the CSR subsidies disappear and it looks like that would be the plan of CHC to pull their Silvers.  My immediate thought on this is that this would be a massive adverse selection problem.  People on CSR with 94% Silver or 87% Silver make under 200% FPL.  They are getting subsidized as they are buying Silver.  If they are switched to Gold or Platinum their monthly post-subsidy premiums will dramatically increase and quite a few healthy people will drop coverage as it is no longer functionally affordable.  The only people who would stick would be the very sick and very expensive.

Wait, it gets’ worse:

Carriers have to offer Silver plans to participate on Exchange. If they yank all of their Silvers, they have to yank everything on Exchange.

And carriers will flee if CSR disappears as they will not eat a 30% revenue loss for a high cost population in a market that they don’t know if it will be around long enough to actually make money on.


The Republican Study Committee and Blue state experimentation

The Republican Study Committee is the policy group of the most conservative Republicans in Congress.  They have a health insurance bill out and there is a lot to say.  I only want to highlight one item though in Section 401:

‘‘(a) IN GENERAL.—Subject to section 601(d) of the American Health Care Reform Act of 2017, the covered laws of the primary State shall apply to individual health insurance coverage offered by a health insurance issuer
in the primary State and in any secondary State, but only if the coverage and issuer comply with the conditions of this section with respect to the offering of coverage in any secondary State.
‘‘(b) EXEMPTIONS FROM COVERED LAWS IN A SECONDARY STATE.—Except as provided in this section, a health insurance issuer with respect to its offer, sale, rating (including medical underwriting), renewal, and issuance of individual health insurance coverage in any secondary State is exempt from any covered laws of the secondary State (and any rules, regulations, agreements, or orders sought or issued by such State under or related to such covered laws) to the extent that such laws would— (My emphasis)

‘‘(1) make unlawful, or regulate, directly or in directly, the operation of the health insurance issuer
operating in the secondary State, except that any secondary State may require such an issuer—

That one sentence effectively forecloses any Blue state solution that relies at all on the individual market.  It blows up the Massachusetts model for if an insurer can register in New Hampshire as its primary state, it can sell across the border into Massachusetts where it offers medically underwritten policies with significant benefit carve-outs such as no maternity coverage.  The Massachusetts risk pool will become extremely sick or extremely likely to be pregnant.  That will significantly raise premiums and death spiral the non-subsidized and lightly subsidized portions of the three legged stool market.

Blue states can experiment under this law only in ways in which they will allow themselves to be subject to regulatory capture and race to the bottom of standards.


Late Night Open Thread: Back to the ’60s Future!


Jelani Cobb, in the New Yorker:

Last summer, the A.C.L.U. issued a report highlighting the ways in which Trump’s proposals on a number of issues would violate the Bill of Rights. After his victory, the A.C.L.U.’s home page featured an image of him with the caption “See You in Court.” In November, Trump tweeted that he would have won the popular vote but for millions of illegal ballots cast. This was not just a window into the conspiratorial and fantasist mind-set of the President-elect but a looming threat to voting rights. Ten days after the election, the N.A.A.C.P. Legal Defense Fund released a statement opposing the nomination of Senator Jeff Sessions, of Alabama, as Attorney General, based on his record of hostility to voting rights and on the fact that he’d once brought unsubstantiated charges of voter fraud against civil-rights activists. But, with a Republican majority that has mostly shown compliance with Trump, despite his contempt for the norms of democracy, the fear is that he will achieve much of what he wants. Even if he accomplishes only half, the landscape of American politics and policy will be radically altered. This prospect has recalled another phenomenon of the nineteen-sixties: the conviction that “democracy is in the streets.”…

In that context, the waves of protests in Portland, Los Angeles, Oakland, New York, Chicago, and Washington, D.C., in the days after the election look less like spontaneous outrage and more like a preview of what the next four years may hold. Unlike the specific protests that emerged during the Obama Administration, the post-election demonstrations have been directed at the general state of American democracy. Two hundred thousand women are expected to assemble in front of the Capitol, on January 21st, the day after the Inauguration, for the Women’s March on Washington. Born of one woman’s invitation to forty friends, the event is meant as a rejoinder to the fact that a candidate with a troubling history regarding women’s rights—one who actually bragged about committing sexual assault—has made it to the White House.

The first Inauguration of George W. Bush, in 2001, saw mass protests driven by the sentiment that the election had been stolen. The protests that greet Trump will, in all probability, exceed them: some twenty other groups have also applied for march permits. Given his history with African-Americans, Muslims, Latinos, immigrants, unionized labor, environmentalists, and people with disabilities, it is not hard to imagine that there will be many more to come. The Congress is unlikely to check the new President, but democracy may thrive in the states, the courts, the next elections, and, lest the lessons of the sixties be forgotten, the streets.

What about the children

From McClatchy we sit a clear trade-off between making sure kids are healthy and able to contribute to a bright future or high income tax cuts:

4.4 million children could lose health coverage in 2019 if the Affordable Care Act is partially repealed through the budget reconciliation process, according new report by the Urban Institute, a progressive, non-partisan think tank.

Likewise, the uninsured rate for … children would more than double in 2019 from … from 4.1 percent to 9.6 percent for children under age 18, the report found…

Of the 4.4 million children who would lose coverage in 2019, 88 percent would have working parents

The previous ACA repeal bill also allowed states to lower child eligibility levels for Medicaid and the Children’s Health Insurance Program (CHIP) beginning in 2017. If all states did so, another 8.9 million children would be without coverage in 2019

So we’re looking at between 4 and 13 million children being sacrificed to the altars of Moloch.

Good to know.

And we call ourselves civilized.

Prepping for the future

I’ll be downloading everything that I can from by January 15th.

I hope that I’m wasting my time but the cost benefit analysis is clear that downloading and archiving is a plausible choice. In the best case scenario, I waste my time. It is only two weeks on the clock while I build a deeper understanding of the entire data universe. I’ve wasted two weeks on projects that had no pay-off before and I know that I will be on projects that go nowhere at some point again in my life. I will have learned something and brought into local control useful data that I can bounce off of national data. Best case scenario, I incur minor costs that are slightly higher than minor benefits.

It is the worst case scenario where data just gets either locked down or yanked from the public and is only accessible via FOIA requests in non-user friendly formats that the pay-off is strong. Again it is two weeks of my life but it is access to years of research material that can fuel impactful analysis. It would be the creation of health policy wonk trading sub-culture that rivals show tapes of Deadheads — I’ll trade you a 2014 Rate PUF for a 2009 CBO public option report man….

And if you assume that this worst case scenario has more than a 1% chance of happening, that is a very good use of a few weeks and a few gigabytes worth of space.

I have to assume environmental and consumer protection focused folks are doing the same thing, just in case.

Love you, don’t want to live with you Mom and Dad

I love my parents. One of the smartest and best things that I did for my relationship with them was moving six hundred miles away for college as I was a complete snot as a teenager. The distance allowed me to be less of an idiot while growing up without having them as a locally convenient authority figure to mindlessly but loudly rebel against.

One of my great pleasures as a parent is seeing my parents be grandparents. My mom tried to go bowling with the grand kids a few weeks ago. My dad spent most of a morning helping my son build a model so that it fly around the kitchen and living room while they tried to rescue stuffed animals and plastic figures. I laugh when I see my kids do something that harkens back to the grandparents’ curse — “May your children be just like you”. I look forward to calling home and telling my mom about what her granddaughter just did as I wait to hear her laugh at and with me.

I want them to visit. I want them to spend a week or two. I want them to be a part of my life and my kids’ lives. I want them to introduce the idea that ice cream can be dinner when it is Grandma’s Rules.

I also don’t want them to live with us as they age.

This I think is powerful messaging as to why the defined benefit nature of Social Security and Medicare need to be kept. I’m not a marketing person, but I think this is a valuable element.