Friday Evening Open Thread: Clown Shoes

I’ll always have a soft spot for Michael Moore, because he reminds me of the best and the worst of the big, well-meaning, blue-collar doofuses I grew up among. On the one hand, he means well! He has a big heart, and it’s in the right place (mostly)! On the other… Dude, Michelle Obama is not your mother, your girlfriend, or your maid.

We’re in a mess, and dumb “populists” like you who didn’t even realize your own biases played no small part in getting us it. YOU get to start the massive job of cleaning it up. And maybe if you’re working hard enough, earnestly enough, the women in your life — and those ‘black friends’ you’re so proud of knowing — can find a space to help you without (also, again) taking on the thankless task of fixing up what’s gotten broken!

Also, too:

And while we’re on the topic:

MLR Variation in Pennsylvania

Medical Loss Ratio (MLR) regulations require individual market insurers to spend 80% of their adjusted premium revenue on claims or quality improvement services.  If, over a three year look-back period, an insurer spends less than 80%, they have to send out checks to the people who bought their plans in the last year of the look-back period to make up the difference.  Large MLR rebates are likely to occur in the fall of 2019 for the 2016-2018 period.  It was predictable (June 2018):

2017 looks to have been a very profitable year for insurers. 2018 looks to be even more profitable. There is a good chance that the 2016-2017-2018 time period will produce several states with an average MLR well below 80% as the first quarter results plus initial 2019 rate filings strongly suggest that insurers in many states overpriced their premiums for 2018

However there is variation as the MLR calculation is at the insurer level and not the state level.   I’m working on a slightly longer project to estimate the expected Medical Loss Ratio rebates in Pennsylvania but the 2018 data that was present on the initial 2020 rate filings is interesting due to the variation.  2018 is a high premium level year with low raw and ACA MLRs being common.  

2018 MLR Calcuations
ABCD (0.008*A)B/A(B+D)/(A-C)
2018 MLR for Pennsylvania Individual Market Insurers competing in 2020PremiumsClaimsTaxes and FeesEstimated QIRaw MLR2018 ACA MLR
Capital Advantage Insurance Company$2,577,457$1,924,633$93,040$20,62075%78%
First Priority$105,685,090$66,718,288$5,626,506$845,48163%68%
Highmark Inc$10,072,903$7,966,069$414,633$80,58379%83%
Highmark Choice Company$40,796,398$30,094,250$763,732$326,37174%76%
Highmark Health Insurance Company$161,466,202$91,364,203$12,332,377$1,291,73057%62%
Geisinger Health Plan$493,460,297$349,829,082$36,269,383$3,947,68271%77%
Geisenger Quality Options$2,319,160$1,560,772$105,126$18,55367%71%
Keystone Health Plan East$1,079,731,654$709,768,606$103,709,776$8,637,85366%74%
QCC Insurance Company$345,713,052$272,647,844$39,414,952$2,765,70479%90%
UPMC Health Coverage Inc.$9,179$604$370$737%8%
UPMC Health Options$842,415,260$670,631,775$21,579,781$6,739,32280%83%
State Average$3,533,841,207$2,456,452,546$283,409,377$28,270,73070%76%

The first point is that the raw MLR is almost always going to be several points below the ACA MLR.  A quick and dirty rule is to add five or six points to the raw MLR to get close to the ACA MLR unless there are weird tax issues going on.

The second point is to look at the incredible variation, even if we only look at insurers with at least $10 million dollars in premiums.  CAAC has a 67% ACA MLR while QCC is running at 90%.

There is significant geographic variation in MLRs.  UPMC Health Options (an entity controlled by my former employer) has a dominant market position in the western part of the state and some presence outside of the Philadelphia Metro and Poconos region. Its only Western Pennsylvania competitor is Highmark.  Highmark had been tremendously overpriced in the region relative to UPMC and had very little enrollment.  Even if Highmark (which was a dumpster fire in 2016-2017) needed to send out MLR rebates, there would be very few people in Western Pennsylvania eligible to receive a check.

That is not the case in Central Pennsylvania where Capital Advantage Assurance Company (an entity of Capital Blue Cross) has had incredibly low MLRs.  CAAC will be writing some good sized checks in their service area while Geissenger might have some checks to right as well.  Keystone Health Plan East (part of Independence Blue) will also be looking at some good size checks along the Delaware River Valley.

Backing this out a bit, MLR rebates will be announced soon. Kaiser Family Foundation anticipates at least $800 million in individual market rebates this year.  These rebates will be built on some insurers have an ungodly low MLR in 2018 being balanced by a dumpster fire of 2016.  However these rebates won’t be evenly distributed across a state or even within a county.  Instead some people will get quasi-random income shocks this fall.  And going forward, there will be another round of much larger income shocks in the fall of 2020 as the dumpster fire of 2016 will be replaced in the formula by a slightly overpriced 2019.

There will be incredible variation.

Friday Morning Open Thread: The Best Revenge




Late Night Respite Open Thread: Life Is What Happens While You’re Making Other Plans

Alternately: Humans plan, Murphy the Trickster God laughs

The gender reveal party likely has more than one inventor, but one of the first documented examples belongs to Los Angeles blogger Jenna Karvunidis. The year was 2008; the cake was shaped like a rubber duck. Karvunidis, who was expecting her first child, sliced it open, revealing pink frosting between white layers. It’s a girl!

Over the ensuing decade, a Pinterest- and YouTube-fueled arms race produced cakes that vomit pink or blue MnMs, black balloons burst to reveal pink or blue confetti, and “color blasters” that detonate a cloud of pink or blue smoke. Today, expectant parents send sealed lab results to bakeries, and gender reveal fails are fodder for Tik Tok. An Arizona Border Patrol agent is paying $8M in restitution for the 47,000-square-foot wildfire caused by his gender reveal color blast. Also? The child Karuvinidis welcomed with a pink-frosted cake is 10 years old and prefers to wear suits…

“I did [the gender reveal party] at the time because we didn’t live in 2019 and didn’t know what we know now⁠—that assigning focus on gender at birth leaves out so much of their potential and talents that have nothing to do with what’s between their legs,” she wrote in the Facebook post, which went viral. The post included a recent family photo in which her oldest child sports short hair and a sharp gray blazer…

Insurers and a one way ratchet lobby

This is interesting to me as it strongly implies that the health insurers and providers has two pathways towards increasing revenue:

1) Cover more people
2) Increase average payment level per person

From a business perspective this makes sense.

Let’s unpack it a bit as we looked at provider side accounts receivable preferences years ago:

Providers have their preferences as to what patients and insurance scenarios they see. Uninsured individuals have always been the least preferred by both the treatment/clinical side and the finance side for a multitude of reasons….
Providers have clear account receivable preferences as to what patients they treat.

The ideal patient from an account receivables perspective pays a very high percentage of the billed charge with a high degree of certainty and a short turn around time and minimal haggling. Excluding celebrity rehab centers and $40,000/year per person coverage, there are few payers who meet this provider ideal. Everything else is a trade-off.

Let’s look at it from an insurer revenue side perspective now.

An uninsured individual brings no revenue. An individual in Medicaid fee for service brings in no revenue. However an individual in Medicaid managed care brings in some revenue. This is a direct revenue source and also a source of slightly more leverage on payer-provider negotiations that would allow the insurer to get slightly lower rates. Insurers support expanding Medicaid because most of the incremental money is flowing through managed care and a good chunk of the incremental ACA covered population is either getting a new Medicaid ID card or were uninsured.

Medicare Advantage tends to pay more than Medicaid. Exchange plans tend to pay anywhere from Medicare Advantage-esque rates to full commercial rates. Large group plans tend to pay the highest as they have the strongest network constraints if they have a large geographic footprint for their critical employees.

These industries want a one way ratchet where program expansion is only allowed to go from lower paying subgroups to higher paying subgroups.

Medicare Advantage for All, Medicaid Buy-ins, Medicare Buy-ins, Medicare for All would move a tremendous number of people out of higher paying categories and into lower paying categories. That is what the fight was about in the Washington State public option bill as the original proposal was for it to pay providers Medicare plus a little bit and the final proposal ended up at basically commercial rates. This is the fight in North Carolina where the state treasure wants to “only” pay 200% Medicare for the State Employee Health Plan. The large hospital groups in North Carolina have not signed onto the proposal.

Providers and insurers are talking their book of business and they want a one way ratchet. And from a business perspective, that makes sense. From a societal perspective, let’s just be aware of what is happening here.