Death spirals all around

We’re going to see how the Republican Party can create a death spiral in the individual market in sixty days or less. They have a few choices:

US Individual Market Policies

First Philip Klein in the Washington Examiner wants to create one the old fashion way:

In contrast, Republicans could immediately freeze enrollment — allowing those who already have insurance through Obamacare to continue receiving subsidies, but preventing new enrollees from receiving any (though they’d still be free to purchase insurance on their own if they aren’t seeking subsidies). The current open enrollment period for privately-administered insurance ends on Jan. 31, so that would be a natural cutoff point.

Do you know who is extremely likely to buy community rated, guaranteed issue insurance with a subsidy? People who are very sick.
Do you know who is extremely unlikely to buy community rated, guaranteed issue insurance without a subsidy? People who have reason to believe they are very healthy.

This proposal will get the individual insurance market to look like the individual markets from the mid-90s in the non-subsidized, non-mandated guarantee issue states. Super high premiums and very sick risk pools. And since insurers set their 2017 rates with the assumption that subsidies are available for Special Enrollment Members, they will lose a lot of money.

Means #2 is just pulling the Cost Sharing Reduction subsidies. Insurers will flee the market. The American Academy of Actuaries have their hair on fire as they look at the impact of Congress not funding Cost Sharing Reduction subsidies after January 20th.

Eliminating CSR reimbursements could also cause insurers to withdraw from the market Premiums for 2017 have been finalized, and they assume that CSR reimbursements will be made. Without those reimbursements, premiums would have been higher for all individual market enrollees. Regardless of whether CSR reimbursements are made to insurers, the ACA requires insurers to provide cost-sharing subsidies. If those reimbursements are not made, premiums will be too low to cover the costs of care. This creates the potential for insurer losses and solvency concerns. Due to contract provisions, insurers would be permitted to withdraw from the market if CSR reimbursements are not made.

Splitting the a Replacement Bill into discrete and seperate chunks will also death spiral the market:

The issue is the popular stuff (guarantee issue, no pre-existing conditions, community rating etc) will get 85 votes in the Senate and 400 in the House. The unpopular stuff (participation enforcement mechanism, definitions, subsidy attachment formulas) won’t get a majority as no one really wants to vote for either a mandate tax OR continuous enrollment criteria without being able to point to a lot of other good stuff enabled by the bad stuff.

So again we’ll get the mid-90s markets of guarantee issue, community rating for only very sick people.

The Urban Institute models out the impact of Repeal without immediate replacmement and it is ugly:

It is mostly a cost shift with massive extraneous suffering.

And that is where I think we’re heading.

So if you have an Exchange plan, I would try to get any problems that I was putting off on taking care of taken care of by January 31, 2017. After that the insurance markets will most likely be extremely chaotic and volatile with a decent tail risk of all carriers pulling all products in a number of states by early spring.



Open Thread: Pizzagate — You Can Fix Ignorant, But You Can’t Fix (Deliberately) Stupid

Pizzagate, possibly to become the textbook example of how inventing “fake news” can lead to “real, tragic consequences”. I’ve been ignoring it — I suspect a lot of us have — because it seems one of those wingnut-shit-dumps designed, like cholera, to spread its contagion further with every mention. But given that one of its deluded proponents has managed to push the argument from banned-on-reddit to national news outlets, I’m gonna recomend Gizmodo‘s “Pizzagaters Aren’t Giving This Shit Up“:

For months, 4chan and Reddit users have delved deep into the emails of John Podesta as they were released by Wikileaks and concluded that the emails contained coded language about a secret child-trafficking ring operating out of Comet Ping Pong, a Washington DC pizzeria—a ring ran by Podesta and former presidential hopeful Hillary Clinton. The theory was known as “Pizzagate,” and until recently it was just another of the internet’s outlandish conspiracy theories. Two of pizzagate’s loudest mouthpieces have backed off their support after a man armed with a AR-15, a Colt. 38, and a shotgun entered the restaurant to “investigate.” And yet, pizzagate somehow trudges on, without them.

(Pizzagate has been debunked by Snopes and the New York Times, and one of its biggest communities—r/pizzagate—was booted off Reddit for the repeated release of personally identifiable information, as Gizmodo reported last week.)

Two of the most vocal (and visible) entities propping up pizzagate’s absurd claims were, predictably, arch-troll Mike Cernovich and the Alex Jones’ Infowars….

There have always been people on the fringes making unsubstantiated claims and then covering their asses, just as there have always been angry, confused people willing to believe and forgive them. And while connections have been drawn by other outlets to Welch’s associations as a possible motivation for entering an otherwise unassuming pizzeria with a small arms cache, the connection is unprovable. But, hopefully the risk of having emboldened a gunman might cause Cernovich, Jones, and their ilk to reconsider fueling the fires of internet conspiracies.

What we’ve all been learning during Trump’s ascendence, though, is that the fringes are closer than ever to the center of power in this country. Among the pizzagate truthers, as Politico reported yesterday, is Michael Flynn Jr., close adviser to his father Lt. Gen. Michael Flynn—Trump’s pick for national security adviser…

Maddison Welch has the excuse of being a petty-criminal substance abuser with nothing more pressing on his calendar than investigating the ‘basement sex tunnels’ in a building with no basement. But what’s Alex Jones’ excuse — or Lt-Gen Flynn’s? Lulz nothing matters?

George Orwell would’ve been so impressed! All human knowledge and history accessible at the click of a few buttons, and people are using it… to embed themselves, and each other, further and further in a matrix of unbreakable, shatterproof STUPID.



Cynicism confirmed

Balloon Juice in August:

Aetna was profitable in 2015 in the individual market in Pennsylvania. It is projecting to be profitable in 2017. The filing memo was drafted in late May and submitted to the Pennsylvania regulators in early June. Conditions have not changed enough to make Pennsylvania a money loser in under two months.

My wee bit of cynicism bears fruit. Aetna is trying to logroll an anti-competetive merger with on-Exchange political consequences. If it works for Aetna/Humana it burns a bridge to get the merger, and if it fails, it puts Aetna on the shitlist of any Democratic administration. That is a very interesting strategy when it is highly likely that there will be another Democratic administration…

So in all years Aetna’s individual market operations in Pennsylvania were either profitable or projected to be profitable. Something stinks worse than a wrestling team’s locker room after two-a-days.

USA Today on Sunday afternoon:

When Aetna announced in August that it was leaving the exchanges in 11 of the 15 states it sells in for 2017, it said it had a pretax loss of $200 million on its individual insurance plans in the second quarter of this year and total pretax losses of more than $430 million since January 2014 on its individual insurance plans. Nearly all of these policies are sold on the ACA exchanges. At the time, CEO Mark Bertolini said the move would “limit our financial exposure moving forward.”

But Aetna made nearly $12 million on individual ACA plans in Texas and more than $8 million in Pennsylvania, according to financial filings with state regulators, and is exiting the Healthcare.gov exchange in both states anyway. Asked to comment on decisions to leave states where it was making money, Aetna spokesman T.J. Crawford said, “We don’t discuss performance at the state level.”

Nice to know that I am occasionally cynical enough.



Not the bumper sticker but the core of the fight

Actuarial value and subsidy level is the core element of the coming fight on Medicare. The delivery mechanism through which that value is transferred is window dressing.

Andrew Sprung outlines what is at stake for Medicare:

what precisely is the Medicare guarantee?

At present, there’s a pretty specific answer: for 95% of seniors, the federal government will pay about 85% of the premiums for insurance that covers a bit more than 80% of the average user’s medical costs. That’s what traditional Medicare does right now, via Parts A, B and D, for those whose incomes are below $85,000 for a single person or $170,000 for a couple.

Put another way, the federal government pays a bit more than two thirds of the average senior’s total medical costs. Low income beneficiaries have all or part of their premiums and out-of-pocket costs paid by Medicaid, though a variety of programs. High income seniors pay higher shares of their premiums, with the percentage stepped up through several income brackets. …..

And here is he is on the ACA:

For 8.8 million current enrollees in the ACA marketplace (as of June 31 30), subsidies cover an average of 73% of the premium for plans with a weighted average actuarial value of 80% (surprise!– thanks to Cost Sharing Reduction (CSR) subsidies, the average AV of plans sold in the marketplace is really that high). On average, then, the ACA marketplace covers about 58% of enrollees’ costs — though that average is very uneven, ranging from over 90% for the lowest-income enrollees to close to zero for the barely subsidy-eligible (and zero for the subsidy-ineligible)*. For another 12 million people whom the ACA rendered eligible for Medicaid, federal and state government cover close to 100% of costs….

Under the charitable assumptions that a typical EPFA(HR2300) subsidy would cover 59% of the premium for a plan with a 60% actuarial value, the premium subsidy would cover 35% of the average enrollee’s medical costs — regardless of whether her income were $17,000 or $17 million.

That is the the essence of the upcoming healthcare fights. Everything else is window dressing or mechanics to shift blame for large benefit cuts.



Network information

Loren is a healthcare wonk. He knows this shit cold and he is right, no one in their right mind would think to call the in-network hospital to see if the anesthesiologist would be in-network if a laboring mother to be needed/wanted an epidural.

As other wonks in the tweet stream noted, the best that he could hope for is the hospital to give him a non-binding informational advisory that their anesthesiologists were or were not in network. And even here, the information is incomplete. Many carriers will offer a number of different networks in the employer and individual markets. Some carriers will tell providers that they are in seven of the twelve networks offered. In those cases, the office manager or the billing clerk might be able to tell an interested patient who is trying to effectively shop for planned care whether or not Dr. Smith is in-network for them. Here the system may not be working but it is not flailing around completely in a fireball of fail.

However not all carriers will do this. Instead they’ll send Dr. Smith seven contract amendments for the seven current networks that they want Dr. Smith in. They will never send him the other five narrow network amendments to sign or reject. So when a patient is trying to conform to the system that we impose on them, the billing manager will honestly say “Yep, we take all plans from Mayhew Insurance….” and three months later as the claim is submitted and everyone expects an in-network charge, the patient gets whacked with an out of network bill.

Our provider information systems are designed to fail in a Kafka-Goldberg-Dilbert menage a trois.



Distributional Impacts of Price Plan (Reprise)

Now that we know Rep. Tom Price (R-GA) will be the next Secretary of Health and Human Services, it would be a good idea to look at the mechanics of his Obamacare Repeal and Replace bill. We did this in 2015 for HR2300 and I am reprinting the post on distributional impacts below. The mechanics of the plan are described in this post:

TLDR: The plan is good if you are healthy and wealthy as there are a ton of tax breaks and tax shelter expansions through HSA expansions. If you are chronically ill or poor, you are significantly worse off. And now for the moldy oldie:
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Yep, no problems here

From Jeff Masters at Wunderground:

Round-the-clock darkness usually forces a rapid growth in sea ice across the Arctic by November, but that process has been much slower than normal over the past month or so. There is now far less mid-November sea ice in the Arctic than in any other year since satellite records began in 1979. For the five-day average ending November 17, the difference in Arctic sea ice extent between this year and the next-lowest year (2012) was 582,000 square kilometers, an area about a third larger than California. It’s an especially dramatic example of the long-term decline in sea ice across the Arctic that’s been evident for upwards of 20 years….

In mid-November, temperatures across the high Arctic spiked to readings more typical of September, about 40°F above average for this time of year (see Figure 3 in our November 17 post). “Continued persistence of this pattern may significantly affect sea ice thickness into 2017,” tweeted Zach Labe (@Zlabe, University of California, Irvine) on Monday.

 

and down in Miami:

 

Yep, no problems at all are facing us or our futures!