Open Thread: Nice — Sandra Fluke Is Still Punishing Rush Limbaugh

Per Politico:

[T]here are signs that all is not well in the Limbaugh radio empire. Because even as his influence is sky high and his dominance at the top of talk radio remains unchallenged, as a business proposition, Limbaugh’s show is on shaky ground. In recent years, Limbaugh has been dropped by several of his long-time affiliates, including some very powerful ones: He’s gone from WABC in New York, WRKO in Boston and KFI in Los Angeles, for example, and has in many cases been moved onto smaller stations with much weaker signals that cover smaller areas.

Why? Because four years after Limbaugh called Georgetown law student Sandra Fluke a “slut” on air, spurring a major boycott movement, reams of advertisers still won’t touch him. He suffers from what talk radio consultant Holland Cooke calls a “scarlet letter among national brand advertisers.” And for someone who has said that “confiscatory ad rates” are a key pillar of his business, that spells trouble. (Limbaugh ignored multiple interview requests.)

Limbaugh’s extremely lucrative eight-year contract—estimated to be worth roughly $38 million a year—is up this summer. What will happen to “America’s Anchorman,” as Limbaugh quasi-ironically refers to himself, once the contract is up, is anybody’s guess. Because as he is learning, political power does not necessarily a stellar business make…



Exchange Strategery thoughts

Exchange strategy is dynamic and I think the new round of pricing plus additional insurance company learning by doing will see some significant changes this during this Fall’s open enrollment period.

This is in reference to New York state pricing. The cost of the second lowest Silver in some regions is projected to go down dramatically from 2016 and 2017 even as the median insurer in the state is asking for an increase. This means there looks to be two clusters on the Silver Exchange market. The first cluster is Medicaid like pricing near the subsidy attachment point of the second least expensive Silver. The other cluster are plans that pay near standard commercial rates to providers and they are much more expensive. The first cluster will get most of the membership and even more of the healthy membership.

Insurance administration needs scale. As I have said before, my job when I was a plumber, was effectively membership scale invariant. A product with 300 people took me as much time to plumb as a product with 30,000 people but my costs were spread out over a much larger population. High cost insurers will be facing administrative scaling problems in markets where there is a Medicaid like provider that gets most of the healthy membership.

Risk adjustment based strategies are a plausible path forward. High cost insurers could offer disease specific plans and make their money by offering good chronic disease control while getting risk adjustment inflows from the low cost plans. The problem with this strategy is the risk adjustment inflow is calculated based on average premiums in the region. The low cost plans bring down regional average premium which means the risk adjustment transfer payment does not fully compensate the high cost plan’s provider reimbursement.

Over the long run (2018/2019), high cost insurers are likely to get off Exchange in regions where there are low cost Medicaid like insurers that get most of the membership.

The other major modification to my thought process on Exchange strategy is on the issue of spamming the exchanges with isomorphs in order to capture the #1 and #2 Silver. This is not a bad strategy but it is a suboptimal strategy.

Let’s use the Chicago zip code 60290 on Health Sherpa as an example for a 40 year old non-smoker.  Ambetter Chicago The chart to the right is the 2016 Silver prices.  As you can see, Ambetter effectively   spammed the Exchanges.  They had the low cost Silver and then another six plans before the first plan offered by another (high provider reimbursement) insurer.  This plan offering configuration means the subsidized individual who chooses the lowest cost Silver pays $3 less per month in out of pocket premiums then they would have if they chose the 2nd Silver.

Right now there is a $54 gap between the first Ambetter product and the first product offered by a competitor.  However there is only a $3 gap between the first Silver and the second Silver.

This is a business opportunity.

Ambetter can make themselves significantly better off (with the side effect of making most subsidized buyers better off) by rejiggering their product offering profile.  Offering fewer silver plans would lead to higher enrollment of healthy people who are heavily subsidized.

They continue to offer the low cost Silver plan at $195 per month and then either discontinue their other low cost Silver plans so that the second Silver  is the Blue Cross Silver plan or offer a medium cost Silver as the new second Silver priced below the Blue Cross offering.  This would increase the Silver subsidy gap bonus.  This would improve their retention of heavily subsidized, healthy members.

Right now, an individual who makes $18,000 a year pays $63 per month for the Second Silver, and they would pay $60 per month for the low cost Silver.  Under this gap maximization plan the Blue Cross Silver would be $63 per month for this individual but the low cost Silver plan would be $9 per month.  Healthy individuals with low incomes are the most likely people to drop coverage because they can’t afford it.  A premium of under $10 per month is far easier for a poor 23 year old Young Invincible to handle than a $60 per month premium.

This is an extreme example as it excludes the relative price dynamics of making the Blue Cross plan much cheaper, so the Blue Cross risk pool will get comparatively healthier as some of the sicker people who are currently in the Ambetter pool buy Blue Cross broader network coverage plans so Ambetter would have even larger risk adjustment outflows.

The highly probably strategy for companies that are very confident that they will offer the # 1 Silver with a large gap between their low price offerings and the next insurer’s lowest priced Silver is a modified plan spam approach with the aim of maximizing the gap without losing too much profitable membership. In this example, that would mean Ambetter would offer the #1 Silver at $195 per month and then the current #5  as their second, benchmark setting Silver plans at $213 per month.  This would make the gap $18 .  For an individual making $18,000 per year, the low cost Silver now costs them $45 per month while there is still a plan choice owned by Ambetter between the subsidy point and the first offering by a competitor.  This will lead to higher initial uptake of healthy, subsidized members during open enrollment as well as less attrition due to failure to pay.

 

 








Peter Thiel Makes The Case For Confiscatory Taxation On Billionaires

This broke over at Forbes and is bouncing around the ‘nets today:

Peter Thiel, a PayPal cofounder and one of the earliest backers of Facebook FB +0.49%, has been secretly covering the expenses for Hulk Hogan’s lawsuits against online news organization Gawker Media. According to people familiar with the situation who agreed to speak on condition of anonymity, Thiel, a cofounder and partner at Founders Fund, has played a lead role in bankrolling the cases Terry Bollea, a.k.a. Hogan, brought against New York-based Gawker. Hogan is being represented by Charles Harder, a prominent Los Angeles-based lawyer.

Whatever you think of Gawker, Hulk Hogan, or Thiel himself, this is yet one more way in which extreme income inequality destroys civic life. It’s actually worse than many, given the clandestine way it deepens the corruption of the system that could (in theory) provide a check on the damage that purchased legislative and executive branches can do.

Lazarus_in_Heaven_and_the_Rich_Man_in_Hell_LACMA_M.88.91.91

Here’s a take on the poison here revealed from Caterina Fake:

Champerty, as third-party litigation funding used to be called (and should probably be called again!) was formerly a crime, but the commercial litigation finance industry has been growing in recent years.

Fake notes that much of such litigation is actually a form of speculation, in which rich folks gamble on the possibility of significant payout.  One can imagine the “free market” argument that such funding levels the playing field, allows those who’ve suffered real harm to recoup, and thus makes the legal system a more efficient and effective dispute-settling and behavior-changing engine. But Thiel’s pursuit of Gawker illuminates what this leads to in the real world:

Generally, people avoid frivolous lawsuits because it often exposes them to as much scrutiny as those they sue, so what is significant about this case is that by funding Hogan behind the scenes, Thiel could get his revenge, escape exposure, and influence the outcome of the case.

For the very rich, this is a win however it goes, and damn the collateral damage.

Hogan’s lawyers made decisions against Hogan’s best interests, withdrawing a claim that would have required Gawker’s insurance company to pay damages rather than the company itself–a move that made Nick Denton, Gawker Media’s founder and CEO, suspect that a Silicon Valley millionaire was behind the suit.

I leave it to the actual lawyers to weigh in on the ethics (and consequences, if any) for such a litigation approach. For myself, I’ll note that what you have here is an insanely rich guy gaming the legal system to destroy a media outfit that pissed him off.

And with that, one more thought:  Franklin Roosevelt created the social welfare state in the US as an alternative to revolution.  Today’s plutocrats might want to think about that.  In plainer terms: to remain democracies, modern democractic states need to tax polity-buying wealth out of individual hands; income taxes and a levy on inheritances.  A 90% rate that kicks in well below an estate value of a billion bucks seems a good place to start.

A blogger can dream…

Image: Cornelius Bos, Lazarus in Heaven and the Rich Man in Hell, 1547.



Monday Evening Open Thread: Don’t Mourn, Organize!

Presumably related, from The Nation:

The gig economy has not been an enormous issue on the campaign trail, and legislators in Congress haven’t attempted to address it in any comprehensive way. But Thursday in Washington, Senator Elizabeth Warren waded into the debate with a lengthy policy speech at the annual New America conference in which she said it’s time to “rethink the basic bargain for workers who produce much of the value in this economy.”

Warren’s essential point is that for all the talk about Uber, ride-sharing apps and their brethren are only part of a larger, destructive trend toward classifying workers as part-time. “Long before anyone ever wrote an article about the ‘gig economy,’ corporations had discovered the higher profits they could wring out of an on-demand workforce made up of independent contractors,” Warren said. Indeed, 53 million Americans—one in three workers—is a freelancer

Warren sees the gig economy as more of a symptom than a cause. “The gig economy has become a stopgap for some workers who can’t make ends meet in a weak labor market,” she said. “For many, the gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10 percent.” …

Her proposals: Improve the safety net (expanded Social Security, a new system of catastrophic insurance coverage), make employee benefits portable, and increase regulation & clarify laws around part-time work. As described at the link, all of these proposals are nicely calculated to make Kochsuckers and other Republicans fall down in foaming fits. Which is a good short-term goal on its own, but they’re also important steps towards stopping the relentless erosion of the middle class for the benefit of the Zero-Point-One Percent.

***********
Apart from agitating, what’s on the agenda for the evening?



Lifestyle insurers in MCO markets: how do they work?

The Exchanges have encouraged new firms to enter the individual insurance market.  This is a good thing as we need to experiment with service delivery systems.  One of the experiments have been either new insurers or new subsidiaries of insurers entering the market with plans and marketing schemes that are heavily technology focused and optimized to give a good customer service experience.

Harken Health (part of United Healthcare) is attempting to drive down costs by a combination of no cost-sharing PCP visits at company owned clinics and lifestyle options.  They’re expending their footprint in Atlanta and Chicago.

Harken Health currently operates four health centers in Cook County, Illinois, where the insurer plans to open another six clinics by next year. Harken currently has six clinics in the Atlanta area, where it plans to open two more by 2017.

In addition to primary care, the health centers also offer everything from sessions with “health coaches” to classes in nutrition, tai chi and yoga.

Oscar, based in New York, has been losing money. They are requesting large rate increases to cover their losses:

Oscar is proposing to increase rates between 8 percent and 30 percent on individual plans, according to a letter sent to brokers….

Oscar’s strategy has been to use their web/mobile technology platforms to be the hip/cool/disruptive insurer for the next generation.

The market segment that both of these plans seem to be aiming for are people who are fairly young, active, technologically savvy and very healthy.

There is no problem with insurers segmenting a market and chasing one segment really hard.  Even with risk adjustment where plans that are comparatively much healthier make transfer payments to companies whose population are comparatively sicker, plans can make money.  Oscar in 2015 had massive risk adjustment liabilities.  Slightly more than a quarter of their earned premium revenues went out the door as risk adjustment payments.  This indicates that Oscar was disproportionately signing people up who were very low utilizers and were coded as very healthy.  This could be fine.  Given how Harken is marketing and pricing itself in the Chicago market, it seems likely it is attracting a similar type of risk profile (young and very healthy)

What I am struggling with is how do these types of insurers compete in markets where there is a large Medicaid Managed Care like Exchange insurer.  In Chicago, Centene Ambetter’s unit is the dominant low cost insurer.  It has a narrow network, Medicaid like HMO product as the 2nd Silver.  An HMO will self select for healthier people than a PPO, and a very narrow network will select for healthier people than a not so narrow network.   For a 40 year non-smoker, that plan costs $198 while the least expensive Harken plan costs $279.  That is a subsidy gap of $81.  Centene has been paying in significant risk adjustment transfers but it has been profitable.

Centene’s risk adjustment payments as well as plan design strongly support the idea that they are attracting a very healthy population.  They are attracting the people who have a low willingness to pay but a high subsidy due to low to medium income.  They are getting people who want insurance for either the stress relief of having insurance to take care of moderate sized problems or they want insurance to avoid paying the mandate.

So if Centene is attracting healthy people, Harken is attracting healthy people and both are paying large risk adjustment transfers, why is Centene making money and Harken probably losing money in Chicago?  Assuming a hypothetical individual could be covered by both insurers for the same treatment, Centene is paying significantly less per service than Harken because Centene’s basing its provider contracts on Medicaid rates instead of commercial or Medicare rates.

Centene and other Medicaid like Exchange providers are targeting roughly the same type of population but since they are much cheaper post subsidy, they are probably getting a far larger population to amortize their fixed costs over plus any service that they do need to pay for, they are paying for at a lower rate.

From here, I am having a hard time seeing how plans that have a “lifestyle” component can compete against Medicaid like Exchange providers.  Maybe it is different off-Exchange where everyone is paying full premium and “cheapness” is not a strong selling point.

 



O-K-L-A-H-O-M-A OK

Math has a well known liberal bias.

 

That is the Oklahoma House passing a Medicaid expansion bill.

The state is heavily dependent on cyclical resource extraction taxes (oil and gas) for a significant chunk of their state budget. The state is facing a a massive deficit and Expansion is a good way to solve a decent chunk of the problem while not destroying the public health system:

a huge $1.3 billion hole in the budget that threatens to do widespread damage to the state’s health care system.

So, in what would be the grandest about-face among rightward leaning states, Oklahoma is now moving toward a plan to expand its Medicaid program to bring in billions of federal dollars from Obama’s new health care system.

What’s more, GOP leaders are considering a tax hike to cover the state’s share of the costs.

“We’re to the point where the provider rates are going to be cut so much that providers won’t be able to survive, particularly the nursing homes,” said Republican state Rep. Doug Cox, referring to possible cuts in state funds for indigent care that could cause some hospitals and nursing homes to close.

The law still needs to go through the Senate and get signed by the Republican governor. After that the state will need to negotiate with the Center for Medicare and Medicaid Services for a waiver as Oklahoma wants to adapt the Arkansas model. Arkansas buys private exchange plans and then tops up their cost sharing assistance for people to minimize the deductible.

From a cash flow perspective this is interesting. Private exchange plans tend to pay providers significantly higher rates than Medicaid. It allows Oklahoma to send their rural providers a decent income stream that should allow the state to hold steady or even decrease their Legacy Medicaid provider rates. That is one source of state cash savings. The other is it moves a lot of people from Legacy Medicaid with a high state share to Expansion Medicaid with a low state share of the costs.

Over the long run, state budget math has an expansionary bias. Expansion solves several big problems without allowing too many hard choices to be made (as well as make the residents of the state better off). It is a one way ratchet. This is why national Democrats have been proposing to give every state three years of 100% funding, and I wish that they would propose bumping up Legacy Medicaid federal shares by several points contingent on expansion being in place. Those policies are big bribes to get the hold-out states on board because sooner or later every state budget will need some relief. Federal Medicaid money is relief.
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Is Trump Lying About His Bankroll Size, Too?

Well, the reactions to this analysis should be interesting. The Wall Street Journal goes there — “As Trump moves to raise big sums, an estimate of his 2016 income shows it short of the big money needed for general election run”:

… When his campaign began last summer, a financial disclosure Mr. Trump filed said he had between about $78 million and $232 million in cash and relatively liquid assets such as stocks and bonds.

That would go fast if Mr. Trump spent an amount close to the $721 million President Barack Obama spent in 2012 up to Election Day, or the $449 million Mitt Romney spent in the same stretch.

This would leave hundreds of millions to be made up. And Mr. Trump’s businesses don’t produce that much in a year, a Wall Street Journal analysis shows. His 2016 pretax income, according to the analysis, is likely to be around $160 million.

The Journal analysis is based on 170 items of “employment assets and income,” such as real estate, golf courses, management companies and licensing deals, listed in the financial disclosure form Mr. Trump filed last July. The Journal estimated how much pretax income each item should yield this year, relying on public documents and interviews with dozens of former and current Trump Organization executives and people who are familiar with his businesses.

In the absence of Mr. Trump’s tax returns, which he has declined to release, the analysis helps answer a question many wonder about: just how much the candidate earns…

The cash issue looms now because the political season is growing more expensive. The Trump campaign spent about 50% more in March than in February, facing higher expenses for field workers, telemarketing and voter-data operations.

Mr. Trump noted that once the general election campaign begins, the Republican National Committee will be spending heavily on his behalf. The RNC spent $386 million during the 2012 presidential campaign. A clutch of other entities such as political-action committees spent $419 million to back Mr. Romney.

This year, officials at some big Republican PACs are saying they are going to turn their funds toward keeping the Senate and House in the Republican hands, meaning their support for Mr. Trump could be diminished.

On the other hand, legal changes since 2012 make it possible for political parties to raise larger individual donations, via joint fundraising committees with their presidential candidates. Such a joint fundraising committee is what Mr. Trump said in early May that he planned to set up with the Republican Party…

And aren’t the Permanent Repub Party bigwigs with their hands on the purse strings — not to mention the ones required to fill that purse — going to enjoy giving the short-fingered vulgarian their money to waste on futilely challenging Hillary Clinton?

The whole article (I found it by Googling its title) is replete with the sort of details that will fascinate wonks, but it reinforces what non-Trump-partisan observers have been saying since Deadbeat Donald first rode that gilded escalator to announce his run: While $160 million (more or less) would be a more-than-satisfactory income to you or me or most normal human beings, it’s nowhere near enough to qualify Trump for “Really Rich Person” status. Assuming he started this shitshow in the first place to enhance his brand/salve his Obama-wounded feelings/bigly assert his yoooge hand size, the media response to this it will not be fun for him. Watching his noisy rage should provide some tasty schadenfreude for the rest of us, though!