Aetna and cynicism confirmed

The anti-trust case where the government has been seeking to block the Aetna-Humana from merging has a ruling. The District Court judge has sided with the FTC and blocked the merger. I would be shocked if the ruling is not appealed.

There is a bit in here that made me smile as it gives some context to some of my more cynical writing over the summer. Aetna was profitable on the QHP market in Pennsylvania. However it pulled out of the entire state despite making a good deal of money.

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.

The judge seems to be a cynical bastard as well:

I’ll have more on this including a policy perspective when I have time to write, but cynicism was completely justified.



Trump’s EO on the ACA

The Trump administration issued its first executive order. The subject is the ACA. The order seeks to destabilize the non-subsidized and off-Exchange portions of the risk pool by minimizing enforcement of the individual mandate.  Dan Diamond at Politico had the first link to the actual order that I saw:

Section 2 is the critical component for the individual market. Section 3 has significant impact for both Exchanges and Medicaid.

Analysis below the fold:
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A personal note on policy evaluation

I want to lay out one of my key heuristics for policy analysis and evaluation for the next four years. But first I need to go back a little in my life to two time periods.

1992 sucked for my family. I am one of five kids. My mom worked a retail job as she was mainly trying to get all of us going in the right direction while managing half a dozen minor chronic conditions between all of us. My dad was a union electrician. Construction is a pro-cyclical industry so when times were good, they were very good and when times are slow, they are really bad. The 80s were good as Boston boomed. The late 80s after the S&L crisis plus the overbuildout of Boston sucked. He was able to get the occasional side job and short term position as an electrician and had already started to work as a cabinet maker, a newspaper deliverer and half a dozen other side jobs and hustles to hold on. We were waiting for the Big Dig to really ramp up as that would clear a log jam on the job list at the union hall.

I remember crying in happiness one day when my parents decided to get me a treat of sweet canned corn instead of frozen corn. We had not had my favorite type of corn in so long as the extra thirty cents a pound was too much of a lift.

Now fast forward.

Mid-2008 my wife had gotten laid off as her organization got a new CEO who wanted to quickly leave their mark for decisiveness and wiped out several profitable but not exciting departments. She was pregnant with our daughter. I was working as a program evaluator for a behavioral health care coordination program. It was funded by a federal grant that was due to run out at the end of FY09. We were trying to transition our funding to local and foundation money. By mid-2009, my wife was working part time at a position far below her skill level, our daughter was happy making faces at her parents, and there was absolutely no local or foundation money as 51 mini-Hoovers were in effect for state level austerity. I got laid off. The next year I stayed home with our daughter as the combination of unemployment insurance and not paying for daycare that was the best solution possible.

Now fast forward.

The past six years have been great for my family. My career has taken off. My wife’s career has launched. We have two great kids. We have stability and we have a cushion. Yesterday the induction motor on the furnace failed after a good eighteen years of service. I was able to grumble and mumble as I wrote a check to the HVAC technician but writing that check had no impact on my family’s financial stability. We’re in good shape.

Some of this is a humble brag. But most of this is how my policy evaluation heuristic is formed. If a policy helps 2009 Me or 1992 Me out more than it helps present day me out, I’m most likelyfor it. If 2017 Me is advantaged over either 2009 or 1992 Me, I’m highly likely to be opposed to it.



Thursday Morning Open Thread: Keep Going After the Bastids

Per Crooks & Liars:

A frustrated Senator Warren asked Rep. Price direct questions about his own policy prescriptions, but he refused to give a definitive answer, even about the cuts he has repeatedly called for.

Sen. Warren discussed his calls to cut funding and asked, “You recently authored as chair of the House Budget Committee would have cut spending on Medicare by $449 billion dollars over the next decade, is that right?

Rep. Price replied, “I don’t have the numbers in front of me.”

She replied, “I have the numbers.”

He said, “I assume you’re correct.”…

Sen. Warren then brought up Trump’s positions on both health care plans, in which he states there will be no cuts to the programs, funding-wise. She asked if Trump was telling the truth and he replied, “yes.”…

Warren said, “Can you guarantee to this committee that you will safeguard president-elect Trump’s promise and while you are HHS secretary, you will not use your authority to carry out a single dollar of cuts to Medicare or Medicaid eligibility or benefits?”

Price said, “What the question presumes is that money is the metric. In my belief from a scientific standpoint, if patients aren’t receiving care even though we’re providing the resources, it doesn’t work for patients.”

Warren said, “We’re very limited on time. The metric IS money. The President-elect…said he would not cut dollars from this program. So that’s the question I’m asking you. Can you assure this committee you will not cut one dollar from Medicare or Medicaid should you be confirmed to this position?

Price replied, “I believe that the metric ought to be the care that the patients are receiving.”

Warren said, “I’ll take that as a no.”…

***********

Apart from applauding Women Who Take No Shit, what’s on the agenda for the day?
.



Late Night California Nightmarin’ Open Thread: Guvernator Thiel

From the Politico article:

Thiel, who co-founded PayPal and was an early investor in Facebook, has been discussing a prospective bid with a small circle of advisers, including Rob Morrow, who has emerged as his political consigliere.

Morrow has worked at Clarium Capital, the San Francisco-based investment management firm and hedge fund that Thiel started.

Those who have been in touch with the 49-year-old entrepreneur are skeptical that he’ll enter the race. He is a deeply private figure, and California is unfriendly territory for a Republican — particularly a pro-Trump one. The president-elect won just over 30 percent of the vote there.

But they add that Thiel has conspicuously yet to rule out a bid and that those around him continue to discuss it…

Thiel, who is worth an estimated $2.7 billion, would fill an important need: the ability to self-fund. Waging a gubernatorial bid in California, where campaigns are famously expensive, could cost over $100 million.

He isn’t the only billionaire who may run. Environmentalist Tom Steyer, a prolific giver to Democratic causes, is also seen as a possible contender.

With Democratic Gov. Jerry Brown term-limited, several high-profile Democrats, including former Los Angeles Mayor Antonio Villaraigosa, Lt. Gov. Gavin Newsom and state Treasurer John Chiang have already launched campaigns…

I’m assuming, from my perch here on the opposite coast, that Thiel is just drafting in Trump’s slipstream, getting his vanity stroked by Repub apologists like Politico without having to task his highly evolved brain with grubby political calculation.

Another sign of the President-Asterisks’s negative effects on the general political sphere — he hasn’t even been inaugurated, and he’s already encouraging the worst sort of anti-human grifters to speculate about following his slimy path.



US Drug price negotiating and OECD subsidization

I’m trying to figure out a model to make the following make sense to me regarding the US negotiating or not negotiating drug prices through the purchasing power of Medicare.  I’m picking on Enplaned from comments just because this is a fairly common argument structure:

Health authorities of other countries routinely get lower prices for their citizens on drugs than are charged in the US. What this means is that US consumers effectively subsidize those of Europe, for instance. This makes sense for drug companies because selling it for less in Italy or Germany or whatever is still additional profit, assuming it’s greater than the cost of production.

What’s the model that produces this statement?

My best bet at figuring out a model is one that assumes drug distributors are actually profit satisficing entities and not profit maximization entities.

By this I mean the implied model assumes that the C-level of a major multi-national drug company will decide that they want a set annual return on equity for the next fiscal year.  They can sell in three markets.  The United States, the rest of the OECD (middle class and higher industrial countries) and the rest of the world.  Rest of the world is broke so most of the sales of expensive drugs there are marketing loss leaders and charity care.  The primary decision point then is how to allocate profits from the disjointed US market where almost no one with market power can say no and the rest of the OECD where locally concentrated buyer power can effectively say no.   So it is an allocation decision that the US will supply 75% of the net profit and the rest of the OECD will supply 25% of the profit.  Now under this profit satisficing model if Medicare is authorized to say no and exclude certain drugs from coverage, the US, all else being equal would now only supply 60% of the profit and without any other changes the OECD would supply 25% of the profit and then there would be a 15% decrease in net profits.  However in this story, the drug companies now will raise rates in the rest of the OECD so they supply 40% of the profits so total profits under either scenario are the same.

I have a hard time buying this and reconciling this implicit model with the left/liberal critique that drug companies are soulless bastards who are trying to make money above all else.

What if we follow the logic of profit maximization through the entire drug pricing decision chain?

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Brow-Raising Read: Peter Not-Bathory Thiel Has No Patience with Your Illogical Humanity

As Thiel would no doubt explain — possibly via a letter from his lawyers — someone who can plausibly style himself a ‘chess prodigy’ cannot be called stupid. (Clueless would be my term.) He simply fails to honor certain metrics popular with lesser beings, ‘soft’ terms like empathy and humor, or self-awareness.

To interview such a challenging subject, the NYTimes‘ Maureen Dowd is perhaps uniquely suited, given her long career of sucking up to those celebrities her bosses admire in combination with her natural instinct to take the mickey. As a brief interval of laughter — “Peter Thiel, Trump’s Tech Pal, Explains Himself“:

Let others tremble at the thought that Donald J. Trump may go too far. Peter Thiel worries that Mr. Trump may not go far enough.

“Everyone says Trump is going to change everything way too much,” says the famed venture capitalist, contrarian and member of the Trump transition team. “Well, maybe Trump is going to change everything way too little. That seems like the much more plausible risk to me.”

Mr. Thiel is comfortable being a walking oxymoron: He is driven to save the world from the apocalypse. Yet he helped boost the man regarded by many as a danger to the planet.

“The election had an apocalyptic feel to it,” says Mr. Thiel, wearing a gray Zegna suit and sipping white wine in a red leather booth at the Monkey Bar in Manhattan. “There was a way in which Trump was funny, so you could be apocalyptic and funny at the same time. It’s a strange combination, but it’s somehow very powerful psychologically.”…

He recalls that he went through a lot of “meta” debates about Mr. Trump in Silicon Valley. “One of my good friends said, ‘Peter, do you realize how crazy this is, how everybody thinks this is crazy?’ I was like: ‘Well, why am I wrong? What’s substantively wrong with this?’ And it all got referred back to ‘Everybody thinks Trump’s really crazy.’ So it’s like there’s a shortcut, which is: ‘I don’t need to explain it. It’s good enough that everybody thinks something. If everybody thinks this is crazy, I don’t even have to explain to you why it’s crazy. You should just change your mind.’”…

(This is the high-IQ, expensively-educated version of “How do you know it’s dangerous to drink bleach? Just because a bunch of quote-unquote scientists told you so?”)

I ask if he’s comfortable with the idea that Vice President-elect Mike Pence, regarded in the gay community as an unreconstructed homophobe, is a heartbeat away from the presidency.

“You know, maybe I should be worried but I’m not that worried about it,” he replies. “I don’t know. People know too many gay people. There are just all these ways I think stuff has just shifted. For speaking at the Republican convention, I got attacked way more by liberal gay people than by conservative Christian people.”…
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