Another co-op acting oddly?

Charles Gaba is doing his regular job of collecting all initial rate filing requests. He looks at New Mexico and something is odd in the filing. The largest individual market insurer (Molina) and two smaller carriers all initially filed effectively flat rates. To me, this implies that the 2019 premiums were slightly overpriced and we should expect to see Medical Loss Ratio (MLR) rebates of decent to significant size in September 2020. However, the second biggest carrier by enrollment in the ACA individual market, New Mexico Health Connections (NMHC), a co-op, filed for a 30% rate increase. accessed 6/12/19

I wonder if NMHC will be a going concern in 2021.

My question comes from a pricing perspective. Molina has been an aggressive spread strategy player in New Mexico. They have a low cost, Medicaid-esque network that allows them to significantly underprice insurers that pay their provider networks something closer to standard commercial rates instead of significantly under those rates. Molina’s pricing advantage is especially notable for their Bronze plan in 2019. Their 2019 Silver plan is only $8 below benchmark for a single 40 year old non-smoker so it is price superior but not price dominant for the 138-200% FPL group that makes up a huge chunk of the individual market. NMHC has a slight pricing advantage on Gold compared to Molina. Blue Cross and Blue Shield priced 2019 a bit above NMHC.

That all changes in 2020

I am making some very quick estimates of the premium spread changes in Bernalillo County, New Mexico, the largest county in the state. I am assuming no change in plan offerings by any current 2019 carrier and flat rates for all non-NMHC carriers.

Assuming no other changes, Molina has a dominant pricing position. They would have the cheapest Bronze, Silver and Gold plan by a significant margin. A significant portion of the subsidized population would see a Molina plan that has a zero dollar premium. That is likely to be important for both attraction and retention as it is hard to terminate a policy for non-payment of premiums when there is no consumer facing premium. Gold plans from Molina will have a very significant pricing advantage over other insurers’ golds. NMHC will be priced over Blue Cross so if people are looking for a non-Molina product, NMHC is a second choice on price after an initial quality/attribute assessment.

I am assuming that the rate requests are approved as is. That is implausible but a realistic starting point. I am assuming that the other insurers don’t alter their product offerings. That, too, is a large assumption. If I was running Molina, I would introduce a 59% AV Bronze plan that I could price $30 or $40 below the current Molina Expanded Bronze offering. Doing that would pull in even more people to a zero premium plan. I am assuming that the NMHC currently covered population is no more intrinsically sticky than the rest of the ACA market. I think that is reasonable.

If these assumptions are true (enough), then NMHC has problems as they will be losing a good percentage of their current, low cost members while perhaps holding onto a morbid pool of high cost patients whose expenses may not be appropriately compensated by risk adjustment. At this time, I think that keeping an eye on one of the few operating co-ops is worth the time and attention. I don’t anticipate much news until the summer of 2020 but there is a possibility of failure if the current pricing is approved in magnitude if not in exact number.

C.R.E.A.M. Open Thread: Young Jared Is A Busy Little Oligarch

(Jeff Danziger via

… Small wonder he occasionally “forgets” minor details of his many, many important jobs in the Squatter-in-Chief’s administration. Such as sending out invitations and RSVPs for the ‘business conference’ intended to bring peace to the Middle East…

… Or mentioning the petty sums — I mean, a mere $90 million, that’s chump change! — from “opaque offshore entities” on his financial disclosure forms…

Read more

Dallas Texas, Hollywood

I’ve put together a list of the most endangered Dem House incumbents in 2020. One interesting thing is that when I started this list, I thought I’d see a lot of the people who won traditionally Republican suburban districts in TX and CA on the list, but Cook rates all of those as Lean Democratic, whereas the 17 most endangered House incumbents are all listed as Toss-Ups here. Apparently, the GOP suburban apocalypse is very real.

Anyway, I ain’t askin’ for much, just a thousand each for the seventeen Democratic incumbents whose seats are listed as “toss-ups” here. This and the Senate list I’ve put together (of Republican targets) will be my main fundraising activity this year.

Goal Thermometer

You can also give to Dan McCready, running in the special in NC-09 here.

Goal Thermometer

I’d like to mention one other fundraising thing, a sad thing. I always enjoyed the writing of Simon Malloy on Salon a great deal. I wondered where he had gone. It turns out he was battling colon cancer and he recently died, leaving behind a wife and two small children. There is a GoFundMe for his family here, and I just gave to it.

C.R.E.A.M. Open Thread: The McConnell-Chao Marriage Is *Mutually* Profitable

Guess it’s nice for the GOP senators who’ve handed their balls over to Mitch to know that, should his Russian funding ever dry up, he won’t be reduced to peddling his memoirs to support his lifestyle:

The Transportation Department under Secretary Elaine Chao designated a special liaison to help with grant applications and other priorities from her husband Mitch McConnell’s state of Kentucky, paving the way for grants totaling at least $78 million for favored projects as McConnell prepared to campaign for reelection.

Chao’s aide Todd Inman, who stated in an email to McConnell’s Senate office that Chao had personally asked him to serve as an intermediary, helped advise the senator and local Kentucky officials on grants with special significance for McConnell — including a highway-improvement project in a McConnell political stronghold that had been twice rejected for previous grant applications…

The circumstances surrounding the Owensboro grant and another, more lucrative grant to Boone County, highlight the ethical conflicts in having a powerful Cabinet secretary married to the Senate’s leader and in a position to help him politically. McConnell has long touted his ability to bring federal resources to his state, which his wife is now in a position to assist.

Chao’s designation of Inman as a special intermediary for Kentucky — a privilege other states did not enjoy — gave a special advantage to projects favored by her husband, which could in turn benefit his political interests. In such situations, ethicists say, each member of a couple benefits personally from the success of the other…

(Much more at the link. As with so many similar one-man pork projects, the money seems to have drained away on ‘showpiece’ architectural projects that benefited a small cadre of connected businessmen without providing much assistance to the voters who really needed some help.)

The power couple isn’t particulary covert about their money-spinning prowess. Bess Levin, at Vanity Fair:

Last week, the New York Times reported that the secretary tried to bring family members to government meetings with Chinese officials, despite said family members having major financial entanglements in China. Last month, the Wall Street Journal found that she’d made a $40,000 profit on her stake in Vulcan, the nation’s largest construction materials supplier, despite having promised—over a year ago!—to divest from the company, on whose board she sat…

Cole linked to the NYTimes article when it appeared, but seriously: Can you imagine the outrage if a Democratic Senator’s wife did anything like this?

Ms. Chao is the top Trump official overseeing the American shipping industry, which is in steep decline and overshadowed by its Chinese competitors.

Her efforts on behalf of the family business — appearing at promotional events, joining her father in interviews with Chinese-language media — have come as Foremost has interacted with the Chinese state to a remarkable degree for an American company.

Foremost has received hundreds of millions of dollars in loan commitments from a bank run by the Chinese government, whose policies have been labeled by the Trump administration as threats to American security. The company’s primary business — delivering China’s iron ore and coal — is intertwined with industries caught up in a trade war with the United States. That dispute stems in part from the White House’s complaints that China is flooding the world with subsidized steel, undermining American producers.
Read more

I walk on guilded splinters

Dr John RIP, but what a way to go, New Orleans-style.

Now back to our regularly scheduled fund-raising, it’s still early, and I think it’s quite possible that Trump will get blown out, but if he doesn’t, I think the race comes down to Wisconsin and North Carolina. There’s a special election in NC-9 coming up and it looks to be close. This is the race that is being done a second time because of Republican voter fraud the first go-round. The Dems have a great candidate in Dan McCready. Let’s help him out.

Goal Thermometer