OOPS and MLR rebates

Michigan’s insurers have asked for a net, blended 2% rate decrease for the 2020 individual market year. 2018 and 2019 were major actuarial OOPSIES as revealed in the rate filings.

I am grabbing two screen shots that show the oopsies in rate filings. First is from Blue Care Network, the largest single individual market insurer in the state:

The second is from the other Blue Cross and Blue Shield of Michigan product line as it is even more explicit:

Exhibit 2.2 in both filings is where all of the action is.  The short version is that the actuaries were way too pessimistic about 2018 and 2019.  The original projection for 2018 and 2019 expected the federal policy actions to be the equivalent of the market getting knee capped with a  tire iron.  The combination of uncertainty in 2017 leading into the 2018 policy year, reduced outreach and continual negative messaging against the exchanges were expected to lead to only the super sick/expensive buying plans for 2018.  The actuaries also expected the policy intervention of no individual mandate to matter a lot more in 2019.

I think both of those things matter (I have a paper on messaging regime changes that I just edited the proofs for over the weekend and our findings show it matters) but the impact on these two counts were counter-balanced by the incredible pricing discounts that the Silver Load strategy created for non-CSR buying individuals.

The actuaries thought that 2018 and 2019 were supposed to be a Category 4 Hurricane when reality had the storm come ashore as a big, messy Tropical Storm or a weak Category 1 that just went over a pool of cool water.  This makes sense, actuaries as a profession are biased against making pricing recommendations that have “lose the company” risks.  If they can’t predict something well based on past experience, the recommendations are to either assume a high rate or run like hell.  In these two insurers’ cases, they assumed a high rate.

So why does this matter?

Medical Loss Ratio (MLR) rebate regulations is why it matters.  Michigan insurers are indicating that they really guessed wrong in 2018 and 2019 on final rates.  We know that 2018 has ridiculously low MLR.  I’ve been using a 7% increase as my rule of thumb to determine if a state had priced 2019 close to “right” where right is defined as insurers thinking they are profitable and being in a non-refund position for 2019.

Blue Cross and Blue Shield of Michigan (the second filing) is stating that they think they overpriced 2019 by at least 10%.  This means they should be expecting to pay a very large MLR rebate next year as they will be dealing with a “normal” 2017, a very low 2018 and a low 2019 MLR.  Those checks will be arriving in the mailboxes of enrollees five weeks before the election cycle.  The MLR checks are effectively “magic” money as they are treated as post-tax refunds and not as income for purposes of taxes and income restricted social service programs.

Large 2019 rebate checks will not be universal but they will be fairly common.  Michigan will see quite a few next year.

Tuesday Morning Open Thread: Graphically Terrible

(Rubes via GoComics.com)

Hey, the worst we have to worry about is Handsy Uncle Joe, an ‘independent’ who’s leaking support, and approximately a bakers dozen of disgruntled white dudes who can’t get traction. The Repubs are stuck with the Squatter-in-Chief, the half-bright diehards at the core of his personality cult, and the uncertain mercies of foreign oligarchs…

As President Trump prepares to formally launch his reelection bid Tuesday, his allies are trying to tamp down headlines that depict his campaign as trailing top Democrats, beset by withering leaks and unable to keep internal tensions from spilling into public view.

The 2020 drama intensified over the weekend, as Trump’s campaign abruptly fired three of its pollsters, including one polling firm formerly owned by Kellyanne Conway, the president’s adviser and former campaign manager.

Privately and publicly, campaign advisers fumed over the leak of internal polling data that showed Trump far behind former vice president Joe Biden in key states — a pattern that has touched a nerve with the president…

While an economy with low unemployment and steady growth would normally be a solid tail wind for an incumbent president, the Trump campaign is facing signs of a tough path to reelection.

The 17-state poll conducted by the campaign in March, for example, showed Trump trailing Biden by double digits in Wisconsin, Pennsylvania, Florida and Michigan, ABC reported Friday. Trump’s approval rating has also been stuck around the 40 percent mark throughout his term…

(Walt Handelsman via GoComics.com)

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Late Night Open Thread: Picking the GOP Nominee

Speaking of survivors from a distant past…

Instead of arena rallies, most of Weld’s weeks are filled with little-noticed trips to New Hampshire, the first-in-the-nation primary state, where he stops by diners and living rooms to meet with voters who might remember him from when he was a neighboring governor in the 1990s.

Other weeks are dotted with meetings and television appearances — he was on MSNBC on Sunday morning — where he has won occasional attention for his scathing criticism of Trump, but little else…

The president’s backers have ignored or mocked Weld since he announced his campaign in April, calling the Harvard lawyer — who can trace his family’s roots to the Pilgrims — “nothing more than a delusional elitist.” That view is shared in the West Wing, according to several Trump advisers, with Weld dismissed as a speck of lint on a black-tie tuxedo.

Weld is a particular type of Republican: a New England moderate who once had stable footing in the GOP but has all but disappeared in the party’s upper ranks. He is measured in temperament, advocates for strong ties with traditional U.S. allies, and is socially liberal. Weld supports abortion rights, and he was elected governor in 1990 and 1994 with the support of Republicans like President George H.W. Bush…

Despite the daunting odds and dynamics, Weld nonetheless remains cheery about his cause. At age 73 — and after a long and winding political career that has included a stint as the Libertarian Party’s vice-presidential nominee in 2016 — he is happy these days to provide like-minded Republicans with an option.

And he is hopeful that, perhaps later this year, he’ll somehow find himself in the political spotlight and be given a chance to lift his campaign’s status from quixotic to competitive, at least in New Hampshire, which has given a boost to past challengers of incumbent presidents — and has an open primary where independent voters can vote in party contests.

“When I go around New Hampshire and mention Mr. Trump’s name to people, I get frowns and thumbs down in response, these long faces,” Weld said, calling such exchanges encouraging. “But I know it’s going to be a long haul.”…

Election 2020 Open Thread: Reverend Barber’s PPC Moral Congress

Kara Vogt reports for Mother Jones; Chelsea Janes (and Dave Weigel) for the Washington Post:

The Poor People’s Campaign is a clergy-led effort to revive the Rev. Martin Luther King Jr.’s push to focus attention and resources on poverty. At the group’s forum in Washington, about 10 of the Democratic presidential candidates showed up to make their case on fighting poverty.

The Rev. William Barber II, a founder of the campaign, asked attendees not to cheer or hiss, but rather to greet all the candidates with polite applause. Even in this subdued setting, however, the response to Biden was noticeably muted, and he left the stage to applause that was less enthusiastic than that which greeted him…

Joy-Ann Reid, an MSNBC host who moderated the session, asked Biden how he would pass his plans through a stubborn Congress — in particular, how he would work with Senate Majority Leader Mitch McConnell (R-Ky.), who makes little secret of his satisfaction at blocking Democratic initiatives.

Biden bristled at the suggestion that his approach was misguided. As he wound through his response, Biden moved nearer to Reid, who was seated, and leaned over her.

“Joy-Ann, I know you’re one of the ones who thinks it’s naive to think we have to work together,” Biden said. “The fact of the matter is, if we can’t get a consensus, nothing happens except the abuse of power by the executive branch. Zero.” He added that “you can shame people into doing the right thing.”

Biden’s suggestion that he could persuade McConnell to cooperate prompted skepticism from those who have interacted with McConnell…

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Election 2020 Open Thread: “But Is the Media America Ready for A Nerd President?”

Peter Beinart’s article is not as silly as the headline makes it sound. “Braininess Is Now the Brand”:

Among the biggest surprises of the Democratic presidential campaign so far are the rise of Pete Buttigieg and the resurgence of Elizabeth Warren, both of whom, according to a new Des Moines Register poll, have moved into a virtual tie for second place in Iowa with Bernie Sanders. In many ways, the Buttigieg and Warren phenomena are distinct: Buttigieg promises generational change; Warren is almost 70. Buttigieg emphasizes his success in a conservative state; Warren stresses her willingness to challenge corporate power. Buttigieg has become a darling of the big donors whom Warren eschews.

What unites them, and separates them from Sanders and Joe Biden, is their unabashed intellectualism. Both have made braininess central to their political brand. And it’s working—a fact that offers a window into the changing culture of the Democratic Party…

It’s not unusual for Democratic presidential candidates to have impressive resumes. Bill Clinton is a Rhodes Scholar; Barack Obama was the president of the Harvard Law Review. Cory Booker and Julián Castro attended Stanford; Amy Klobuchar went to Yale. In fact, every president since Ronald Reagan has been a product of the Ivy League.

What’s new is that Warren and Buttigieg are leaning into their credentialed intellectualism rather than worrying that it will make them appear elitist….

As late as 1994, according to the Pew Research Center, voters who had graduated from college were 15 points more likely to identify as Republicans than Democrats, and voters with graduate degrees were almost evenly split between the two parties. By 2017, college graduates’ partisan leanings had flipped: They now favored Democrats by 15 points. Among Americans with graduate degrees, the shift has been even starker. The Democratic advantage, which stood at two points in 1994, had grown to 32 points by 2017.

As a result, the educational composition of the two parties has diverged. From 1997 to 2017, the share of registered Republican voters who finished college stayed the same. Among Democrats, it rose by 15 points. This shift has influenced the way the two parties see education itself. In 2010, Democrats were seven points more likely than Republicans to say that colleges and universities have a positive effect on America. By 2017, they were 36 points more likely…
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