Good lord that is a lot of money

Wellmark in Iowa has a great example of the benefit changes of the ACA and their costs:

Wellmark Blue Cross & Blue Shield is sending letters this week telling about 30,000 customers it plans to raise their premiums by 38 percent to 43 percent next year….
She said about 10 percentage points of the increase stem from the costs of a single, extremely complicated patient who is receiving $1 million per month worth of care for a severe genetic disorder.

Pre-PPACA or with current grandfathered/grandmothered plans that are not ACA compliant, Wellspan would have had a pair of outs. The first one would be that they could have underwritten individuals with severe genetic risks out. They might not be able to say that they are writing out based on genetics but they could write them out on the basis of past service history. The second out would be the lifetime limit. Most individual policies would have stopped paying after $1 million or $5 million in claims.

So what would that have meant in a pre-PPACA world for the patient?  Most likely the patient would quickly run through their private insurance.  At that point, s/he would most likely either qualify for Medicaid, put on charity care or left to die.

From a policy perspective, it is completely unreasonable to expect a 30,000 person risk pool to absorb one of the top ten claims in the nation.  I am slightly surprised that Wellmark does not have reinsurance or stop loss policies on their plans unless they figure that they can self-insure because they are big enough as a corporation to eat the loss of one unlucky division.  Risk adjustment does not help as risk adjustment does a decent job of calculating average costs of conditions.  A $12 million dollar a year claim episode is an extreme outlier so a risk adjustment transfer might only move a small fraction of the total claim cost to Wellmark.

National re-insurance could be a viable solution.  We had talked about a life panel approach where Medicare would act as a claims repricer for a certain set of conditions before.

we identified a set of big chronic conditions that are impossible to game or upcode, this could be an interesting proposal that reduces private medical premiums, and total net medical spend.

Let us  take cystic fibrosis and  hemophilia as examples.  These are conditions that can’t be faked on a chart and can be easily verified.  They are also very expensive conditions.  Insurers with small risk pools in a particular region/product can be destroyed by having an unnatural cluster of CF or hemophilia members that they cover.    Each condition can cost $300,000 or more per personper year to treat.  Fifty or more very low utilizers in an exchange or commercial plan are needed to generate sufficient surplus to cover one CF person.

Moving these very high cost individuals to Medicare immediately lowers the medical expenses of the privately insured groups as some of their highest cost members have been removed.  This means lower premiums (and for those who think insurers are inherently evil, lower potential profits as the MLR requirements kick in).  Medicare tends to pay a lower rate for services than commercial and Exchange plans.  The rate for Exchange plans is usually Medicare plus a bit, while large employer groups tend to pay at Medicare plus a lot.

A plan like this could be financed by a covered life set-aside.  Every month, every person covered by a fully insured product would see $5 of their premiums go to the national super catastrophic risk re-pricer pool to cover the people who have $8 million/year claims.  This would create a defacto national super high cost risk pool that is adequately funded while removing some of the expensive cases from insurers’ books by paying those claims at Medicare rates instead of higher Exchange or commercial rates.

And yes, this type of plumbing work-arounds would not be needed in single payer system but we’re not in that world today nor likely to be in it next year.

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Finding woodworkers in Louisiana

Louisiana is expanding Medicaid with the new eligibility date starting on July 1st.  The Times Picayune  reports that Louisiana is using its SNAP (food stamp) database as a means of identifying individuals who are Expansion eligible and then automatically signing them up.

Department of Health and Hospitals officials are “highly confident” they’ll receive federal approval to use data from food stamp applications to qualify people for Medicaid, the first state in the country to use such a method through what’s known as a state plan amendment….

Kennedy said DHH is preparing to send out about 100,000 letters to people that the agency has determined are eligible for Medicaid but aren’t among the state’s 1.4 million enrollees. All the recipients will have to do is respond to the letter, Kennedy said, and they’ll be added to the program….

DHH officials had previously said they would use a “fast track” approach to Medicaid expansion enrollment, but the food stamp enrollment is particularly significant because the federal government had never before approved using food stamp data to qualify Medicaid recipients.

I think this is interesting from a few angles.

First it is an example of a government that wants to do well by maximizing the data that it already holds.  The state of Louisiana in a variety of data sources that it owns already has an excellent idea of who is eligible for Medicaid based on income and who is not.  The challenge has always been integrating those data sources into a coherent information stream.  Using the SNAP database is an excellent starting point.

Secondly, it makes sense that Louisiana is doing this for an expansion roll-out.  All else being equal, an individual who otherwise would not have signed up for Medicaid Expansion without being automatically enrolled will be healthier and less expensive once they are signed up via the letter than people who actively sought out enrollment into Medicaid.  The active seekers are more worried about their health care costs because they know themselves to have a good reason to worry about paying for health care services.  This will lower the average cost on a capitated basis.

The most interesting angle to me is how does this outreach change the Medicaid cost savings for Louisiana.  The woodworkers have a FY2017 62/38 Federal/state split on their costs.  The Expansion eligible individuals have a CY2016 100/0 split on their costs.  A large rush of legacy woodworkers will eat up most of the cost savings gained through lower charity care appropriations, and shifting of voluntary Legacy Medicaid qualified individuals to Expansion eligibility groups.

This is a good problem to have, as more people covered with the Feds picking up most of the tab is a good thing in and of itself.  However the problem is Louisiana has a balanced budget constraint and a large structural deficit.  Medicaid expansion is taking a decent chunk out of the structural deficit caused by Jindal’s decision to destroy Louisiana to boost his Presidential chances but a 100% Medicaid Eligibility uptake rate would take away most of the savings.


Tuesday Evening Open Thread: For Entertainment Purposes Only

Convention-planning update from CNN:

Sen. John McCain told reporters on Capitol Hill on Tuesday he might not go to the Republican National Convention this year because it’s so close to his primary in August. “I have to campaign for reelection,” he said.
This year’s convention might also be something of a spectacle if Donald Trump and Ted Cruz are slogging it out for delegates on the convention floor.

This is the latest in a trend of lawmakers who are up for reelection and are considering skipping, including Mark Kirk of Illinois, Kelly Ayotte of New Hampshire and Richard Burr of North Carolina. Some who don’t like Trump won’t go if he’s the nominee, like Rep. Charlie Dent, a moderate from Pennsylvania…

It would be notable if McCain were to skip, if for no other reason than he’s had a speaking spot at every convention for more than 30 years

Apart from that, Mrs. Lincoln, what’s on the agenda for the evening?

Late Night Oddities Open Thread: Rainbow Bagel and the End of Days

Via commentor NotMax; once he’d violated my eyeballs with the Washington Post link, I had to try and dilute the horror by sharing it with you all. Per Roberto A. Ferdman, “The most controversial bagel in Brooklyn”;

It’s mid-afternoon, but the line still spills out the front door, snaking around the block, eating up the better part of the sidewalk, as it has since early that morning. There are young couples, clinging to each other in the cold. Mothers, standing patiently next to their anxious children. There are teenage girls, chatting in packs. And there are SLR cameras — so many SLR cameras.

“What are you all waiting for?” a passerby who lives in the neighborhood asks as she plucks an earphone out from one of her ears. She is looking at the crowd with amazement. “I see this line every day. It isn’t just for bagels, is it?”

“It’s the line for rainbow bagels!” a little girl yells…

The rainbow bagel, the brainchild of self-proclaimed “world premier bagel artist” Scott Rossillo, who has been making the brightly hued treat for almost two decades, is having a moment that many people in Williamsburg, Brooklyn, could do without.

For years, Williamsburg was the epicenter of cool for a specific kind of person. A thriving artist population, a liberal bend and a general disdain for popular culture birthed a haven for counterculturalism, a capital of hipsterdom that was defined, at least in part, by a high concentration of yoga studios, organic markets, vintage stores and artisanal coffee shops.

But time has transformed the neighborhood from the sort of place coveted by a select few to a destination for just about anyone visiting New York City. And that popularity hasn’t always jibed with local values. The tourism triggered a commercial flood: First came the Dunkin’ Donuts, then the Starbucks. A Whole Foods will be opening this year.

In many ways, the rise of the rainbow bagel perfectly encapsulates this tension, an unlikely but apt example of a proud neighborhood confronting the inevitable: change. The dye-infused treat, whose dough resembles Play-Doh more than it does something edible, is the antithesis of the organic-eating culture that courses through the veins of so many who live in the area.

It’s evidence of a uniquely modern form of gentrification…

It’s a good article, honestly (you should read the whole thing!) but I think it’s “uniquely modern” only insofar as it’s easier to fly in on a jet and snap a selfie than to travel by sail or animal-back to bring long stories home to your less cosmopolitan neighbors. The nuns in our high school taught us that a certain Mary from Magdala was a key figure in the New Testament because Magdala was the period equivalent of Las Vegas, an exciting resort destination for Roman bigwigs stranded in the Middle Eastern backwaters. A woman from Magdala would be used seeing the best entertainers and conjurers, the contemporary equivalent of Siegfried and Roy or David Copperfield; the support of someone so sophisticated was proof that Jesus wasn’t just another street preacher with a gift for sleight-of-hand. A few hundred years from now — assuming our species survives — no doubt there will be tourists at every aquatic gambling hall on Jupiter, sending sensograms back to their neighbors at home on the mundane rocks of the asteroid belt…

Insert Clever Title About Glacial Speed

Seriously- that was quick:

The Panama Papers leaks apparently resulted in a political casualty Tuesday when Icelandic Prime Minister Sigmundur David Gunnlaugsson resigned.

Sigurdur Ingi Johannsson, the deputy chair of the Progressive Party, announced Gunnlaugsson’s resignation Tuesday on Iceland’s national public service broadcaster RUV.

Gunnlaugsson had been under intense pressure to step down since leaked documents hacked from a Panamanian law firm revealed his links to an offshore company, triggering mass protests in the capital.

Senior political figures in the Nordic nation have been holding emergency talks amid fallout from the Panama Papers leaks.
Critics said the revelations surrounding the offshore company, which allegedly had holdings in Iceland’s collapsed banks, shattered public confidence in Gunnlaugsson’s leadership and could harm the country’s international reputation.

Hee’s a decent explainer of the Panama Papers. this being an election year, I would be remiss if I did not add this:

The Panama Papers leak, that reveals how the rich and powerful rely on a secretive law firm to hide their wealth in tax havens, has drawn attention to a 2011 speech by Senator Bernie Sanders against the Panama-United States Trade Promotion Agreement, which became law in 2012. He noted that Panama’s entire economic output at the time was so low that the pact seemed unlikely to benefit American workers. The real reason for the agreement, Sanders argued, is that “Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade taxes.” Sanders said the trade agreement “will make this bad situation much worse.” We get reaction from Michael Hudson, senior editor at the International Consortium of Investigative Journalists, which published the Panama Papers, and Frederik Obermaier, investigative reporter at Germany’s leading newspaper, the Munich-based Süddeutsche Zeitung. He is co-author of the book “Panama Papers: The Story of a Worldwide Revelation.”

This is going to end up being the international story of the year.

Solidarity on the field

Some interesting sports/labor news from SI:

In the latest labor salvo between the World Cup-winning U.S. women’s national team players and the U.S. Soccer Federation, the five most prominent members of the USWNT have filed an action with the Equal Employment Opportunity Commission (a government agency) accusing U.S. Soccer of wage discrimination in relation to the money the federation pays to the U.S. men’s national team.

In a press release announced Thursday morning, lawyers for the five U.S. players—Carli Lloyd, Alex Morgan, Hope Solo, Megan Rapinoe and Becky Sauerbrunn—argue that the USWNT is paid almost four times less than the USMNT, despite producing nearly $20 million in revenues for U.S. Soccer in 2015 (per U.S. Soccer’s recently released annual financial report).

….”you have a situation where not only are their work requirements identical to the men’s requirements—the same number of minimum friendlies they have to play, the same requirements to prepare for their World Cups—but they have outperformed the men both economically and on the playing field in every possible way the last two years. So this isn’t a case where someone can come in and say the reason the men are paid more is because they are more economically successful or the men outperform the women or they’re not comparable in the same way….”


Equal pay for equal work, and better pay for better work should be a core value. And right now the US Women’s National Team is doing much better work than the men. They should get paid, especially as they are subsidizing the men.

The Company He Keeps

Look who Ted Cruz has recruited as his economic advisor:

If it’s true that a man can be judged by the company he keeps, what are we to make of the appointment of former Sen. Phil Gramm as economic advisor to the Presidential campaign of Ted Cruz?

Cruz made the appointment Friday, when he collected Gramm’s endorsement of his quest for the Presidency.

As Micheal Hiltzik points out in his coverage of this — what’s the word?– curious appointment, Gramm is exactly whom you’d choose if one global financial meltdown just wasn’t delicious enough:

Gramm left a long record as a dedicated financial deregulator on Capitol Hill, with much of his effort aimed at freeing up trading in derivatives. That’s why he’s often identified as one of the godfathers of the 2008 financial crisis, which was spurred in part by banks’ imprudent trading and investing in these extremely complex financial instruments.


Gramm himself is undeterred by his own disastrous record, and clearly Cruz is equally unbothered.  That would be why both men are ignoring Gramm’s last appearance as a campaign surrogate:

Gramm’s previous stint as a Presidential campaign advisor ended inauspiciously. That was in 2008, when he served as co-chairman of John McCain’s Presidential run.

Gramm’s most notable moment in that position came on July 10, 2008, when he dismissed the developing economic crisis as “a mental recession” in an interview–and video–released by the conservative Washington Times. “We’ve never been more dominant,” he said. “We’ve never had more natural advantages than we have today. We’ve sort of become a nation of whiners.” McCain immediately disavowed the remarks, and a few days later Gramm stepped down as his campaign co-chairman.

I’m assuming that Ted Cruz does actually hope to become president, and thus makes his choices in the belief that they will advance him to that end.  So I can only see two possible interpretations for this exhuming of one of the most egregious poster children for GOP economic failure.

One is that this is what epistemic closure looks like when it’s at home.  It takes a hermetic seal between you and reality to think the “nation of whiners” trope is a winner this year (or ever, really, but especially now).

The other is that this is just trolling, or rather yet one more instance of believing an action is simply good in itself, transcendently so, if it pisses liberals off.  Which lands Cruz — and the GOP — in exactly the same place as option one: doubling down on the crazy for reasons extremely clear only to those with the correct implants in their upper left second molar.

All of which is to say that I remain firm in my belief that the entity identifying itself as Senator Cruz is in fact one of these guys.

“Where are we going?”

“Galt’s Gulch”


“Real soon!”

Image:  J. W. M. Turner, Sunrise With Sea Monsters, 1845