Gimme Brains for Breakfast Baby

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Holy shit, Senator Elizabeth Warren apparently murdered a bankster in the Senate today:

I’m honest to goodness physically aroused.



APTC Hacks, Non subsidized plans and choice revelation

Advanced Premium Tax Credits (APTC) are only relevant for people who buy policies on the Exchanges.  However the subsidized universe is only about half of the entire individual market.  The non-subsidized and off-Exchange universes will help us determine how carriers embark on their Silver pricing strategies.

If an individual would have qualified for an APTC but buys an off-Exchange policy for whatever reason, they do not get any subsidy to help offset the premium.  They pay full price.  There are some non-subsidized buyers on the Exchanges.  A common case will be people with variable incomes who are not sure if they are subsidy eligible.  They may overestimate their income so they don’t have to pay the APTC back but if they have a bad year, they can collect the Premium Tax Credit the following year when they file for their tax refund.  People who know that they can not qualify for the Exchange have no reason to shop on Exchange.  Indeed, they have a mild incentive to look off-Exchange.

Policies that are sold on Exchange must be offered off-Exchange.  However carriers can offer policy and plan designs off-Exchange that they do not offer on Exchange.  Mayhew Insurance did that in 2014 with an experimental product as we needed data to see if our hunch was right (we weren’t).  Carriers can decide to only participate off-Exchange if they wish to do so.  The advantage of selling off-Exchange is that the population is a bit higher income and that tends to correlate with two things; better health and more stability in paying bills.  Even though policies are offered off Exchange, the on and off-Exchange policies in a single metal band in a state are in a common risk pool for risk adjustment purposes.

Off Exchange has a typical policy buying decision maker earning over 400% Federal Poverty Level (FPL).  On Exchange, subsidized buyers have a median policy decision maker earning around 200% FPL.  These are very different market segments.  And those differences can feed some insight into why a carrier that has the ability to capture the #1 and #2 Silver positions would engage in either a Silver Spamming or Silver Gapping strategy.

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A CAP in Illinois

What is the situation and why am I thinking it is an adverse selection event if anyone offers to write credits for the Land of Lincoln members.

Land of Lincoln was a Co-Op. It was placed under state oversight in July. It’s reserves had gotten too low due to a higher than expected risk adjustment bill and no compensating risk corridor asset. Coverage for people on the individual market will terminate on 9/30/16. That means people will be running without coverage from October 1 to December 31.

New York had a similar experience in 2015 when Health Republic was liquidated in the fall of 2015.

Normally regulators would prefer to allow an insurer under oversight to run until the next open enrollment period. That would allow their members to have continuous coverage with the least amount of disruption and added stress. However Land of Lincoln and Health Republic could not make it to the end of the current policy year. Instead, they ended mid-contract. This triggers a Special Enrollment Period as the members lost coverage due to no fault of their own.

In New York, there was an arrangement that people who were on Health Republic who signed up for a month of coverage would have their deductibles and out of pocket expenses credited to their new policies.

That is now not the case in Illinois. Blue Cross and Blue Shield is refusing to enter into a voluntary arrangement to credit deductible and out of pocket spending for any new policies it rights for any qualifying event. That is their right to do so. However, their refusal to do so pretty much forces every other Illinois insurer to also refuse to extend deductible credits.

Adverse selection is the cause of this race to mutually assured ugliness.

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Improving Meaningful difference

Jed Graham raises a good point at IBD on the problems of medicaid managed care providers spamming the exchanges in Mississippi:

A closer look at Centene’s much-heralded success reveals that competition between insurers on the ObamaCare exchanges has become toxic. Rather than being a boon to consumers looking for a good deal, competition is hurting the very people it is supposed to help…

only 40% of the subsidy-eligible exchange population is enrolled in Mississippi, putting it dead last among states which didn’t expand Medicaid and, therefore, cater to a more heavily subsidized group.

Yet the fallout was entirely predictable. Although subsidies are pegged to the premium of the second-lowest-cost silver plan in each market, Centene has been scrunching down its silver premiums by making the plans more bronzelike…. That in turns shrinks the government subsidies that are supposed to help make coverage affordable. If customers can’t afford, or don’t like, the cheap Centene silver plans on offer, they’ll have less of a subsidy to buy a bronze plan or a silver plan from a competitor.

In the largest HealthCare.gov market in 37 states, the second cheapest silver plan costs, on average, 27% more than the cheapest bronze plan this year. But in Mississippi, where Centene’s Ambetter brand is the low-cost provider, the gap between bronze and silver is only 12.6% in 2016, down from 34.8% in 2015.

Ambetter/Centene has adapted a Silver spam strategy that has been a hobby horse of mine for a while.  The goal is to proliferate a bunch of plans tightly clustered around the subsidy benchmark point.  For markets where all insurers are paying near commercial rates, this is not a big deal.  In markets where one insurer is paying Medicaid plus something or Medicare like rates and everyone else is paying commercial rates to providers, this is a big deal. It forces heavily subsidized buyers to choose between half a dozen affordable plans that are functionally similar from the same insurer or not really be able to afford a choice.

This is due to the lack of good meaningful difference regulation.  Currently Meaingful Difference regulation is a farce.
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Entrenching Medicaid Expansion

Just a pair of notes on the political entrenching of  Medicaid Expansion into the political and policy processes of the United States.

First in Arkansas:

 

Arkansas officials should consider transferring more high-cost enrollees from the private option to the traditional, fee-for-service Medicaid program, a sponsor of the law that created the program said Monday.

At a meeting of the Health Reform Legislative Task Force, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said he’s concerned that health care costs of some enrollees are increasing the cost of coverage for others in the state’s individual insurance market.

The basic mechanics of this plan would be to shift more of the expensive, high utilizing and not too healthy members from the Arkansas Private Option subsidized on-Exchange risk pool that pays providers commercial rates to the legacy Medicaid program where providers are paid (in Arkansas) about half the commercial rate. The goal is to reduce Arkansas’ state contribution to Medicaid expansion by effectively making the Expansion eligible individuals in the Legacy Medicaid pool an effective and well funded low income high risk pool while dumping all of the good risk into the private option pool to minimize nominal premium increases on Exchange.

The simpler thing to do in general would have been a general expansion with new ID cards and little else, but that will not pass in Arkansas so we get this policy tweak that actually solves a problem and probably makes everyone but the providers no worse off if not a bit better off.
 

Next, in Indiana:


 

Governor Pence pushed for the Healthy Indiana Plan v2. (HIP 2.0) to expand Medicaid. It is a convoluted bastard of conservative pet rocks and hoop jumping but it actually does cover most of the people who need to be covered by Medicaid Expansion.

It is also not an immediately disqualifying event for Governor Pence to be elevated to a national ticket.

This is how policies get entrenched even as a party bitches about them.



Texas flim flam loses

A 5-3 decision ruled that HB-2 in Texas is an unconstitutional burden on the ability of women to access legal pre-viability abortions in Texas.

A lot more from lawyers later.

The quick consensus is that complete and utter bullshit claims that restricting abortion access through running providers through the ringer are under serious threat. The Ginsburg concurrence hints that TRAAP laws (Targeted Regulation Against Abortion Providers) should be assumed to be unconstitutional. The longer term policy and advocacy goal should be to have a standard in place that anything that treats abortion providers differently than providers of other services of roughly similar risk (mole removal for instance) is an unconstitutional burden.



KY and a dry screw

Kentucky submitted their Medicaid Expansion waiver today. and it is a doozy.  There are a couple of interesting and potentially useful nuggets ( I liked the wrap-around policies so that a family that qualifies for multiple categories of aid stay on one plan for simplicity’s sake), a couple of things that I could live with but don’t like and then work requirements tied to health insurance which CMS has always shot down.

Below is a pair of screen shots from the cost justification section of the waiver that I found utterly fascinating.  The top shot is what the state projects will be the enrollment and cost per person per month (PMPM) growth without the waiver.  The  bottom is what the state projects would happen to enrollment and costs with the waiver.  The 1115 waiver is supposed to be at least budget neutral and coverage neutral.

TLDR: Fewer people enrolled at higher costs.

Let’s look at the data below the fold:

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