Geographic disparities and HR2300

HR2300 is the incoming Secretary of Health and Human Services, Rep. Price (R-GA), PPACA replacement bill. It does lots of things. One of those things is it replaces income based subsidies with age based subsidies.

Sec. 101. Refundable Tax Credit for Health Insurance Coverage
 Provides for refundable, age adjusted tax credits with amounts tied to average insurance on individual
market adjusted for inflation.1
o $1,200 for those between 18 to 35 years of age
o $2,100 for those between 35 and 50 years of age
o $3,000 for those who are 50 years and older
o $900 per child up to age 18

Besides being grossly inadequate in size, there is another problem with these subsidies. These subsidies will have massive geographic disparities. Individuals who live in low cost medical markets with large and healthy risk pools will see their subsidy cover a far higher percentage of their premium costs for a given actuarial value. Individuals who live in high cost medical markets will pay a lot more out of pocket for their premiums. Below is a map of every county on Healthcare.gov excluding Alaska. The pricing is the least expensive Silver plan with no subsidies for a forty year non-smoker. The range is significant. The least expensive Silver in the data set is thirteen counties in Texas at $199.28 per month. The most expensive non-Alaska coverage is three counties in Arizona at $754.74.

least-expensive-silver-2017

The subsidy in the price plan will let the Texas 40 year olds buy 70% AV coverage for less than $20 a month out of pocket. Given quite a few other moving parts in HR0-2300 I can’t get a firm estimate but this is a good ballpark estimate. However the subsidy for the three Arizona counties for a forty year old would be sufficient to buy 25% AV coverage and the individual is paying $500 out of pocket every month.

We’ve talked about county level inequities within PPACA through Silver Gapping and Silver Hacking

More importantly, people in Perry County who are getting subsidized will see the ACA working really well. They have good, cheap health insurance. However their cousins across the state are getting a raw deal compared to the great deal that they get in Perry County. This is especially true as we move up the income scale which means moving up the likely voter scale and influence scale.

The people in the cheap Texas counties will see the Price plan as a great deal, especially higher up the income scale as the current subsidies fade out and then fall off a cliff. The people who make under 400% FPL in Arizona will be getting a raw deal.



Open Thread: Cheap Laffs from the Peanut Gallery



Oscar lays off their underpants gnomes

 

February:

Oscar is able to get young and healthy people on an expensive network and high risk adjustment payments.  I can’t figure out their business model past the buzzwords.

March:

Oscar is incurring losses of roughly $145 Per Member Per Month (PMPM) in its biggest market.  It is charging roughly $190 PMPM in net premiums.  Some of the loss is due to risk adjustment (~$20 PMPM) as Oscar’s entire business strategy is to cater to tech savvy individuals who tend to be young and healthy…

I think there are two take-aways.  First, I still can’t figure out Oscar’s business model.

Secondly, setting up an insurance company or expanding an incumbent carrier into new lines of business and new areas is tough.

 May:

Oscar’s strategy has been to use their web/mobile technology platforms to be the hip/cool/disruptive insurer for the next generation.

The market segment that both of these plans seem to be aiming for are people who are fairly young, active, technologically savvy and very healthy….

Assuming a hypothetical individual could be covered by both insurers for the same treatment, Centene is paying significantly less per service than Harken because Centene’s basing its provider contracts on Medicaid rates instead of commercial or Medicare rates.

Centene and other Medicaid like Exchange providers are targeting roughly the same type of population but since they are much cheaper post subsidy, they are probably getting a far larger population to amortize their fixed costs over plus any service that they do need to pay for, they are paying for at a lower rate.

From here, I am having a hard time seeing how plans that have a “lifestyle” component can compete against Medicaid like Exchange providers.  Maybe it is different off-Exchange where everyone is paying full premium and “cheapness” is not a strong selling point.

June

I’ve been skeptical about Oscar as I can’t figure out their business model besides build a cool app and then profit???

Ohhh… no one has ever thought about medical management and early chronic care intervention.  My cube wall mate spends 90% of her time working on our algorithms to identify members who are likely to be expensive before they become expensive so that we can intervene. …

Oscar is trying to go narrow network or quasi-TPA support for health systems that want to run a home host insurance product that should allow them to control costs. But those strategies are common.  That is what I spent most of 2013 working on building hyper narrow networks for both Exchange and Commercial ESI.  That is what my 11:30 meeting tomorrow is about.

And August from Bloomberg:

Oscar, which pitches itself as a tech-savvy alternative to traditional health insurers, plans to end sales of Affordable Care Act plans in Dallas, a market it entered this year, and New Jersey. It’s part of a more conservative approach by the New York-based company as it plans to introduce insurance products for businesses next year….

The company said it’s quitting New Jersey mainly because its network of doctors, hospitals and other health providers isn’t a “narrow network” — a relatively closed, but lower cost, group of providers that many in the industry see as a way to keep expenses down….

In the interview, Schlosser said the company’s new plans focus more on Oscar’s strengths, particularly narrow networks. Along with lower costs, using more narrow networks gives the company a larger role in coordinating the care of its customers…

By the end of next year, Oscar wants to begin offering health plans for larger employers, Schlosser said.

I have not been able to figure out Oscar’s business model.  It was always a flashy app/front end with loads of good marketing and Venture Capital buzzword bingo, handwaving about disrupting the marketplace and then PROFIT!!!

The little bit about Oscar trying to go to the large group market segment is interesting as in some ways that is the easiest segment to operate.  Bills get paid on time, there is no risk adjustment payment flows to worry about and the population is comparatively health with comparatively low variance.  It is also a segment that is most inclined to want big networks and is the least price sensitive.  It is a hard market to get into but a fairly easy market to set up the plumbing for.

But as the reality that being an insurer is HARD sinks in, let us all have a moment of silence for all of the now laid off underpants gnomes who have nothing to do between deploying cool frontward facing tech and PROFIT.  They have a rough life so let us appreciate those gnomes.



Weirdness Open Thread: Peter ‘Bathory’ Thiel Vants to Transfuse Your Plasma

And here we all assumed Ayn Rand fanatic Thiel was just encouraging strapping young men to drop out of college and visit his palatial seasteading for the usual reasons. According to Inc:

More than anything, Peter Thiel, the billionaire technology investor and Donald Trump supporter, wants to find a way to escape death. He’s channeled millions of dollars into startups working on anti-aging medicine, spends considerable time and money researching therapies for his personal use, and believes society ought to open its mind to life-extension methods that sound weird or unsavory.

Speaking of weird and unsavory, if there’s one thing that really excites Thiel, it’s the prospect of having younger people’s blood transfused into his own veins.

That practice is known as parabiosis, and, according to Thiel, it’s a potential biological Fountain of Youth–the closest thing science has discovered to an anti-aging panacea. Research into parabiosis began in the 1950s with crude experiments that involved cutting rats open and stitching their circulatory systems together. After decades languishing on the fringes, it’s recently started getting attention from mainstream researchers, with multiple clinical trials underway in humans in the U.S. and even more advanced studies in China and Korea

In Monterey, California, about 120 miles from San Francisco, a company called Ambrosia recently commenced one of the trials. Titled “Young Donor Plasma Transfusion and Age-Related Biomarkers,” it has a simple protocol: Healthy participants aged 35 and older get a transfusion of blood plasma from donors under 25, and researchers monitor their blood over the next two years for molecular indicators of health and aging. The study is patient-funded; participants, who range in age from late 30s through 80s, must pay $8,000 to take part, and live in or travel to Monterey for treatments and follow-up assessments…

Because the RNC convention was such a multi-ring circus, I never found time to link to the NYTimes essay on Thiel’s speech endorsing Trump there. “Peter Thiel’s Heroic Political Fantasies,” frankly, presented Thiel as someone who thinks of himself along the lines of the genetic vampires in Peter Watts’ novel Blindsight — a member of a predator species only distantly related to Homo Sap.

But that’s an unduly heroic fantasy. Thiel’s just another Dives trying to avoid the final judgement — during the first Gilded Age, he’d have been visiting Switzerland to have monkey glands (or the testicles of executed criminals) sewn into his scrotum.



SATSQ: Conservative wonk edition

Via Vox, an answer to stupid or evil:

This revisionism, according to Roy, points to a much bigger conservative delusion: They cannot admit that their party’s voters are motivated far more by white identity politics than by conservative ideals.

“Conservative intellectuals, and conservative politicians, have been in kind of a bubble,” Roy says. “We’ve had this view that the voters were with us on conservatism — philosophical, economic conservatism. In reality, the gravitational center of the Republican Party is white nationalism.”

No fucking shit.

At least it updates our priors to weight willfully blind if not stupid.

Open thread



The value of 12 days

That is what this chart asks:

An $80,000 per course of treatment that is better than the previous regime. It providers, on median, an extra twelve days of life before half of the cohort dies.

Backing out some very rough calculations, that gives a quality adjusted life year cost of at least $2.5 million dollars. It could be much more as I am assuming that each day is a great day instead of probably a severely discounted day.
Update 1: Someone who actually knows WTF they are talking about passed me the Journal of Clinical Oncology CBA on this drug. I was off by a bit.

Incremental cost per life year saved
† 410,000
Incremental cost per qualityadjusted
life year
† (low impact
of diarrhea to high impact of
diarrhea)
430,000-510,000

For 2007 US Dollars.

In Great Britain, a drug that has an incremental improvement over regimes like this might be worth a couple thousand dollars. If the drug prolongs life but keeps a person in the ICU for the incremental days, its incremental value would be close to zero. If the twelve extra days on average are spent out of the hospital and in great shape, it might be worth $4,000.

In the United States, we are paying 625 100 times the British willingness to pay for a quality adjusted life year in this case.

Is that how we want to use our resources? If so, than be ready to see health care costs continue to accelerate. If not, then we need to change our intellectual property regime as well as incorporate and accept some systems of no in order to get the price for a drug like this down to reasonable levels.



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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