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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Late Night Open Thread: Among the Wild Libertarians

Yes, it’s almost too easy a target. But then again, they’re Libertarians, so they should be used to it by now. The NYTimes:

In a year when the two major parties are consumed by tensions, defections and chaos, the Libertarian Party, which sees itself as their alternative, displayed some of the same traits as it wrestled with nominating two former Republican governors for its presidential ticket at its annual convention over the weekend. But there was also a palpable sense of excitement at the event, held at a hotel here less than 10 miles from Disney World.

For an antiwar party that promotes legalizing marijuana and tearing up the tax code, 2016 has brought hope that acceptance in the political mainstream is imminent amid broad discontent with the probable nominees from the major parties.

The Libertarian Party is the country’s third largest by voter registration, excluding people who consider themselves independent, but it is often overlooked as a political sideshow with a hodgepodge of positions that many consider to be either overly liberal on social issues or too conservative fiscally…

Dave Weigel, at the Washington Post, is far more sympathetic:

ORLANDO — Former New Mexico governor Gary Johnson won the Libertarian Party’s presidential nomination on Sunday, fending off five rivals from different factions on two closely fought ballots and securing more than 55.8 percent of the total vote.

But Johnson’s near-miss on the first ballot kicked off an afternoon of protests and delegate glad-handing, with the vice presidential race to be decided later. Johnson had run a careful campaign with an eye on the general election, picking former Massachusetts governor Bill Weld — like him, a Republican who switched parties — as his running mate. In Saturday night’s debate, Johnson, alone among the top-five contenders, said that he would have signed the 1964 Civil Rights Act and that he thought people should be licensed to drive cars. He was loudly booed for both positions…

Johnson’s rivals, especially Libertarian activist Austin Petersen and software engineer John McAfee, saw an opportunity to drag out the process. They briefly huddled on the convention floor and worked delegates, as Johnson had unfruitful conversations with critics and then walked outside for an interview with MSNBC…

(Earlier WaPo reports here and here.)


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Peter Thiel Makes The Case For Confiscatory Taxation On Billionaires

This broke over at Forbes and is bouncing around the ‘nets today:

Peter Thiel, a PayPal cofounder and one of the earliest backers of Facebook FB +0.49%, has been secretly covering the expenses for Hulk Hogan’s lawsuits against online news organization Gawker Media. According to people familiar with the situation who agreed to speak on condition of anonymity, Thiel, a cofounder and partner at Founders Fund, has played a lead role in bankrolling the cases Terry Bollea, a.k.a. Hogan, brought against New York-based Gawker. Hogan is being represented by Charles Harder, a prominent Los Angeles-based lawyer.

Whatever you think of Gawker, Hulk Hogan, or Thiel himself, this is yet one more way in which extreme income inequality destroys civic life. It’s actually worse than many, given the clandestine way it deepens the corruption of the system that could (in theory) provide a check on the damage that purchased legislative and executive branches can do.

Lazarus_in_Heaven_and_the_Rich_Man_in_Hell_LACMA_M.88.91.91

Here’s a take on the poison here revealed from Caterina Fake:

Champerty, as third-party litigation funding used to be called (and should probably be called again!) was formerly a crime, but the commercial litigation finance industry has been growing in recent years.

Fake notes that much of such litigation is actually a form of speculation, in which rich folks gamble on the possibility of significant payout.  One can imagine the “free market” argument that such funding levels the playing field, allows those who’ve suffered real harm to recoup, and thus makes the legal system a more efficient and effective dispute-settling and behavior-changing engine. But Thiel’s pursuit of Gawker illuminates what this leads to in the real world:

Generally, people avoid frivolous lawsuits because it often exposes them to as much scrutiny as those they sue, so what is significant about this case is that by funding Hogan behind the scenes, Thiel could get his revenge, escape exposure, and influence the outcome of the case.

For the very rich, this is a win however it goes, and damn the collateral damage.

Hogan’s lawyers made decisions against Hogan’s best interests, withdrawing a claim that would have required Gawker’s insurance company to pay damages rather than the company itself–a move that made Nick Denton, Gawker Media’s founder and CEO, suspect that a Silicon Valley millionaire was behind the suit.

I leave it to the actual lawyers to weigh in on the ethics (and consequences, if any) for such a litigation approach. For myself, I’ll note that what you have here is an insanely rich guy gaming the legal system to destroy a media outfit that pissed him off.

And with that, one more thought:  Franklin Roosevelt created the social welfare state in the US as an alternative to revolution.  Today’s plutocrats might want to think about that.  In plainer terms: to remain democracies, modern democractic states need to tax polity-buying wealth out of individual hands; income taxes and a levy on inheritances.  A 90% rate that kicks in well below an estate value of a billion bucks seems a good place to start.

A blogger can dream…

Image: Cornelius Bos, Lazarus in Heaven and the Rich Man in Hell, 1547.