The individual market under AHCA V2

This is going to be a wonky, speculative post as to what the individual insurance market could look like under the AHCA as rumored to be as of 0030, March 23, 2017. I want to speculate about how insurers would do their plan designs.

The major policy planks that would influence plan design are the following:

  • Guarantee issue at a universal price (community rating)
  • No Essential Health Benefits
  • No actuarial value requirements
  • 5:1 premium rating
  • Risk adjustment is either ineffective/easy to game or gone
  • Fixed, age based subsidies
  • No ability to transfer surplus subsidies to HSA

Smart insurers will bifurcate their product design.  They can’t underwrite their way to a healthy risk pool so they will use benefit design to segment it instead.

The first stream of product design will be aimed to cover very little.  The primary objective of these plans are to be priced at the subsidy point.  They will be very narrow networks with no major academic medical centers involved; their benefits will be designed to drive away sick people with chronic conditions.  For instance, asthma inhalers or insulin or Epi-Pens might not be covered.  Hep-C drugs would not be covered.  Maternity care would not be covered except after a $15,000 stand-alone deductible. They will use donut benefit designed principles where the first couple of PCP visits are no cost sharing but everything else comes with $300 co-pays and $20,000 deductibles.  Utilization is designed to be very low and the population that will choose these policies will have to be very healthy.

The selling point for this plan is that it is free out of pocket after the subsidy AND it is sufficient to not incur the continuous coverage 30% premium penalty.

For the 50% of the population that drives 3% of the spend, this will be sufficient for most people as long as they don’t get hit by a bus nor come down with cancer during the policy year.

The other path of coverage is a full service insurance for the sick.  It is a privatized and non-inclusive high cost risk pool.  It will offer a network with top tier hospitals, it will cover chemotherapy.  It will cover the cost of chronic disease management.  It will look a lot like the insurance people get from their jobs.  It will be massively out of reach for most people with chronic conditions as the subsidies will be grossly inadequate and the cost of care for some conditions are more than half the median income of an American family.  But “access” to a good policy will be there.

There are a lot of moving parts so this is purely speculation but if I was working for an insurer, that is the strategic choice that is clear given the rules of the AHCA.



Late Night Comic Relief Open Thread: To… the Moon, and Beyond!



Out Of The Closet: I Am a Freemason

Meet on the level, part on the square

I figure it’s about time to share an important part of my identity at 47: I am a Freemason. For most of you, that’s not necessarily interesting or of note; for some, it is likely a badge of dishonor. For a few men, I hope it’s a sign of Brotherhood. I would like to share a bit about this sub-culture with you as I think it is a good use of my time and attention.

When I was first made a Mason, I was shocked to find out that the values of a centuries-old organization were so appealing that, on the spot, I realized that I was born to be a Mason. As I am decidedly not a joiner, this was a major surprise. And although I am not currently active in a Lodge, I still read, think upon the lessons, symbols, and men that have made me a better person.

Question at the Door

Q: Who comes here?

A: Mr AB, a Free man, of good report, and well-recommended.

Freemasonry is about the never-ending pursuit of the Light. This Light is Enlightenment, as in The Enlightenment. We value morality, education, knowledge, insight, wisdom, and Charity. And Liberty. That’s a very important one – we are all Free men.

The American Revolution was planned by many Masons meeting in and around Boston in pursuit of these values, and they helped shape this country’s legal and philosophical systems. And although it’s become a very conservative Brotherhood in many states as the fraternity has pulled in fewer, less-educated members, there is still a spark of the true Liberal spirit that remains.

King Solomon's Temple

We have lessons, stories, rituals, and procedures that use stories from the Old Testament as a cloak. A central theme is King Solomon, the building of his Temple, and its perfection. There are just three levels in Masonry – Entered Apprentice, Fellowcraft, and Master Mason – as each class of stone masons was employed in building the Temple.  All other degrees beyond these three come from associated Masonic organizations such as Scottish Rite and York Rite. The Shriners are one of the most well-known Masonic organizations, but there are others – Order of the Amaranth, Order of the Eastern Star, Royal Order of Jesters, etc. And there are a number of Masonic bodies for children, mostly to inculcate an interest and understanding of Masonic values so that when they are older, they become lifelong members.

Read more



America’s Food Sourcers: The Common Clay of the New West

Actually, I don’t think the farmers in the following articles are idiots — they’re just ideologues. To the point of religious obsession. Sure, superior people like us are motivated by monetary rewards, but you can’t expect dumb minimum-wage workers to respond to such refined incentives!…

From the NYTimes, another sad story of Trump supporters who took him seriously-not-literally — “California Farmers Backed Trump, but Now Fear Losing Field Workers“:

MERCED, Calif. — Jeff Marchini and others in the Central Valley here bet their farms on the election of Donald J. Trump. His message of reducing regulations and taxes appealed to this Republican stronghold, one of Mr. Trump’s strongest bases of support in the state.

As for his promises about cracking down on illegal immigrants, many assumed Mr. Trump’s pledges were mostly just talk. But two weeks into his administration, Mr. Trump has signed executive orders that have upended the country’s immigration laws. Now farmers here are deeply alarmed about what the new policies could mean for their workers, most of whom are unauthorized, and the businesses that depend on them.

“Everything’s coming so quickly,” Mr. Marchini said. “We’re not loading people into buses or deporting them, that’s not happening yet.” As he looked out over a crew of workers bent over as they rifled through muddy leaves to find purple heads of radicchio, he said that as a businessman, Mr. Trump would know that farmers had invested millions of dollars into produce that is growing right now, and that not being able to pick and sell those crops would represent huge losses for the state economy. “I’m confident that he can grasp the magnitude and the anxiety of what’s happening now.”…

Dude, the old man can barely grasp how to work a light switch. You think he cares about your troubles, now that he’s sitting in the Oval Office (possibly in the dark)?
Read more



Slim hope open thread

My only hope for the new year is that 2017 is not telling 2016 “hold my beer and watch this…..”

 

Open thread



A few notes on Replace

This tweet tree is an interesting indicator of the behind the scenes Replace state of play:

The first thing in health policy is to always follow the money.  Covering sick people means spending money.  The question is always how much money and who is spending that money.  We’ll know very quickly if there is an actual replacement plan that is way too heavily focused on HSAs but actually tries to provide some useful coverage to a reasonable number of Americans or if it is a Potemkin plan by looking at the top line CBO scoring of the expense of the coverage provisions.  This runs into a potential Norquist problem but the money is the big thing to review.

This piece from the Washington Examiner is interesting regarding the Norquist problem:

Republicans are searching for a way to capture savings from repealing Obamacare in a piggybank they could later use to fund a replacement.

It’s not clear how or if such a maneuver would work, but if Republicans are successful, it could overcome the tricky political problem of paying for whatever health reform they try to put in the Affordable Care Act’s place….

If Republicans find a way to set that money aside, in a bank account of sorts, they could use it to pay for measures that are more palatable to conservatives but still expensive, such as the age-based tax credits House Speaker Paul Ryan has proposed to help Americans buy health insurance.

 If this is a convoluted work-around of a self-imposed constraint, then there is a chance in hell that there could be a vaguely adequately funded bill.  I am not betting the house on it, but I might bet one soccer game referee fee on it.

There have been numerous wonks tearing their hair out about the mechanics of implementation.  My estimate derived from my time spent as a low level plumber :

Any big bill will have major rule making. Any big bill will require insurers to reconfigure and retweak their systems. I worked 70 hour weeks from roughly July 2012 to October 2013 to get my little part of the QHP Exchanges to a point where the user facing chunk was minimally functional. I then spent another six months getting all of the back-end mechanics of directory and network information working cleanly in an operational, no human intervention sense.  (I was up 53 of the 60 hours before October 1, 2013 launch date getting the final network directory ready to launch).

The ACA had roughly a 45 month ramp up period from signature to going live on the major components….

If the Replace Bill is anything more than a rebranding of the law and a dropping of subsidies, required actuarial value and essential health benefits, insurers need at least eighteen months from the signature to get something together and preferably 18 months from when CMS issues the big rules to get a good launch

IF the discussion is now on a four year transition period, some semblemance of reality may be at least temporarily be injected into the conversation.  Three years after a signature on the Replace Bill is a bare minimum and four years is a reasonable build-out time.



Reminder: The unpopular stuff was needed

Via TPM, Senator Corker (R-TN) is stating an impossibility:

“You really do have to have 60 votes to replace and you know reconciliation can create some hangover effects as we’ve seen with the health care bill itself and with the Bush tax cuts and all of that so are you better off going ahead and attempting to put something in place that will work that does away with all the negatives that exist in ACA, but builds on some of the positives?” Corker asked. “Again, President-elect Trump mentioned, I thought wisely during the campaign, that replacement and repeal should be done simultaneously.”

The negatives (mandates, reinsurance, risk adjustment, risk corridors) and the annoying (narrow networks, HMO’s, high cost sharing) were needed to make the popular stuff work (guarantee issue, community rating) work.  Definitions as to what counted as a qualified plan were needed.  Definitions as to what counts as an essential health benefit were needed.  All of the negatives were needed .  They can be tweaked and twisted.  The continual enrollment concept changes the form of a mandate but performs the same function of making going without coverage too expensive to be attractive.  The negative stuff was not put into the bill for shits and giggles.

About the only major things in the medical coverage expansion sections of the ACA that don’t need the negatives of the ACA are Medicaid expansion and the Under-26 coverage expansions.  Those are easy things that are severable from the core of the three legged stool.  One is state by state single payer and the other is an expansion of multi-payer community rated/guaranteed issue coverage.

We’ll see this refrain at least four times a week for the next four years.  Health policy is hard even if the objective is to present a patina of coverage in order to loot.  Actually providing a usable coverage expansion is harder.

 

Update 1: Victor in comments makes a very good point:

I think it is also fair to point out that most of the stuff on the revenue side was also unnecessary. The ACA can work without the employer mandate or the cadillac tax although the Cadillac tax is a good economic policy. The employer mandate was a fine rule from a fairness issue but can easily cause labor market distortions.