Expand and loot

Good news (via Politico) for Pennsylvania:

Republican Pennsylvania Gov. Tom Corbett is planning a Monday press conference to throw his support behind a version of Obamacare’s Medicaid expansion, industry and legislative sources tell POLITICO.

Corbett’s eyeing versions of expansion that rely on private-sector health plans rather than adding to the public Medicaid rolls, similar to approaches being considered in Iowa and Arkansas, according to the sources. The approach would bring in billions of Obamacare dollars marked for states that back expansion and use them to buy private insurance for the state’s poorest residents.

Medicaid expansion is a good thing for the working poor in Pennsylvania.  The Oregon study strongly indicated that Medicaid significantly improves health and quality of life for its recipients.  Pennsylvania is one of the last Obama voting states that had been holding out  and it is a large hold-out.

The bad news on this probable announcment is that the expansion is being done in a cockamanie manner designed to prove that government can’t work.  Simply expanding state Medicaid elibigibility rules would be faster and cheaper (as Medicaid pays a low reimbursement rate) than sending people to exchanges for products that have yet to be designed.  Two steps forwards, one step back and then a piroutte towards social justice…..

Gini in a bottle

Let’s head to fantasy land — no you perverts, not that one… the one where Econ 101 is an accurate description of how the health service markets work.  In this world, information is widely disseminated, products and services are clearly differentiated, no single buyer or seller has enough market power to set or demand a price that differs from marginal cost, and all costs and benefits of a purchase/no purchase decision accrue to only the parties involved in a deal.

Yes, as I specified this is fantasy land.  It is also the model that fuels the belief that the free market will solve everything so that everyone including those without significant incomes or assets will be better off than today’s status. The model is neat, it is clean, and it is wrong.

Now let’s get down and dirty talking about payer-provider negotiations and agreement zones. Read more

Payment models and death panels

JCJ asked an excellent question:

Do you think in the future insurance companies will offer a single payment for services? My question has to do with my specialty – radiation oncology. If a woman undergoes lumpectomy for breast cancer and meets criteria for hypofractionated whole breast radiation (age > 50, no previous chemotherapy, separation (sorry, technical term) < 25 cm) yet still receives a more protracted course of treatments might insurance companies be justified in paying for the only for the shorter course and let the doctor explain the difference? Similarly a man with favorable risk prostate cancer could undergo a course of treatment with radiation receiving 28 doses while at another hospital seven miles away might receive 40 or 43 treatments….

Death panels!

A really good jumping off point for discussing payment models?

You decide! Read more

Adverse Selection in New York State

Currently New York State’s individual insurance market is structured with only one of three major components of the Obamacare exchange products.  New York state requires insurance companies to sell insurance to anyone who applies for it.  This is community rating and it is a shared policy with Obamacare.  However, New York state has no mandate so the only people who are looking to buy insurance are those who are either currently sick or very strongly believe that they will soon be using a lot of medical services.  New York also has no subsidies to help people pay for their insurance.

Predictably, the New York state individual insurance market is dominated by people who are ill as no one else sees the value in buying insurance that is way too expensive for regular risk.  Below is a screenshot of the individual market rates for a single county for September 2013.  The rest of the file is here: 



The New York Times last June reported on the projected Exchange policy’s premiums.  The cost differential is significant:

State insurance regulators say they have approved rates for 2014 that are at least 50 percent lower on average than those currently available in New York. Beginning in October, individuals in New York City who now pay $1,000 a month or more for coverage will be able to shop for health insurance for as little as $308 monthly. With federal subsidies, the cost will be even lower…

 Because the cost of individual coverage has soared, only 17,000 New Yorkers currently buy insurance on their own. About 2.6 million are uninsured in New York State.

State officials estimate as many as 615,000 individuals will buy health insurance on their own in the first few years the health law is in effect. In addition to lower premiums, about three-quarters of those people will be eligible for the subsidies available to lower-income individuals….

The politicians are praising the competitive aspect of the exchange marketplace.  That is most likely a mild factor, but it is a secondary factor.  The big difference between Obamacare individual policies and current New York community issue without mandate policies is the composition of the risk pool.  The current risk pool is older and much sicker than the general population.  The new Obamacare Exchange risk pool is relatively young and relatively healthy.  These people will be jumping into the risk pool because they are mandated to do so and the subsidies in Obamacare makes it possible for them to do so. 


What’s the fee cause it ain’t free

Obamacare’s exchanges go live in three weeks and three days… or as we count time, a gross of coffee spoons.

The big news this week is that actual pricing is starting to be released in a variety of states.  The Reality Based Community passes along the fact that Blue Cross and Blue Shield of  NorthCarolina released rates on everything they are offering on the North Carolina exchange/marketplace.


take 3

(Click to embiggen)

There is  massive variance in non-subsidized costs.  The cheapest is $145 for catastrophic coverage for a 25 year old while the most expensive is a platinum plan for a 60 year old at $947 per month.  Even looking within a single level for a single age, there are significant differences in price.

What are the factors that drive these cost differences?

Read more

Hey baby, what’s your network….

Phoenix Rising asked a good question in my last health insurance post:

If you can explain a bit about in-network vs. out-of-network co-pays & deductibles, that might be really helpful for those who don’t already have an oncologist.

Every insurance product in this country has a network.  Federally administered Medicare has a network, and the smallest boutique insurance company has a network.  A single insurance company that sells multiple types of insurance (HMO, PPO, CHIP, Medicare Advantage, Exchange etc) will have multiple networks.  So let’s understand why insurance companies have networks first, and then we’ll talk about in and out of network pricing.

Read more

What are those charges…

I’m a bureaucrat at a health insurance company which most of you have never and will never hear about. My job is to be a subject matter expert on a fairly arcane set of knowledge. I have seen some posts and some great comment threads at Balloon Juice where great questions are being asked and basic mechanical knowledge would be very useful. I will be writing a series of posts over the next couple of weeks/months that attempts to explain why a profit seeking insurance company does what it does.

And yes, before I get started, I agree with the vast majority of the commenteriat here that absent massive path dependency and being able to make policy behind a veil of ignorance, I would not choose the US model or the modifications to the model that are being made by Obamacare. I would have chosen a far more comprehensive single payer system that is not a kludge of multiple previous kludges. However, that is not the world that we live in, so I am assuming profit seeking insurance companies will be around for a while.

Why do insurance companies charge deductibles, co-payments and co-insurance?  What is the point of three forms of making the buyer of insurance pay?  Why wouldn’t there be a single form?  What are the incentives and how do the different cost share payments save the insurance company money? Read more