Convergence and Blue Cross and Blue Shield of Minnesota

The big health wonk news late last week was the decision by  Blue Cross and Blue Shield of Minnesota to drop their broad network PPO individual market plans and offer only narrow network HMO plans on and off Exchange.

Minnesota’s largest health insurer, Blue Cross and Blue Shield of Minnesota, has decided to stop selling health plans to individuals and families in Minnesota starting next year.

The insurance carrier’s parent company, which goes by the same name, will continue to sell a much more limited offering on the individual market through its Blue Plus HMO.

BCBS/MN was offering a broad network PPO plan on the Exchanges.  They lost a ton of money as the plan was priced high for three reasons.  First since the plan was a broad network, each unit of service was being paid out at either standard or near standard commercial rates.  Those rates are roughly 150% to 200% of standard Medicare rates.  Secondly, the people who signed up for those plans tended to be sicker as they were attracted to access to most of the hospitals in the upper Great Plains.  Finally, for the hospitals that were not in-network, since the plan is a PPO, the members had fairly decent out of network benefits that would allow them to travel nationally for care at high cost but no higher quality facilities than they had in network.  Broad access, commercial rate paying PPO plans are Exchange money sinks.

They are money sinks even in states where there is no very low cost competitor.  In Minnesota there is at least one Medicaid like managed care company, Health Partners offering plans on Exchange.  Their baseline Silver plan in the Twin Cities is a narrow network HMO where they pay low rates and mainly attract healthy people who need coverage.  They most likely pay a significant risk adjustment outflow but it works well enough.

BCBS/MN is converging their configuration on the plan designs that work well for the Minnesota market where the providers get paid a bit less than commercial rates.  They’ll probably end up getting paid near Medicare rates, and the networks are fairly narrow with significant gate keeping HMO functions.  These design features will knock off 10% to 15% of the premium cost and allow BCBS/MN to stay reasonably competitive once risk adjustment is taken into consideration.

And none of this should be surprising as some idiot on an almost Top-10,000 blog noted this market structure in June of 2014:

The Exchange and subsidy design create the first segment of the Silver market.  All subsidies on the Exchange are based onallowing an individual to buy the second cheapest Silver plan on the Exchange for a percentage of their income. …there is a strong incentive for insurers to offer at least a  Silver plan that is either the cheapest two Silvers or very close to the subsidy cut-off. …
This segment in a competitive market should see a cluster of plans that are at the subsidy line plus or minus a couple percentage points.  These plans are the first segment.  They tend to be very restrictive in all modifiable aspects.  HMO’s with gatekeeper and strict authorization processes are likely to be here while open access PPO networks are unlikely to be in this segment.  The networks will tend to be very narrow as the pricing model is Medicare plus a small kicker…and insurance companies are avoiding the high cost providers if they can.  These are the super narrow networks where the goal is to get a Silver plan that is either top 2 or really close to top 2 in pricing.  They are aimed at people who are getting subsidies are extremely aware of every additional dollar they have to spend on monthly premiums. …

These segments were haphazardly defined in 2014 as companies were mostly shooting blind on both what the risk pools looked like and what their competitors’ strategies are.  2014 is a successful beta testing year.  I think the Silver segmentation will be much clearer in 2015 and very obvious in 2016 as more data and experience comes into play.

I was off by a year, the convergence in configuration is happening in Minnesota in 2017 instead of 2016 when I thought it would have been obvious by mid-spring of 2015 of what was working and what was not working on Exchange.

 

 

 



Good news everybody

National healthcare spending is significantly (~10%) below 2010 projections:

And people are less stressed about being able to pay for a medical bill:

Why I was told that was Unpossible

Open thread



Internet Pile-On Open Thread: Frying French

Roy Edroso, of Alicublog, casts a cold eye on David French:

I have followed French’s career at National Review for years and will just quickly tell you that he’s not only against gay marriage, he’s also against Griswold v Connecticut, the decision that invalidated laws against contraception (“Is there a single legal doctrine that can stand against the quest for personal sexual fulfillment?” French thundered); that he denounced the widespread mourning of Prince’s death on the grounds that “Prince was ultimately just another talented and decadent voice in a hedonistic culture… notable mainly because he was particularly effective at communicating that decadence to an eager and willing audience”; that he has compared Kim Davis, that crazy clerk who refused to sign gay marriage licenses, to “men like Martin Luther, John Calvin, and John Knox — the men who first put the ‘protest’ in ‘Protestant'”; that he — well, I’m out of time for the moment, but you can peruse the archive for more if you can stand it. The point is, he makes Trump look like Eisenhower…

So, even if this brief moment of pixellated notoriety has faded by evening (the Washington Post has a dutiful synopsis on an interior page, while the NYTimes settled for reprinting a couple of paragraphs from Reuters), Mr. French seems to have earned his stint as a chew toy…

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Good news everybody

The interesting thing to me in this chart besides the final outcome is that the introduction and proliferation of government sponsored insurance after 1980 to 2010 basically was sufficient to replace 1:1 declining employer sponsored coverage and not expand coverage. Legacy Medicaid picked up more responsibility, Medicare picked up more members, CHIP was a brand new program that has covered a lot of kids. But all of those programs were effectively either status quo keepers on a population basis or slowed the rate of uninsurance growth.

There are three major challenges left.

  • Reduce uninsured rate to under 2% (Massachusetts is damn close to that now)
  • Increase the value of the coverage so that it is far more useful to more people
  • Continue to bend the cost curve so that total national healthcare costs grow at or under the rate of nominal economic growth.

 



Late Night Horrorshow: Zika Is Coming, Ready or Not

I’m probably gonna get dinged for chicken-littling, because hey, no Ebola outbreak happened in America, right? And yet… “White House Ebola response coordinator from 2014 to 2015” Klain’s Washington Post article:

The good news is that both the House and Senate have finally passed bills that would provide some funding to combat the Zika virus. The bad news is that this action comes more than three months after President Obama requested the aid. Moreover, the House bill provides only one-third of the response needed; pays for this limited, ineffective response by diverting money allocated to fight other infectious diseases; and necessitates a conference committee to resolve differences with the Senate bill, meaning we still do not know when any money will finally get through Congress to fund the response…

As befuddling as Congress’ refusal to approve funds for the Zika response is, perhaps even more of a mystery is why such approval is needed in the first place. If nature was threatening us with serious injury and evacuations via fire, flood or hurricane, the president could use his authority under the Stafford Disaster Relief and Emergency Assistance Act to provide immediate aid without waiting for Congress to act. The fact that epidemic “natural disasters” are the result of disease and not an earthquake or tornado should not constrain the federal government’s ability to provide a timely, comprehensive response…

Speaking of those damaged babies? Once the Zika virus gets established in “our” mosquitos, microcephaly is going to become yet another standard prenatal test for women in the afflicted areas. Or who’ve visited those areas. Or whose male partners were exposed to Zika, even months before the pregnancy. And by the time microcephaly can be diagnosed, it’s too late for a quiet ‘medical abortion‘ — women will need full surgical services, and most will have been visibly pregnant. It’s not going to be easy for ‘fundamentalist’ anti-choicers to find reasons to blame good married Christian white ladies in the Sunbelt for having been bitten by the wrong mosquito… but I’m sure they’re gonna try their damndest.
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Sports-Adjacent Open Thread: Has the Fourth Horseman Just Shown Up in Rio?

There will never be an Olympic Games that doesn’t involve some kind of unseemly political tradeoffs (like Russia’s anti-LGTB terrorism pre-Sochi) and unfortunate aftereffects (“Bombshell Report Details Elaborate State-Run Russian Doping Program During Sochi Olympics”). But the upcoming Summer Games in Rio have scored an especially depressing hat trick, as described in Foreign Policy:

Imagine trying to throw a giant party while going through an ugly divorce — and as disease-bearing mosquitoes swarm around your badly damaged house. That, essentially, is what Brazil is trying to do as it barrels toward this summer’s Olympic Games during an impeachment crisis and an as-yet uncontrolled Zika outbreak.

On Wednesday night, the Brazilian Senate voted to impeach President Dilma Rousseff. The political crisis that has rocked the country since Rousseff was first accused of manipulating government funds during her 2014 reelection campaign has only worsened the public health crisis caused by the explosive spread of a particularly dangerous strain of Zika virus…

And now, the Olympics could help a dangerous strain of Zika go global. [Amir] Attaran, who has served as an advisor to Brazil’s Ministry of Health, argued in the Harvard Public Health Review that Zika in Brazil is much more serious than previously acknowledged, and that allowing Rio to host the 2016 Olympics will speed up a global health crisis.

Rio has the highest number of probable Zika cases in the country, and the virus is more dangerous than previously thought — and not just for pregnant women, Attaran said.

“The effects on the adult nervous system are only beginning to be studied, but the preliminary findings are not good, and suggest that exposure to the virus is linked to Guillain-Barré disease, increasing the odds 60-fold,” he wrote.

In addition, new evidence seems to demonstrate both that Zika is clearly a cause of microcephaly, which shrinks babies’ brains, and that the virus can spread through sexual contact…
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Open Thread: Deadbeat Donnie’s Veepstakes

Of course they’ll fall into line eventually — it’s what Republicans do — but meanwhile we Democrats get to enjoy the klown show. Per the Wall Street Journal, “Tensions Rise Over Republican VP Options”:

While rank-and-file conservatives are searching for a signal that Mr. Trump shares their values, Ben Carson, a former GOP rival now helping the presumptive Republican presidential nominee pick a running mate, said Thursday Democrats may be among those considered…

Mr. Carson is the public face on the search process, while top campaign aide Paul Manafort is maintaining overall tight control, according to people familiar with the campaign. In the interview, the former surgeon took himself out of the mix. “I’m not interested in doing that for a number of reasons,” he said. “I don’t want to be a distraction.”…

Given that Republican National Convention delegates aren’t bound to abide by his choice, Mr. Trump could face an arena of delegates rebelling against his running mate choice if he sends the wrong signal. “He could get to Cleveland and designate someone as his vice president and have the convention lose its mind,” said Erick Erickson, an anti-Trump conservative activist.
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