Sort of Maybe a Bit Like Friday Recipe Exchange on Monday: Do NOT Try This at Home Edition!!!!!

Alton Brown has been tinkering again. He’s invented a way to make ice cream in under 10 seconds. The video is below. Whatever you do, do not try this at home!

Bon appetit! And open thread.

Withdrawal for a too small company

An insurer in New York state that offered plans for 2014 will not be on the 2015 Exchange:

American Progressive Life & Health Insurance Company of New York has become the first company to withdraw from the New York State Health Exchange after failing to file a 2015 rate proposal.

The company, also known as Today’s Options of New York, operated in 37 counties across New York State, but only 384 people signed up for its plans [emphasis mine]under the first year of the Affordable Care Act….

h/t ACA Signups

Size matters a lot, and Today’s Options was too small to be even laughed at.  Why is this a good business decision?

384 people are too few people for an insurance company to offer a commercial or commercial like product for two significant reasons.  Either reason is a good enough reason for a company to get out of this market segment.

The first reason is that insurance companies are group size queens:

Actuaries and underwriters love large groups.  The bigger the better. Small groups and individuals are almost impossible to accurately price.  Big groups allow statistical approximations to approach population realities while the error bars on a small group are massive.  Massive error bars make underwriters and actuaries cry…

A large group smooths out the random noise and makes the cost of covering the sick lower due to both lower administrative costs and lower variance costs.

384 people in a single risk pool is an inadequate risk pool unless there is massive and costly reinsurance on the back-end.  At this point, a fully insured group of this size could see the risk pool blow up if there is one more drunk driver than projected, if there is one more conversation that ends in “Hold my beer and watch this”, if there is one more cancer diagnosis than projected.  An unexpected $350,000 claim is a massive miss.  A risk pool of 5,000 or even better 100,000 people in it can absorb a little claims noise far better than a risk pool of 384 people.

Secondly, preparation to file for a new plan year is expensive as hell.  I was intimately involved in filing Mayhew Insurance’s 2015 options, and I would guess that this effort was at least 35 man years where most of those man years are not cheap man years. Our filing was complex. Filing a single basic plan design at different metal levels which is what it looks like Today’s Options did in 2014 is a simpler task but it will still eat up several man years to prepare a comprehensive filing.

Mayhew Insurance could afford to invest the time and manpower in the filings for two reasons. First, we have an enrollment base to cover the costs. Secondly, we’re historically a general services insurer and a long term chunk of the strategy is to be able to play in all levels of the market.  Taking a short term loss may be acceptable.  Today’s Options is fundamentally a Medicare Advantage company with low margins and it was attempting to make a quick play for a virgin market.  Butting its collective head against the wall while losing money is not a good idea for a secondary line of business.

Since there were only 384 members with an allowable administrative overhead of 20% which has to cover everything, filing costs and regulatory compliance expenses most likely overwhelmed Today’s Options’ cost structure.

From a policy point of view, unpopular and comparatively expensive plans exiting the marketplace is a good thing in states with deep markets and significant participation.  It sucks that 384 people will need to find new policies next but they are highly likely to get better and cheaper policies instead.  Most insurers are using 2014 as a beta test year, and some insurers will figure out that the test failed, so we should expect to see insurers with minimal enrollment leave the markets.

Co-ops and customization

Health insurance co-ops were the last vaguely plausible door prize for progressives and others who wanted a robust public option tied to either Medicare rates or at least open negoatiation by CMS with providers.  Co-ops were sacrificed at the alter of austerity in the budget showdowns as the federal start up funds and loan guarantees got whacked.  And honestly, I’m of the opinion that the tax structure of an insurer has some but not too significant influence on quality.  There are some great local non-profit insurers, and some shit-tastic local non-profits; there are some great national for profits as well as great national non-profits as well as bottom feeding scumbags that make the industry slightly less popular than Congress.  More important, in my mind has always been the structure and integration of an insurer with providers. 

However, the co-ops seem to be proving me wrong in the first year.  This is a nice little surprise.

Bangor Daily News on March 16 reported on the Maine co-op: (BTW — Bangor Daily News does excellent healthcare reporting in general)

In Maine, the insurer that has enrolled the most Affordable Care Act customers isn’t the state’s well-established Blue Cross Blue Shield plan, owned by WellPoint Inc. It’s WellPoint’s only rival: Maine Community Health Options, a startup that didn’t exist three years ago.

The newcomer, funded primarily by taxpayer money lent under the U.S. health care law, has won about 80 percent of the market so far in Maine’s new insurance exchange…

Along with Maine, co-ops have attained large market share in New York, Iowa, Nebraska, Colorado, Kentucky, Wisconsin, South Carolina, Utah, Montana, Nevada and New Mexico, said John Morrison, a board member and founding president of the co-op trade group, and other executives.

New York’s co-op, Republic Insurance of New York, which was founded by the same organization, Freelancers Union, that started Bonder’s company in Oregon, is probably the largest in the country, with more than 50,000 members….

Federal authorities have approved plans by the co-ops in Montana, Massachusetts and Kentucky to expand into neighboring states next year — Idaho, New Hampshire and West Virginia, respectively.

This is some great news.  I think the co-ops that are succeeding are succeeding because they are new entrants to the market and can craft their strategies to fit the market as it is without worrying about creating problems for other business divisions. Co-ops that only sell Exchange qualified products to individuals and small groups don’t have to worry about pissing off their providers who also serve their large group and Medicare Advantage populations as the co-ops don’t have large groups or Medicare Advantage to worry about.  They are able to craft narrowly tailored strategies that fit the needs of the people who are shopping on Exchanges. 

Incumbent insurers who offer a broad array of products to multiple market segments (individual, Exchange, small, medium, large group, Medicare Advantage, Medicaid managed care, CHIP etc) don’t have the luxury of narrowly crafting a strategy for a small but growing market segment in isolation.  Exchange decisions will be influenced by the need to keep large group markets happy.  For instance, an Exchange decision to offer Medicare plus 1% pricing for Exchange may not fly as the providers have the leverage of withdrawing not just from Exchange but from the commercial large group markets where they were getting Medicare plus 30%.  Or the decision to require referrals from an Exchange HMO but not a large group EPO will provoke provider resistance as their job just got more complicated for only a small population. 

I think the most important line from the report above is the expansion of three co-ops into West Virginia, New Hampshire and Idaho.  Idaho has an insurance market in 2014 that had multiple companies offering Exchange plans.  West Virginia and New Hampshire were single company states on the Exchange in 2014.  That means the sole insurer was mainly competing against itself and the state regulator’s ability to limit “outrageous”.  Co-ops are a viable competitor that will at the very least keep the big boys more honest.  And given the Maine experience, they could overrun the market.  I have doubts about that as the big insurance carriers will have a year of name recognition and the rules of the 2015 open enrollment period default people into sticking with what they bought in 2014, but competition is a good thing.



There are worse things than forgetting.

911_muffinsVia Gawker, here’s a candidate for the most crass corporate co-opting of 9/11 ever. With the exception of the event’s hostile takeover by Bush, Inc., of course.

As I was dropping my teenager off at school this morning, the radio announcer spoke the date, September 11th. The kiddo groaned, “Oh god, is it 9/11 today? That means we’ll have to watch boring movies and talk about 9/11 in every class. Again.”

She doesn’t remember 9/11. She was a toddler then, and now she’s a lanky high schooler. 9/11 feels like a dim artifact of history to her, like the Kennedy assassination felt to us Gen Xers — an event that scarred our parents but was experienced by us kids as an iconic video. Maybe this is a good thing.

[X-posted at Rumproast]

Why do you keep passing the open windows?


Scoff if you must (and some of you will), but this blog is a community of sorts, and many of us have had a tough time lately. One thing that continues to amaze me, not just at Balloon Juice but in life generally, is the range and diversity of how people deal with anger, sorrow and pain.

Some people drink themselves into a stupor. Some people eat or smoke too much. Some people loll in front of the TV until they nod off. Some people read all the time. Some people create – food, art, prose, poetry, needlepoint, knitting, etc. Some people focus on their families or pets. Some people shop. Some people pursue romance or at least sex. Some people drive around aimlessly in a car or on a bike or wander around in the dark on foot.

With the exception of knitting, I’ve engaged in every single one of those activities at some point as a way to convince myself to keep putting one foot in front of the other. Obviously some of these activities are more healthy than others, but I’m not sure it’s the activities themselves that are important as a way to get through a shitty time but rather the distraction they provide.

Those are all ways to stay occupied and/or distracted, so “stay occupied and/or distracted” is the underlying strategy. Maybe every coping strategy is a species of this, but I’m not convinced that’s true. For example, I’ve been on a few heinous hamster wheels of suck in my life where I had to force myself to stop just occupying my time and make a radical change to disembark. I had to leave that horrible job or get out of that toxic relationship, etc., even though it was scary as hell at the time.

That was the only way back to (relative) mental health. I’m not suggesting that making a radical life change can cure clinical depression, which I believe is a chemical imbalance that is just as much a medical condition as diabetes. But I think we do have the power, in some cases, to change our lives in a way that can jolt us out of feeling so sad or angry or downtrodden or ashamed. And doing so can improve our overall mental health, just as lifestyle changes can mitigate the course of certain types of diabetes.

So even though I’m afraid of where this thread might go, I’m going to ask anyway: Have you ever found yourself languishing on some horrible hamster wheel of suck and found a way to change your thinking and/or actions enough to get off of it? In a world that is so filled with sadness, impermanence and pain, what makes you keep passing the open windows?

Happy Emancipation Day

One hundred and fifty years ago today, President Abraham Lincoln signed the Emancipation Proclamation.


Here’s the money quote:

Whereas, on the twenty-second day of September, in the year of our Lord one thousand eight hundred and sixty-two, a proclamation was issued by the President of the United States, containing, among other things, the following, to wit:

“That on the first day of January, in the year of our Lord one thousand eight hundred and sixty-three, all persons held as slaves within any State or designated part of a State, the people whereof shall then be in rebellion against the United States, shall be then, thenceforward, and forever free; and the Executive Government of the United States, including the military and naval authority thereof, will recognize and maintain the freedom of such persons, and will do no act or acts to repress such persons, or any of them, in any efforts they may make for their actual freedom.

Read more

If You’re Looking for Signs of the Apocalypse

Franklin Graham must not read Rolling Stone, because this is worse than four horsemen, or even a black President.

Also, too: nice pearls. Are they cultured?