Arizona’s odd lack of segmentation

A friend of the blog passed me the Arizona approved rates for the 2017 Exchange year.  They look really odd to me.  Not the premiums (#’s are for 40 year single non-smoker with no subsidy), but the plan offering array seems very strange.

I really want to look at two rating areas to pull out the oddness.



The Silver Spam and Silver Gap strategies are fundamentally market segmentation plays exploiting the subsidy attachment formula.  Market Segmentation is one of the first Neat Little Tricks taught in business school.  Creating slightly different products at slightly different prices allows for higher allocation of transactional surplus to the produce instead of the consumer or society in general.  That is why there are 12, 16 and 20 ounce soda bottles of the same brand in the grocery store.

Rating Area 3 has two pieces of oddness leaping out at me.  The first is the massive price differential between the catastrophic and the Bronze plans.  Bronze has slightly more actuarial value than Catastrophic.  The two major differentiators is that Bronze is subsidy eligible while Catastrophic is restricted to under 30 without subsidy.  Additionally Catastrophic is a distinct risk adjustment pool.  Getting out of the really sick risk pool and only selling to young people leads to a much healthier and cheaper product.  That is interesting but not too interesting to me.

In Yuma, the intriguing thing is that Blue Cross and Blue Shield of Arizona is only offering a single Silver plan.  Subsidies will be base based on that single plan.

This is really weird and I am professionally puzzled.  We know that BCBS-AZ can take a plan type (HMO) and a network and build out two distinct policy offerings. They did that with their Bronze offerings in the same rating area.  The big lift in building a plan offering is assembling a network and building the utilization management and plumbing for a restrictive product type like an HMO or an EPO.  Adding slightly different cost-sharing components to the base of a network and plan type is dirt cheap.  It requires little incremental actuarial work, it requires little incremental system plumbing, it requires little incremental provider outreach.  The incremental cost of adding a new cost-sharing arrangement once you’ve done the hard work of building the base plan is low.  And you can justifiably offer a tweaked plan at a slightly different price point.  And that slightly different price point rejiggers the subsidy attachment point which makes the less expensive Silver plan more affordable post-subsidy.  A minor tweak improves the local risk pool incrementally.

Now Maricopa County (Rating Area 4) is not as odd.  Health Net of Arizona is doing a moderate Silver Gap.  Their less expensive Silver will be $32 less than the second least expensive Silver.  For an individual making $18,000 a year, the less expensive Silver is roughly half the post-subsidy price as the benchmark Silver.

The odd, to me, thing about the HNAZ strategy is again segmentation.  They’ve shown they can tweak their benefit configuration from a common base to get distinctive price points for their Silver product.  I am surprised that they are only offering a single Bronze and a single Gold plan on-Exchange.  Adding a few clones would be very low cost and it would allow them to more effectively segment the market.

I don’t know why these decisions were made.  They just seem odd to me.

King of Hearts

Republicans in the Arizona state legislature, not content to twiddle their thumbs whilst SB 1070 navigates the courts, have introduced new legislation challenging birthright citizenship:

The aim is “to trigger … a Supreme Court review of the phrase ‘subject to the jurisdiction thereof’ in the 14th amendment,” said Rep. John Kavanagh, one on the backers of the legislation.

It ultimately seeks “to deny citizenship to any child born of parents who are not citizens of the United States, be they illegal aliens, or foreigners on business or for tourist purposes,” he added.

A total of four proposals were introduced, two in the state House of Representatives and two in the Senate, where Republicans have a majority.

Meanwhile, Sheriff Joe and Steven Seagal took to the streets with deputies and a posse to round up the illegals:

In Phoenix, Maricopa County Sheriff Joe Arpaio on Thursday kicked off a sweep to crack down on illegal immigration.

Aside from his deputies, Arpaio also relied on volunteer members of a newly formed Illegal Immigration Enforcement Posse, who took to the streets in a two-day countywide operation targeting drop houses, drug activity and human smuggling, said sheriff’s spokesman Sergeant Jesse Spurgin.

Action flick star Steven Seagal is a member of the sheriff’s posse, and he took part in the operation, Spurgin said. Twenty-two suspected illegal immigrants had been arrested by late Thursday, he said.

The legislation Arizona lawmakers introduced on Thursday is part of a coordinated drive by Republican legislators in several U.S. states that seeks to deny birthright citizenship to the children of illegal immigrants.

Truly, the inmates have taken control of the asylum.

These are the same people who want to cut 280,000 thousand poor people off the Medicaid rolls in Arizona, who want to slash education funding from K-12 and public universities – all because it’s impossible to pass any tax hikes beyond a measly, temporary jump in the state sales tax. Jan Brewer wants to create a state college system to run alongside the University system to offer a lower cost alternative (along the lines of California’s parallel institutions). But this is no fix to an immediate budget crisis! This is a long-term plan that certainly may have its merits – I’m skeptical given it comes from the governor’s desk – but it’s no short-term fix. If anything, it’s a disguised attempt to pull more funds from the existing higher education system and funnel them into a theoretical state college system. I have my doubts those funds will end up where they say they will. This is not the first time the legislature has attempted to rob the coffers of other state programs – attempts that have been rejected time and again by Arizona voters. The same voters who, inexplicably, keep electing these people to office.

But hey, at least Arizona students and faculty will be able to carry guns on campus.

What bloody madness.

I think Arizona is a wonderful state. It’s sunny, diverse, has quirky artsy towns like Gerome Jerome (I always misspell that) and Bisbee, and the super-quirky Arcosanti. We’ve got legal medical marijuana and soon will have a dispensary system. The state is actually quite a lot more diverse than reports like these would have you believe – bordering purple, and trending that direction (which may explain the reactionary nature of its current government). But these bills that keep coming up just get crazier and crazier. Nothing has done more to push me leftward politically than watching the consequences of these red-meat politicians and their paranoid, revanchist legislation.

Angels & Bikers


One silver lining in the ongoing saga of the vile Westboro Baptist Church funeral protests is that wherever they go Americans unite against them. The Arizona State Legislature has passed a law preventing protesters to come within 300 feet of funerals. And Arizonans are organizing a counter-protest to keep the family and other mourners of the nine-year-old girl murdered this past Saturday, Christina Green, shielded from the hateful signs and chants of the Westboro clan.

Within hours of the church’s announcements, Facebook groups sprang up to plan actions surrounding the funerals that would keep the church members separate from the mourners.

Tucson just isn’t that kind of town, says Christin Gilmer, 26, referring to the actions of the church.

“For something like this to happen in Tucson was a really big shock to us all,” she said. “Our nightmare happened when we saw Westboro Baptist Church was going to picket the funerals.”

Gilmer and others are planning an “angel action” — with 8-by-10-foot “angel wings” worn by participants to shield mourners from picketers. Angel actions were created by Coloradan Romaine Patterson, who was shocked to find the Topeka church and its multicolored signs outside the 1999 funeral of Matthew Shepard, a young gay man beaten and left on a fence to die in Laramie, Wyoming.

Bikers will be there, too, as they so often are at these counter-protests:

“It makes me sick to my stomach,” said Glen Littell, who’s bringing a pack of bikers from the Phoenix Motorcycle Rider Group to Tucson on Thursday. “They’re a stench from a slaughterhouse. We’re just going to block the stench so the family can catch their breath.” […]

Littell has notified the Pima County Sheriff’s Department and has reached out to several other biker groups notifying them of their planned presence at Green’s funeral. He crossed his fingers that the Hells Angels would join them.

“Nothing says stand back and be silent like a Hells Angels presence,” he said.

Littell added that if the church moves on to picket other funerals, his riders will follow.

“We’re getting word there’s gonna be a pretty large presence of bikers,” he said. “Word’s spreading. And spreading quickly.”

With so much awful, rancorous division in this country it’s good to see people coming together in defiance of hatred. There is something beautiful to me in this battalion of angels and bikers come to shield the grieving. A bright streak of humanity in an otherwise dark hour.


Thanks to commenter JPL for this update:

KANSAS CITY, MO (AP) – A controversial Kansas church has decided not protest at the funeral of a 9-year-old girl killed in Saturday’s shooting rampage in Tucson, Ariz.

Shirley Phelps-Roper of the Westboro Baptist Church in Topeka, Kan., says church members will skip Thursday’s funeral of Christina Taylor Green.

Phelps-Roper was interviewed Tuesday by a station in Toronto, Canada, and is scheduled to be on a morning talk show Saturday. She says Westboro Baptist Church decided not to picket in exchange for the airtime.

Phelps-Roper says the group will picket the funeral Friday for U.S. District Judge John Roll and at the intersection where Congresswoman Gabrielle Giffords and others were shot.

The Arizona Legislature unanimously passed a measure Tuesday banning protests at or near funeral sites.

The Topeka Capital-Journal first reported the church’s decision to skip the girl’s funeral.

A simple voter’s guide to the Arizona elections

I’ll confine my advice to the state-wide propositions. You can basically assume that anyone you vote for in Arizona with an (R) next to their name is going to be well to the right of Barry Goldwater and most Democrats are going to vote similarly to your moderate Northeast Republicans. Arizona is far from the reddest state – despite our rumblings to the contrary lately, and despite the fact that we reelect Sheriff Joe year after year – but our political class is generally kooky.

Anyways, as a rule, if the Proposition in question has been sponsored by the state legislature: vote No. If it is a voter initiative, you’re probably on much safer footing (think medical marijuana). When in doubt – and I hate to say this, but if you haven’t bothered to read up on the Propositions – when in doubt, just vote No on everything. That’s the lesser evil. Here’s a quick guide to the Propositions if you actually want to know a bit more about just what the AZ legislature has up its sleeve, and go to the polls Tuesday a tiny bit better informed.