Risk Adjustment — all clear

In Mayhew On Insurance by David Anderson

CMS released an interim final rule for the 2017 risk adjustment budget neutrality assumption last night.  Given the subject matter, it is scintillating reading. TLDR: All is well (except insurance finance directors’ blood pressure) HHS has published their thought process as to why risk adjustment for 2017 should be budget neutral and we should expect risk adjustment payments and receipts that are due to move around in the next two months to start moving normally. This approach supports the overall goal of the risk adjustment program to encourage issuers to rate …

Spreads and Levels

In Mayhew On Insurance by David Anderson

This is just the annual reminder of three critical points about the individual market in the ACA: 1) The ACA individual market is a county level story. 2) Subsidized buyers really care about the premium spread. 3) Non-subsidized buyers really care about the premium level. The initial rates coming out of Philadelphia illustrate all three of these points. Pennsylvania is seeing effectively flat rates for 2019. Philadelphia is seeing a significant price decrease as a new insurer, Centene is entering the market and will deploy a very narrow and low …

Retroactive claims and administrative burden

In Fuck The Poor, Mayhew On Insurance by David Anderson

Last week, Kentucky announced that the state Medicaid program would start paying for dental and vision benefits again after those benefits were cut in a snit-fit when a federal judge noted that the point of Medicaid is to pay for medical expenses.  Normal benefits will resume on August 1.  Claims will be paid for services rendered in July. My days as an insurance company plumber forced me to cringe.  Paying retroactive claims after a blanket denial is a good way to light administrative money on fire.  A well run claim …

Defensive medicine is 4% or 5%

In Mayhew On Insurance by David Anderson

One of my Duke Margolis colleagues, the economist Michael Frakes in conjunction with Jonathan Gruber at MIT took advantage of a really interesting identification opportunity to estimate the impact of defensive medicine.  Their results are at NBER.  A key question surrounding this debate, however, is just how large these costs really are. Some have argued that defensive medicine is the major driver of excessive health care spending in the U.S. Former Congressman (and former Secretary of the Department of Health and Human Services) Tom Price suggested in 2010 that as …

Spread-em

In Election 2018, Mayhew On Insurance by David Anderson

Right now, as I am looking at the initial rate filings (compiled by KFF and Charles Gaba), I feel like I am back into my CSR thought process of last summer. I am seeing a very different universe than the political class. Last summer, I was arguing that if CSR was terminated, the incentives would not line up for a reinstatement. I also noted that the bump in advanced premium tax credits that were not supported by the underlying claims cost would make 1332 waivers easier to file. This year, …

Risk adjustment update

In Mayhew On Insurance by David Anderson

The Office of Management and Budget (OMB) received an interim final rule from Health and Human Services (HHS) regarding the retrospective justification of the risk adjustment process in the ACA:   https://t.co/UkOPSjZt5D pic.twitter.com/eTcYwTVTwK — Adrianna McIntyre (@onceuponA) July 19, 2018   This is good news. I have not been too worried about the risk adjustment suspension. My concern-o-meter had been at 3% for the past two weeks. Everyone who I have talked to who is clued in with CMS has said that the risk adjustment hold was highly likely to …

The never-ending story (CSR version)

In Mayhew On Insurance by David Anderson

Cost Sharing Reduction (CSR) litigation is the story that will never end. Update: The court has instead opted to dismiss the case; but states can bring action again if circumstances change i.e. Admin blocks silver-loading in 2020 and beyond. IHP story TK @nicholas_bagley @charles_gaba taking comments ! https://t.co/cPHJlmehsH — Amy Lotven (@amylotven) July 18, 2018 The back story is that when the Trump Administration terminated CSR payments in October 2017, many states, led by California sued.  The district judge identified that most states used a Silver Loading or Silver Switching …

Silver Gapping in 2019

In Mayhew On Insurance by David Anderson

As I wrote earlier this week, Democrats should not expect significant political help from ACA rate increases this fall. Insurers seem to have overpriced their 2018 rates and that is eating a lot of the rate increases we would have expected from the new policy changes of no individual mandate, proliferation of 364 day underwritten short term plans and the new rules on association health plans. We should also expect even larger Silver spreads which will provide better deals to subsidized buyers. Non-subsidized buyers will continue to be kicked hard …

And now for some good news

In Election 2018, Mayhew On Insurance by David Anderson

Idaho is putting Medicaid Expansion on the ballot this fall:   Congratulations! #medicaid expansion will be on the #idaho ballot in November! Regular Idahoans put in countless hours of work talking to their friends and neighbors to make this happen, gathering so many signatures we blew state req.s out of the water! pic.twitter.com/lRTlpzwbtj — Idahoans for Healthcare (@ID4Healthcare) July 17, 2018   So if you live in Idaho, you know what to do — go vote And if you live anywhere else in this country, do the same thing — …

Deductibles and distribution

In Mayhew On Insurance by David Anderson

The Kaiser Family Foundation and the Peterson Center on Healthcare tracks cost sharing and premiums for employer sponsored insurance (ESI).   I am using their Table 1 data to look at the distributional consequences of benefit design changes. The blue line is the actuarial value.  It has hovered at about 85% over the decade of data.  Insurers pay roughly 85% of the incurred claims.  15% of the claims are paid by individuals through cost sharing.  The implied challenge is that medical costs are growing significantly faster than wages so total spending …

Don’t expect as much premium announcement shock for the midterms (V2)

In Election 2018, Election 2020, Mayhew On Insurance by David Anderson

Three weeks before the midterms Democrats should not expect to see nationwide headlines of 15% or 20% or 25% rate increases on the Exchanges.  There will be some states and some insurers with those types of rate increases, but there will be a number of insurers with either “normal” increases of less than 10% or actual rate decreases. If insurers priced perfectly for 2018, we would expect the following factors to drive premiums for 2019: Normal Medical utilization (+7%) Repeal of the health insurance premium tax (-3%) Repeal of the …

Don’t expect as much premium announcement shock for the midterms

In Election 2018, Election 2020, Mayhew On Insurance by David Anderson

Three weeks before the midterms Democrats should not expect to see nationwide headlines of 15% or 20% or 25% rate increases on the Exchanges.  There will be some states and some insurers with those types of rate increases, but there will be a number of insurers with either “normal” increases of less than 10% or actual rate decreases. Insurers massively overpriced for 2018. If insurers priced perfectly for 2018, we would expect the following factors to drive premiums for 2019: Normal Medical utilization (+7%) Repeal of the health insurance premium …