MLR and Risk Adjustment games (a cynical take)

In Mayhew On Insurance by David Anderson

I was talking with another health insurance nerd last night.  We talked about the risk adjustment pause and a very cynical thought was developed — what if the Center for Medicare and Medicaid Services (CMS) instructs insurers to exclude risk adjustment flows from their Medical Loss Ratio (MLR) calculations that are due on July 31? MLR requires individual market insurers to spend 80% of their net premium dollars (minus taxes and fees) on claims or qualified quality improvement activities.  Net premiums are after risk adjustment flows.  So insurers that pay …

Tax, Trade and Health Policy

In Mayhew On Insurance by David Anderson

Incentives to change behavior need to be targeted to be effective. House Ways and Means is now marking up a bill to let taxpayers write off up to $1000 per year on gym memberships, fitness classes + other exercise efforts. JCT says it’d cost $3.5 billion over 10 years https://t.co/bKJoltqFry — Ryan McCrimmon (@RyanMcCrimmon) July 11, 2018 If this was to pass, I will be able to use the entire amount. This morning was a squat morning. Tomorrow is an off day and Saturday is a dynamic back and isometric …

Revisiting Alexander-Murray copper

In Mayhew On Insurance by David Anderson

Alexander-Murray was a fairly straightforward proposal.  It was an honest attempt to solve problems.  Almost every section I could read through the bill and do the following: Identify what problem the new language was attempting to address Identify a clear pathway to resolve that problem Assess a reasonable likelihood that the identified problem would be resolved in a manner favorable to the advocates of that section. I may not have liked all of the sections on policy grounds (Iowa 1332 waiver revision section for instance) but mechanically the bill made …

Actual vs. statistical

In Mayhew On Insurance by David Anderson

Just two very good points by two very smart people: The dramatic Thailand rescue story definitely will make it into my next lecture distinguishing statistical and identified lives. — Harold Pollack (@haroldpollack) July 9, 2018 There are many disadvantages to FFS, but let's not kid ourselves on how often the #ThaiCaveRescue happens in medicine. Would it happen in an ACO model? — Amitabh Chandra (@amitabhchandra2) July 9, 2018

More on risk adjustment

In Mayhew On Insurance by David Anderson

This is a follow-up from my Saturday post on the risk adjustment freeze. There have been two major updates from the Center for Medicare and Medicaid Services (CMS). 1) CMS press release On February 28, 2018, the United States District Court for the District of New Mexico issued a decision invalidating use of the statewide average premium by the Center for Medicare & Medicaid Services (CMS) in the risk adjustment transfer formula established under section 1343 of the Patient Protection and Affordable Care Act for the 2014 – 2018 benefit …

Risk Adjustment suspension

In Mayhew On Insurance by David Anderson

New ACA disruption and sabotage news was reported last night by the Wall Street Journal health care team. The Administration is suspending risk adjustment payments for at least 2017 and 2018. The Trump administration is expected to suspend an Affordable Care Act program that plays a key role in the health law’s insurance markets, a move that could deal a financial blow to many insurers that expect payments. The suspension of some payouts under the program, known as risk adjustment, could come in the wake of a recent decision by …

Medicaid notes

In Mayhew On Insurance by David Anderson

Some notes on Medicaid news from this week. First some good news: This is the fourth successful campaign for a Medicaid ballot initiative. Voters in Idaho, Nebraska, and Utah will get a chance to decide whether to expand coverage. Mainers voted in favor of this last year. — Jeffrey Young (@JeffYoung) July 5, 2018 People want healthcare. People want to be able to go to the doctor when something is not right and not worry that it will screw them over for the next decade because of debt. And the …

Insurer expansions — or getting that one wrong

In Mayhew On Insurance by David Anderson

If you had asked me in January to place a bet on the number of insurers that would file plans for 2019 by early July and you offered me the following options: About the same Significantly fewer insurers Significantly more insurers I would have taken the under. If you had asked me if there would be a “bare county” problem on the Exchanges, I would have been surprised if there was not at least one state currently struggling to cover their rural areas. I was wrong on both counts.   …

Expect big MLR checks in the fall of 2019

In Election 2020, Mayhew On Insurance by David Anderson

Many individual market buyers in several states should expect to see surprising checks in the fall of 2019. These will be Medical Loss Ratio (MLR) rebate checks. Insurers are required to spend, on a three year rolling average, 80% of the premium dollars on claims and quality improvement expenses. If they spend more than that, that is fine. If they spend less than 80%, the isnurers need to cut checks to their policy holders. Over the past couple of years, there have not been large checks cut as insurers weren’t …

Changing spreads in 2019

In Mayhew On Insurance by David Anderson

The Kaiser Family Foundation is keeping track of 2019 rate filings for the ACA. Their Table 1 has the least expensive Bronze and Gold plans as well as the benchmark Silver plan in a single major city in each state that they’ve updated. This is very valuable albeit incomplete data as the story in central cities can and often is different than the story in rural areas. What I find interesting is the changes in the spreads from 2018 to 2019. For people who are eligible for premium tax credit …

Actuarial value and plan choices

In Mayhew On Insurance by David Anderson

High actuarial value is better, right? Well it depends. It really depends on what you assess your prospective personal health risk to be and how much of a hit you can absorb. And from there, it is a matter of interrogating the benefit design of plans. Let’s look at two Gold plans I designed using the 2019 actuarial value calculator to tease this out a bit. Plan A Plan B Deductible $500 $2,000 Coinsurance after deductible (you pay) 30% 0% Maximum Out of Pocket $6,000 $2,000 PCP Sick Visit No …

Silver Gapping in Iowa and Tennessee: 2 Separate tales

In Mayhew On Insurance by David Anderson

Iowa and Tennessee are, in some ways, very similar states regarding the ACA. They are both mostly rural and their political elite has worked hard to create numerous “outs” for healthier and prospectively low risk individuals from the ACA. They both have very high premiums and comparatively high risk scores. Yet, in 2018, they were very different. Tennessee had some multi-insurer regions (Nashville and Memphis) while the local Blue Cross affiliate offered plans in most of the state. BCBS-TN aggressively Silver Gapped with some of the biggest premium spreads in …