Carriers that want to participate in the Exchanges need to make very strong assumptions for their actuaries in the next couple of weeks.
What will actuaries assume if 2018 CSRs aren't decided by April 30.
"That it's not getting paid and we price accordingly." 11
— Andy Slavitt (@ASlavitt) April 6, 2017
This is the only logical thing to do for actuaries. As a class of people, actuaries don’t like being wrong in a particular manner. They are professional pessimists who really don’t want to be wrong in a way that costs their employers money. It is hard to see an actuary be too pessimistic while it is fighting words to call one an optimist. This leads to the following policy assumption pay-out grid based on the assumptions that things could either be business as close to normal as possible or sabotage of the Exchanges.
Actuaries for carriers that are the sole carrier in a region have a professional obligation to assume sabotage. If they get sabotage, their employers have near normal operations. If they assume sabotage but get normal operations, they make a ton of money and some of that money goes back out the door as Medical Loss Ratio rebates. If they assume normal operations and get normal operations, they get normal operations. If they assume business as normal but get sabotage, the carriers lose a lot of money and the actuaries are looking for new jobs.
I am trying to figure out how this plays out in multi-carrier regions.
Is there a potential winner’s curse where the most optimistic set of assumptions in a sabotage environment is the biggest loser. Even in a normal environment, optimism on projecting a population can lead to significant losses. I need to think this through some more.
cmorenc
mamas, don’t let your babies grow up to be actuaries.
they’ll never stay home, and they’re always alone.
even with a spreadsheet they love.
Major Major Major Major
Whatever you work out, if you do I’d love to see it. This is beyond my limited game theory knowledge.
Wag
S if I were an actuary in the present climate I would have to assume that sabotage is coming down the road. Any other conclusion opens you up to major losses. Am I missing something here?
Aaron
Can carriers submit 2 sets of figure: one with sabotage, and one without. It’s too big a jump, policy wise, otherwise.
Ruckus
What are the chances that this maladministration will be able to pull off anything on time?
What are the chances that this maladministration will be capable of doing anything approaching sanity/reality?
Major Major Major Major
@Wag: That’s what you would do in the situation David describes where you’re the only carrier on the exchange. It’s a pretty straightforward screwed-up prisoner’s dilemma scoring. The problem is when there are multiple carriers – how do you choose between projections that are really catastrophic, super catastrophic, and super duper catastrophic, when you don’t know what the other carriers are going to do, since their unknown predictions will affect the accuracy of your own predictions?
Yarrow
How will this mess affect people who need to buy health insurance on the exchange?
David Anderson
@Yarrow: It won’t hurt people who are subsidized all that much assuming something is offered. It will kick the ever living shit out of non-subsidized buyers
daveNYC
I assume the only reason you need to think this through more is to determine if it’s bad, fucking bad, or dogs and cats living together bad.
David Anderson
@daveNYC: Not really, it could just be fucking odd
Weaselone
I would assume that the actuaries are probably modeling both the total sabotage and SNAFU scenarios along with several other scenarios in the continuum.
The decision on how to price in a region with multiple carriers is more of a strategic one to be decided by management. In a multicarrier region where one of the competitors has deep pockets, but a small market share I could definitely see one of the carriers price based on normal or moderate levels of sabotage in order to gobble up market share. If things are reasonably normal, they get lots of new customers, expand their market share and the firm does reasonably well. If the sabotage is maximal, they take a hit they can absorb, raise rates next year and probably maintain at least a portion of the market share the gained which allows them to make back the losses over time.
rikyrah
Trump reverses course, vows to tackle health care ‘first’
04/12/17 10:14 AM
By Steve Benen
About three weeks ago, after the House Republicans’ health care bill collapsed in the face of intra-party opposition, Donald Trump delivered some brief remarks from the Oval Office, expressing his disappointment about the outcome, blaming Democrats, and looking ahead.
While the president said policymakers will “end up with a truly great health care bill in the future,” Trump added he’d shift his attention to a different issue. “We’ll probably be going right now for tax reform, which we could have done earlier, but this really would have worked out better if we could have had some Democrat [sic] support,” he said, adding, “So now we’re going to go for tax reform which I’ve always liked.”
Two days later, on NBC’s “Meet the Press,” Trump’s budget director, Mick Mulvaney, sounded a similar note. “We’ve moved on to other things,” Mulvaney said. “The president has other things he wants to accomplish.”
Three weeks later, Trump has apparently no longer intends to move on.
The president’s phrasing was clumsy, but he seems to have some basic understanding of the broader dynamic. “[W]e’re going to have great health care, and all of that savings goes into the tax,” Trump told Fox Business. “If you don’t do that you can’t put any of the savings into the tax cuts and the tax reform.”
That’s more or less accurate. One of the reasons House Speaker Paul Ryan (R-Wis.) prioritized health care over tax reform is that he saw the former as helping lay the groundwork for the latter. By crafting a far-right bill, Republicans could save billions, which in turn could be applied to tax cuts in a separate, conservative tax reform package.
NEVER EVER FORGET…
TRUMPCARE was nothing but a Tax Cut plan disguised as a healthcare bill.
Yarrow
@David Anderson: Thanks. The healthcare thing affects me personally so I’m following it closely. Very much appreciate your posts.
Yarrow
@rikyrah: I wonder if Trump understands that when they come back from this break that the Members of Congress will be focusing on 2018. And all eyes will be on the debt ceiling.
hovercraft
@rikyrah:
I guess someone told him that with out pillaging healthcare, the numbers don’t work* for the 10 trillion dollar tax cut they want to give to the rich.
* they don’t work anyway, but the additional money from Obamacare makes them look less bad, and there is or rather was the possibility of using reconciliation to avoid both a filibuster and sunsetting.
Chyron HR
@hovercraft:
No.
zach
From Joy Reid:
So shocking that the Trump/Russia start only starts to accelerate after Gorsuch is safely through… GOP got what they wanted in the short term and now it’s best to get potential impeachment out of the way ASAP.
StringOnAStick
@rikyrah: Social Security Works, a PAC, has sent me an email saying that Ryan’s plan for killing SS is to eliminate the payroll tax. Clever, in that average people will see a big increase in take home pay, but at the expense of dying homeless in the gutter much later on. This one has to be fought tooth and nail, and it requires educating people so they understand that the payroll tax is hugely important to their futures; that means explaining so we know it will be a hard lift.
daveNYC
@David Anderson: Eh? I’d think between the conservative bias of the actuarial and the worry at the company level that they could get massively hung out to dry, the best one could hope for is one company trucking out the good prices, ending up with all the business, and then not actually getting boned by the government. Good enough for consumers this year, possibly not so good for providers depending on networks, but next year you could end up with companies leaving that region due to lack of business, which would lead to all sorts of goofy misery.
Far more likely is that everyone sets prices and whatnot on the assumption of Maximum Fuckery and are not disappointed when that occurs. Then next year you throw in some non-enforcement of the mandate and it’s fun on a bun.
Lizzy L
@StringOnAStick: I agree, this one must be fought to the (its) death, but I am very dubious that Ryan’s effort will get much traction. ASAIK, nobody is going to vote to damage or kill Social Security, not and remain in office, and that’s all these folks care about. It’s good to stay informed, of course.
rikyrah
@hovercraft:
Yep. They can hide their sociopathy.
Using reconciliation means not needing any Democratic votes in the Senate.
And, Trumpcare helps put a gashing wound into Medicare, so that the ZEGK can fulfill his dream of Medicare vouchers.
David Anderson
@daveNYC: There could be a wide range of outcomes, being totally boned is not the only outcome, only a highly probable and salient outcome. I’m trying to think this through.
rikyrah
There are reasons why these special elections are so important.
1. Democrats need to field candidates in every race
2. The Candidates get practice running
3. We will close the margin of victory in traditional GOP districts
4. Possibility of catching lightening and getting a victory
3 & 4 are important because of this number.
23
There are 23 GOP Congressmen where Hillary won their district.
The ZEGK doesn’t have a cushion to where he can lose 23 votes.
Scaring these 23 people is more important than the Freedom Caucus.
Without them, there’s no Trumpcare. The Freedom Caucus to the face of the opposition, but these folks were scared of voting for something so odious.
Never forget, Trumpcare is nothing but a tax cut bill masquerading as a healthcare plan. If they passed Trumpcare, then:
1. they could hide their sociopathy
2. they could go after more tax cuts under Reconciliation, thus not needing any Democratic votes
3. It would put a huge gash into Medicare, which will enable the ZEGK to get that much closer to his dream of Medicare vouchers.
Everyday that passes is one in our favor. Running out the clock matters a lot now. There are hard deadlines that they have to meet. The GOP’s inherent laziness in not actually wanting to work can work in our favor. Everyday that passes in 2017, brings us closer to 2018 and elections…and nobody likes to pass anything in an election year.
rikyrah
UH HUH
UH HUH
Source: Carter Page isn’t the only Trump campaign ally who was the subject of a FISA warrant. A second target was recorded also. Tick tock..
— Joy Reid (@JoyAnnReid) April 12, 2017
StringOnAStick
@Lizzy L: Unfortunately we will have to depend on the media to let people know that killing the payroll tax = killing SS, and that won’t happen unless we push the story, hard. The average non-political person just looks at their pay stub and sees big money they aren’t getting, but the gubmit is. They don’t know that is how they are funding their future payments from SS, and I think we can rely on RW media to squirt a lot of squid ink to keep that knowledge under wraps, make it confusing, and then start pushing the “hey, invest it in Wall Street and retire like a king!” crap that has been Pete Peterson’s reason for investing in politics for decades now. I have what I consider reasonably well informed 40 something friends who have entirely internalized the “SS won’t be there for me” arguments that have come out of Peterson’s efforts for decades, and they are committed D’s who vote in every election; they take that lie as a given.
Going after SS was super unpopular last time with Shrub. They have no doubt learned that they need to be more clever and obtuse in how they do it, and Drumpf does such a good job of filling the news with outrage after outrage that people can miss this one or just plain tune out because the crazy is ruining their mental health. Hell, I’m falling into the latter category.
Fred
Trump is now explicitly threatening to withhold cost-sharing reduction payments as a negotiating ploy:
http://www.reuters.com/article/us-usa-healthcare-payments-idUSKBN17E2SO
It should now be obvious that any future promise by an administration official to continue paying the CSR’s will be a meaningless promise that can be reneged upon at any time.
And the House refuses to pass an appropriation for CSR payments for 2018.
Therefore, insurers should assume that there will be NO CSR’s paid in 2018 and adjust their silver-plan rates accordingly. I don’t even see the point of preparing an alternative set of rates contingent on the administration making the payments – why would anyone go out on a cliff like that?
David Anderson
@Fred: you keep it in the back pocket just in case there is an actual appropriation. Cheap enough to prepare and never do anything with it.