• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

Accountability, motherfuckers.

Pessimism assures that nothing of any importance will change.

Whatever happens next week, the fight doesn’t end.

Republicans in disarray!

Good lord, these people are nuts.

Not all heroes wear capes.

Schmidt just says fuck it, opens a tea shop.

Technically true, but collectively nonsense

Roe isn’t about choice, it’s about freedom.

Putting aside our relentless self-interest because the moral imperative is crystal clear.

Black Jesus loves a paper trail.

You don’t get rid of your umbrella while it’s still raining.

But frankly mr. cole, I’ll be happier when you get back to telling us to go fuck ourselves.

fuckem (in honor of the late great efgoldman)

Incompetence, fear, or corruption? why not all three?

Yeah, with this crowd one never knows.

… riddled with inexplicable and elementary errors of law and fact

We still have time to mess this up!

Seems like a complicated subject, have you tried yelling at it?

“What are Republicans afraid of?” Everything.

Sitting here in limbo waiting for the dice to roll

Second rate reporter says what?

T R E 4 5 O N

Imperialist aggressors must be defeated, or the whole world loses.

Mobile Menu

  • Winnable House Races
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • Balloon Juice 2023 Pet Calendar (coming soon)
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • War in Ukraine
  • Garden Chats
  • On The Road
  • 2021-22 Fundraising!
You are here: Home / Anderson On Health Insurance / First quarter stability in the ACA markets

First quarter stability in the ACA markets

by David Anderson|  July 10, 20178:54 am| 13 Comments

This post is in: Anderson On Health Insurance

FacebookTweetEmail

Kaiser Family Foundation has compiled the first quarter results of on-Exchange insurers and it looks good. The two graphs below are the Medical Loss Ratio (MLR) and the net claims versus net premiums for the quarter over time.


As you can see, MLR for the first quarter dramatically dropped. We’ll see what that means in dollars in a second:

Net premiums minus net claims is the wedge that pays for administrative costs and profits. That wedge is now almost $100. Well run, large insurers should be able to keep their admin costs down to $50 to $70 per member per month.

We need to be cautious about using first quarter data. This should be the best time of the year for an insurer for a couple of reasons. First, people are still going through their deductibles. The percentage paid by the insurer as a function of total allowed charges should be the lowest all year. This matters because deductibles and other cost sharing are both a way for insurers to shift costs back onto patients and more importantly, to reduce utilization. Some people will have known chronic conditions where they hit their out of pocket max in January or February every year and their incentives don’t change year over year. Other people have a surprise one time event such as when their cat attacks them after they are not fed for eight hour straight and destroys their shoulder. These people who unexpectedly maxed out have a strong incentive to get everything that they have been putting off for a while done in the rest of the year. They will have a spike of summer and fall claims.

Secondly, and more subtly, the population changes. Open enrollment will have just ended in the first quarter. This means the insurers are probably have the most people with low utilization on their books for the entire year. People will drop out of the pool. Those drop-outs will be due to natural movement (emigration, new jobs, marriages etc) and financial reasons (the premiums are too expensive). For the people who believe that their premiums are too much, they are far more likely to be very likely to be healthy than having significant care needs. New enrollees through the Special Enrollment Periods are either babies (expensive) or people who are willing to put up the time to go through verification and validation (so more likely to be sicker than average).

So what does this mean?

My first guess, having looked at both the Kaiser report and the financials of several insurers that I’m tracking, is that insurers slightly overcharged for 2017. They upped their rates by too much.

FacebookTweetEmail
Previous Post: « Keep on Calling, just keep on calling
Next Post: Market Structure and competition »

Reader Interactions

13Comments

  1. 1.

    delosgatos

    July 10, 2017 at 9:04 am

    Is the second graph showing individual premiums per person rising by over 80% over the last six years?

  2. 2.

    David Anderson

    July 10, 2017 at 9:39 am

    Yes, but need to note a few things:

    1) Average actuarial value increased in the individual market
    2) EHB
    3) Guarantee issue

    Not an apples to apples comparison pre 1/1/14 to post 1/1/14

  3. 3.

    daveNYC

    July 10, 2017 at 9:55 am

    This real or nominal Amero-bucks?

  4. 4.

    Anonymous At Work

    July 10, 2017 at 10:17 am

    Any of this due to insurers trying to spike up premiums over the risk-corridor uncertainty? What about “We’ll make medical loss 50% and dare Trump to make us share the rest”?

  5. 5.

    daveNYC

    July 10, 2017 at 11:03 am

    @Anonymous At Work: Daring Trump to not pay up seems like a bad plan.

  6. 6.

    Mike

    July 10, 2017 at 11:13 am

    I’m not a big fan of the way they calculate the MLR. Per their notes they exclude risk programs which I assume includes reinsurance. Carriers priced anticipating reinsurance so you create a false trend because premiums and clams are mismatched. Even If carriers priced perfectly each year the KFF analysis would show an improving MLR from 2014-2017.

  7. 7.

    David Anderson

    July 10, 2017 at 11:21 am

    @Mike: It is not perfect either, but as long as they look at every carrier’s data the net positive risk adjustment inflows will be balanced by the net negative risk adjustment outflows. If the methodology is flawed but constant, there is signal to look at. And I think there is signal to look at both on what KFF is reporting and what I have seen elsewhere.

  8. 8.

    Mike

    July 10, 2017 at 11:38 am

    @David Anderson: Agreed on risk adjustment but not on reinsurance. Reinsurance is not revenue neutral and its exclusion here creates artificial trends in the MLRs.

  9. 9.

    EW

    July 10, 2017 at 12:24 pm

    I don’t fully agree on risk adjustment. The statutory accounting rules don’t fully align with the GAAP viewpoint KFF is trying to demonstrate.

    One other item is the margin chart. The health insurance provider fee was accrued in Q1 for the entire year in 2014 to 2016. That put downward pressure on net margins. There is no deduction for 2017.

  10. 10.

    Anonymous At Work

    July 10, 2017 at 1:22 pm

    @daveNYC: Medical Loss must be at 80% overall for the year, or the rest is returned, is my understanding. Taking a medical loss of 50% means the insurance company owes you some money. Would Trump really force insurance companies to pay their subscribers, if the insurance companies overcharged?

  11. 11.

    Lee

    July 10, 2017 at 1:29 pm

    Other people have a surprise one time event such as when their cat attacks them after they are not fed for eight hour straight and destroys their shoulder.

    Or a mishap with a unsuspecting mop….

  12. 12.

    daveNYC

    July 10, 2017 at 2:38 pm

    @Anonymous At Work: I refuse to make any predictions about Trump because that wanker is the definition of perverse. That said, Trump doesn’t like spending money on anything but Trump and withholding that money might implode the ACA, s I’d really prefer not to risk it.

Comments are closed.

Trackbacks

  1. More evidence shows Obamacare is getting healthier, but will that stop the GOP wrecking crew? | Bible Prophecy In The Daily Headlines says:
    July 10, 2017 at 4:51 pm

    […] Kaiser data have some limitations, as insurance expert David Anderson of Duke cautions. The first quarter is traditionally the best for health insurers, for two main […]

Primary Sidebar

Recent Comments

  • sab on On The Road – knally – Shropshire Hills (Mar 31, 2023 @ 5:52am)
  • YY_Sima Qian on Late Night Open Thread: Binancing the Susceptible (Mar 31, 2023 @ 5:49am)
  • eclare on On The Road – knally – Shropshire Hills (Mar 31, 2023 @ 5:46am)
  • J R in WV on The Funniest Thing About All of This (Mar 31, 2023 @ 5:42am)
  • sab on On The Road – knally – Shropshire Hills (Mar 31, 2023 @ 5:31am)

Balloon Juice Meetups!

All Meetups
Seattle Meetup coming up on April 4!

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
We All Need A Little Kindness
Classified Documents: A Primer
State & Local Elections Discussion

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Mailing List Signup
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)

Twitter / Spoutible

Balloon Juice (Spoutible)
WaterGirl (Spoutible)
TaMara (Spoutible)
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
TaMara
David Anderson
Major Major Major Major
ActualCitizensUnited

Join the Fight!

Join the Fight Signup Form
All Join the Fight Posts

Balloon Juice Events

5/14  The Apocalypse
5/20  Home Away from Home
5/29  We’re Back, Baby
7/21  Merging!

Balloon Juice for Ukraine

Donate

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2023 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!