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You are here: Home / Anderson On Health Insurance / Insurer expansions — or getting that one wrong

Insurer expansions — or getting that one wrong

by | 15 Comments

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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.

 

And I owe it to you to explain where my model and thoughts went wrong.

I had assumed that insurers hate policy uncertainty. And that the repeal of the individual mandate plus further negative strategic messaging would lead to even more uncertainty. Insurers have two responses to uncertainty. Increases prices or run like hell.

I thought that some insurers would run.

Instead, the current incumbents have stayed, some have expanded their coverage region within their current states and premiums have not skyrocketed. A lot of that is it looks like insurers massively overpriced 2018 premiums:

States are also being much more aggressive in getting reinsurance 1332 waivers submitted that will eat some of the right hand catastrophic claim risk.

My fundamental error was timing. And that is a kick in the ass because I had made a timing argument that CSR termination would not be an effective threat if insurers had enough time to adjust.

This is a time limited threat. It is obviously a time limited threat for insurers have been stating that they are usually filing with the assumption that CSR will be paid for 2018, they reserve the right to refile under a variety of assumptions and attribution methods if CSR goes for 2018.

More subtly, let’s imagine that CSR has been paid through November 30th. If they were not paid in December, the carriers would have to use their reserves to cover the expenses but insurers would not flee the market before the end of the policy year. They might be able to reprice their 2018 policies based on the lack of the regular, early notification of accounts payable that they get before the CSR money is actually transferred in mid-December. They would take a hit, but it would not be a show stopper…
The CSR threat loses its ability to blow up the market by sometime in the fall.

Insurers would prefer that there is an individual mandate. However insurers had more than enough time to figure out the impact of no individual mandate will have on morbidity and enrollment in 2019 so they can price those changes into premiums.

I got that one wrong because I had not thought through my arguments fully.

Reader Interactions

15Comments

  2. 2.

    Platonailedit

    Insurers would prefer that there is an individual mandate.

    It’s all Obama’s fault, thanks Obama.

    Fucking assholes fought him tooth and nail and now so they say this? Fuck’em.

  4. 4.

    nonynony

    Since we’re having it forced on us, it will be interesting to see if the individual mandate is actually as necessary as many would have assumed it would be.

    On the one hand, folks tend not to do things they don’t have to do. On the other, people generally hate uncertainty. I personally think that if they can afford it even most healthy people would rather have health insurance than not. Yeah there are the “reckless 20-something guys who think they’re immortal”, but I wonder whether they exist in large enough numbers to make an impact or if it’s just the projection of us old people back onto “the kids these days”.

  5. 5.

    B.B.A.

    The requirement to cover preexisting conditions is about to be rolled back, so insurers want to get in on those sweet premiums for worthless coverage?

    All I got. Remember, kids, you can never be too cynical.

  7. 7.

    Mary G

    One of the reasons Republicans went so hard against President Obama (not the primary reason, that was the racism) is that he managed to squeak the ACA through and they knew people would like the peace of mind that having medical coverage gives and they wouldn’t be able to take it away. So despite the fact that they keep chipping away at it, it survives. People dislike uncertainty too.

  9. 9.

    MomSense

    I guess you are stuck with the rest of us who are never fully sure of what will happen next.

    I’m so angry about all the drama we have to go through to just secure the basics of a modern, productive society.

    Let’s rock the 21st century by being dumb, sick, ignorant, unskilled, and impoverished.

  10. 10.

    dnfree

    Not every factor is predictable, nor can every factor be weighted accurately with respect to every other factor. Cut yourself a little slack!

  11. 11.

    oatler.

    “Let’s rock the 21st century by being dumb, sick, ignorant, unskilled, and impoverished”
    All according to the business model…Trump’s/Putin’s.

  12. 12.

    Brachiator

    @nonynony:

    I personally think that if they can afford it even most healthy people would rather have health insurance than not. Yeah there are the “reckless 20-something guys who think they’re immortal”, but I wonder whether they exist in large enough numbers to make an impact

    I think a good chunk of healthy people, especially single people, may elect not to have health insurance.

    Can people get health insurance for their kids, but not for themselves?

    We shall see. Also, I wonder how many people think incorrectly that the individual mandate was repealed for 2018, and dropped or did not get coverage?

  13. 13.

    ProfDamatu

    Boy, did they massively overprice in my area! Pre-subsidy premiums in my city more than doubled this year from 2017. I’ve heard that they may actually be requesting a small decrease for 2019, but I have to say, it would take a massive decrease to help the unsubsidized around here. No lie, the benchmark silver for a 42 year old in my town is $870 a month, up from about $400/month. Nothing valuable to add here, just always feel like venting when it comes to premiums. :-)

  14. 14.

    David Anderson

    @ProfDamatu: understood.

    Non-subsidized are getting kicked in the junk.

    I think multiple insurers will be re-entering your market

  15. 15.

    ProfDamatu

    @David Anderson: One can only hope! Not that I’ve had any problems with Optima, and being one of the lucky duckies whose income is low enough for subsidies, I haven’t been priced out of insurance, but I’ve got to believe that having just one insurer had something to do with those premium hikes. The only question is whether there’s enough population to make it worth their while.

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