• 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.

Following reporting rules is only for the little people, apparently.

…and a burning sense of injustice to juice the soul.

Ron DeSantis, the grand wizard, oops, governor of FL.

Well, whatever it is, it’s better than being a Republican.

Let me eat cake. The rest of you could stand to lose some weight, frankly.

Pelosi: “He either is stupid, or he thinks the rest of us are.” Why not both?

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

Republican also-rans: four mules fighting over a turnip.

So it was an October Surprise A Day, like an Advent calendar but for crime.

The next time the wall street journal editorial board speaks the truth will be the first.

And now I have baud making fun of me. this day can’t get worse.

Spilling the end game before they can coat it in frankl luntz-approved dogwhistles.

Republican speaker of the house Mike Johnson is the bland and smiling face of evil.

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

The party of Reagan has become the party of Putin.

fuckem (in honor of the late great efgoldman)

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

Let’s show the world that autocracy can be defeated.

Sadly, media malpractice has become standard practice.

One of our two political parties is a cult whose leader admires Vladimir Putin.

The cruelty is the point; the law be damned.

The truth is, these are not very bright guys, and things got out of hand.

Make the republican party small enough to drown in a bathtub.

Republicans do not pay their debts.

Mobile Menu

  • Four Directions Montana
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • 2024 Elections
  • Garden Chats
  • On The Road
  • Targeted Fundraising!
You are here: Home / Anderson On Health Insurance / Moving to state based exchanges and catastrophic reinsurance

Moving to state based exchanges and catastrophic reinsurance

by David Anderson|  June 6, 20199:21 am| 4 Comments

This post is in: Anderson On Health Insurance, Meth Laboratories of Democracy

FacebookTweetEmail

Pennsylvania is in the process of moving their individual market from being hosted and run by Healthcare.gov to a state based exchange. This is a step that several other states are taking. However, Pennsylvania is being really creative in why they want to do this. First let’s get the details from WESA:

House Bill 3 would have Pennsylvania operate the online health insurance exchange that has been run by the federal government since 2014 through the Affordable Care Act.

The bill is being co-sponsored by Lancaster County Republican state Rep. Bryan Cutler and Allegheny County Democratic state Rep. Frank Dermody. Both are their respective parties’ floor leaders….

Pennsylvania pays the federal government about $94 million a year to run the marketplace, Cutler said. With the proposal, Pennsylvania would use technology other states have already shown to be effective to run the marketplace at a much lower cost, which he estimated to be about $35 million annually…

the measure would also take advantage of a federal Section 1332 “reinsurance” waiver that can help to lower costs and tailor the program for Pennsyvlanians.

That last sentence is the most interesting and unique part of the Pennsylvania plan.

Pennsylvania wants to take the difference between what they pay to Healthcare.gov and what they think they can run their own exchange for and apply that increment to a Section 1332 reinsurance waiver. This is nifty. 1332 waivers are fairly common for reinsurance purposes in red, blue and purple states. Waivers are required to be federal budget neutral against a “no change” baseline. Reinsurance waivers bring in a non-premium infusion of funds that creates a wedge between claims and premiums. That wedge reduces federal subsidies and those lower federal subsidies are then fed back into the reinsurance program. The end result is that non-subsidized premiums are lower and the relative spreads of subsidized premiums are compressed. This leads to higher non-subsidized enrollment and slightly lower subsidized enrollment.

Usually, the state reinsurance waivers have the non-premium cash infusion come from some state tax revenue. Pennsylvania is not doing that. Instead, they are betting that they can run the exchange cheaper and while charging insurers the same amount of money, there will be a wedge that can be diverted to paying off some catastrophic claims. This is different.

I am not sure how much rate relief reinsurance provides when the reinsurance is funded by premiums. It is not a new wedge of non-premium related cash. It does two things. First it slightly increases the amount of premiums paying claims so total premiums can go down. It is also a pool of money that might be worth one or two percent of state wide premium that can eat some catastrophic claims. This is valuable. It reduces extreme tail risk for any one insurer. Less variance means marginally lower rates as well.

More importantly from the goal of reducing non-subsidized gross premiums, removing some catastrophic claim risk marginally increases the incentives for current insurers to expand their footprint and minimize the number of monopoly counties. Iowa’s insurance markets had an extreme example of a hyper expensive individual with recurring million dollar claim months.

In a competitive market where the subsidies are tied to the second least expensive Silver and there is one super-outlier who can not be re-insured against, every carrier lives in fear of being chosen by the one outlier. If they set their rates low enough to be attractive to healthy people, they lose money on the catastrophic expected claims. If they set the rates high enough to cover a $12,000,000 claim, no one buys their product.

No one wants to catch a spinning, falling knife.

Reinsurance funded by a fixed surcharge on premiums among all individual market insurers in the state smooths the pool and dramatically reduces risk.

If the Pennsylvania proposal goes through and the waiver gets approved, this is an interesting experiment to increase competition.

FacebookTweetEmail
Previous Post: « Thursday Morning Open Thread: “But Are American Voters Ready for A Smart President?”
Next Post: Tribe’s Impeachment Compromise »

Reader Interactions

4Comments

  1. 1.

    Brad F

    June 6, 2019 at 10:22 am

    David
    Would it be an overstep to say reinsurance is not so much an influx of cash to cover costs of outliers (to keep community-rated premiums down) as it is a preemptive strike to avoid MCOs from smelling fear? From that fear, the insurers jack premiums higher than they need or should be–and in turn make the market less efficient.

    When the feds reinsure through waivers, they are throwing money into the state exchange pot to reduce CSRs and premium subsidies to mitigate their overall spend. But again, it seems more preemptive to avoid community rates from going up–when they could have used the “reinsurance dollars” to pay the higher CSR/PSs for the outliers. Robbing Peter to pay Paul, no?

    Brad

    (PS–you RSS feed no longer coming through. Something change on your end?)

  2. 2.

    David Anderson

    June 6, 2019 at 10:27 am

    @Brad F: Re RSS — new category name

    https://balloon-juice.com/category/anderson-on-insurance/

  3. 3.

    David Anderson

    June 6, 2019 at 11:42 am

    @David Anderson: try this:

    https://balloon-juice.com/category/Anderson-on-insurance/feed/

  4. 4.

    Another Scott

    June 6, 2019 at 8:27 pm

    Kinda-sorta related. The May 31, 2019 issue of Science (pp. 808-809):

    $2.1 million gene therapy OK’d

    Biomedicine – The U.S. Food and Drug Administration last week approved a new gene therapy, for a neuromuscular disease called spinal muscular atrophy (SMA), that stands to become the most expensive drug ever at a cost of $2.1 million. Untreated, the severe form of the disease usually leads to death by age 2.
    Called Zolgensma, the treatment from drugmaker Novartis is a one-time, intravenous administration of a virus ferrying a gene for a missing protein into the motor neuron cells of babies born with SMA. In a clinical trial, most infants who received Zolgensma were later able to sit up and breathe on their own, and some could walk. The drug will compete with one called Spinraza that has similar effects but must be injected into the spine every few months.

    Cheers,
    Scott.

Comments are closed.

Primary Sidebar

Recent Comments

  • Subsole on War for Ukraine Day 781: A Brief(ish) Sunday Night Update (Apr 15, 2024 @ 4:38am)
  • Aussie Sheila on Late Night Weekend Wrap-Up Open Thread: Journamalism, Not A Dependable Profit Center (Apr 15, 2024 @ 4:35am)
  • Subsole on War for Ukraine Day 781: A Brief(ish) Sunday Night Update (Apr 15, 2024 @ 4:34am)
  • Chet Murthy on Late Night Weekend Wrap-Up Open Thread: Journamalism, Not A Dependable Profit Center (Apr 15, 2024 @ 4:18am)
  • Subsole on War for Ukraine Day 781: A Brief(ish) Sunday Night Update (Apr 15, 2024 @ 4:18am)

🎈Keep Balloon Juice Ad Free

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

Balloon Juice Posts

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

Balloon Juice Meetups!

All Meetups
Talk of Meetups – Meetup Planning
Proposed BJ meetups list from frosty

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8
Virginia House Races
Four Directions – Montana
Worker Power AZ
Four Directions – Arizona
Four Directions – Nevada

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
Positive Climate News
War in Ukraine
Cole’s “Stories from the Road”
Classified Documents Primer

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)

Fix Nyms with Apostrophes

Balloon Juice for Ukraine

Donate

Twitter / Spoutible

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

Political Action 2024

Postcard Writing Information

Balloon Juice for Four Directions AZ

Donate

Balloon Juice for Four Directions NV

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 © 2024 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

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

Email sent!