Balloon Juice - Anderson On Health Insurance Archives

Tipping and paying for performance

by David Anderson| October 7, 201310:53 am| 64 Comments

This post is in: Anderson On Health Insurance

I’ve enjoyably wasted a good chunk of my morning reading about a tipless restaurant (thanks Aimai)

When in time we started contemplating the elimination of tips from the Linkery, Ilooked for actual research on the subject, and found Michael Lynn’s then-recently-published“Tip Levels and Service”. This paper shows that in spite of what people think motivates theirtipping calculations, the quality of service has only a tiny effect on how much a restaurant customer actually leaves as a tip. In fact, the percent tip left by a guest is as much influenced by whether the server (if female) draws a smiley face on the check, or predicts good weather, as by the guests’ happiness with the quality of service…if you’re a server who wants to maximize your income, service quality should not be your focus….

The Incidental Economist links to an interesting study on pay for performance evaluation:

The strength of their intervention is that they made it incredibly simple for adoctor to get a payout: 1) Measure blood pressure, 2) Treat accordingly. But that strengthmorphs into a weakness when it comes to what we’re supposed to do with this study. As the authors note, it didn’t require complex diagnosis—really any diagnosis, for that matter, since blood pressure is measured at every physician visit. And it didn’t require treating the blood pressure successfully; everyone who tried got an A for effort. So in this particular condition(hypertension), with this particular incentive structure, pay for performance worksbeautifully. The RCT was a success.

These two things are related.

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Simple monetary incentives are pretty good at motivating people to do check box activities. And these incentives have their place in medicine. For instance, it is a good thing that everyone who can safely take a flu shot gets a flu shot, or every child in their 4 year old well visit gets a hearing and vision screening or the body part that is to be operated on is marked with an “X” with a Sharpie pen before surgery. These things are simple, direct and rely on a vast literature which supports doing these actions 10,000 times will produce significantly better results than not doing these actions 10,000 times.

The entire set of activities that actually promote good health are not check box activities.

They are complex, multi-variate problems with massive interdependencies. What if the blood pressure problem is due to a complex underlying root cause that the basic treatment that was rewarded masks for a few years? How does the incentive structure prevent proper care?

Most pay for performance systems are multi-tiered. The first tier are direct payments for following guidelines and best practice recommendations (flu shots, aspirin for people complaining of chest pains/tightness, handwashing protocals etc). These are the low hanging fruit which should produce strong signals of quality and reward. However, the second level is the more complex and higher pay-off levels. How do we promote health of a population instead of encouraging providers to only “treat” health patients and pocket the health incentives?

This is a complex problem with plenty of opportunities to royally jack things up (that is the highly technical insurance jargon). The solution has to been to create metrics that attempt to measure health care quality given a population’s initial starting condition. A population that is older and has more problems will be normalized in a different manner than a population that consists of 23 year old tri-atheletes. And even then, there will be odd results and perverse incentives that will need to get ironed out in multiple iterations.

(BTW — this is similar to the complex problem of actually measuring teacher value add — it is a highly complex problem where the simple solution of just taking test scores and looking at the yearly delta is amazingly wrong but appealing)

Tipping and paying for performancePost + Comments (64)

Does this Qualify?

by David Anderson| October 4, 20138:14 am| 28 Comments

This post is in: Anderson On Health Insurance, Open Threads

We’re in the biggest open enrollment period of my lifetime. Open Enrollment is when people who don’t have a plan can get a plan and those who have a plan can change plans without penalty. Open Enrollment is a common feature in any non-NHS system including the German, Dutch and Swiss as well as the American commercial and Exchange operations.

Open Enrollment is an attempt to manage adverse selection. Open Enrollment creates uncertainty which insurance companies can statistically price instead of certainty. For instance, in a buy at any point environment, the rational thing for me to do would be to carry a very cheap catastrophic policy in order to cover me in case I get hit by a bus. However, if I go to the doctor on Tuesday morning for some strange bruising in my legs, and Wednesday afternoon, I get the “Congratulations, you have cancer” phone call, under a buy at any time scenario, my rational response would be to go buy the super platinum insurance policy. A limited open enrollment period will see people who get the “Congratulations you have cancer” phone call during the enrollment plan select the highest benefit but it guards against someone policy jumping six months later. It will also see someone who got the cancer call four months ago select the highest benefit level possible.

It is not a perfect filtering device, there is no such thing besides universal enrollment with either single payer or significant back-end risk transfer payments between multiple payers. But it is a decent device that forces people to treat health insurance as insurance against future risks instead of a cost-sharing pool for known events.

However, life changes, and this creates the concept of qualifying events. Qualifying events are situations that allow people to buy or switch policies outside of normal enrollment periods and to do so without penalties. The basic idea behind a qualifying event is dramatic life and family changes. When Kid #2 was born, he was a qualifying event as well as a pooping machine. When I lost my job several years ago, that was a qualifying event. When I got married to the best woman in the world (for me at least), that was a qualifying event. When my family moved three states, that was a qualifying event.

PPACA/Obamacare also uses the open enrollment system for risk management. The first year has an open enrollment period of six months (Oct. 1 to March 31, 2014). Going forward, the open enrollment period for the Exchanges will be 56 days in late Fall. However PPACA will also have the qualifying event criteria for people to buy on the Exchange outside of open enrollment. The qualifying events are the regular ones such as changes in jobs, changes in family size through marriage, divorce, births, adoptions and deaths, changes in location although a move across the street won’t qualify, but a move out of the designated selling/service area of the previously bought policy will qualify. Additionally, changes in previous insurance status will matter; if an employer drops coverage in July for his employees, that is a qualifying event or if a person makes too much now for Medicaid, that is a qualifying event, or if a person ages into Medicare, that is a qualifying event for people to get rid of their Exchange plan.

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Better MLS referees in 2019

by David Anderson| October 3, 20138:12 am| 32 Comments

This post is in: Anderson On Health Insurance, Sports

I am a bad soccer player but a pretty good referee.

Last night, I was working a high school game with a former MLS official and an up and coming USSF-5 who has a plausible path to the MLS, on my lines. I set the tone early with a caution for a dive in the box at the sixty third second. The players just played for the rest of the match. After the game, the ref crew stopped for a burger and a beer.

We talked through the first caution (ballsy but right) and a second caution for a crap tackle as well as a few other situations. And then we talked about a major tournament two time zones away. Both of the other guys had been invited to officiate. The former MLS guy had been invited as a “senior mentor” while the young guy had been invited as part of the US Soccer Federation (USSF) identification/winnowing process. I’ll never be a part of this process, I am slightly too old and more than slightly too slow, but it fascinates me.

Right now there are roughly 200 referees who are theoretically MLS eligible (Grade 4 or higher), of which roughly a third will get an MLS game this year, and third will never see an MLS preseason camp much less a game because they either blew their opportunities at one level below MLS or have other circumstances going on. The rest are either working towards the MLS or retired from the MLS. There are another 500 or so officials (Grade-6 States, Grade-5 States, Grade-5 National Candidates etc) who have been identified as potential top flight referees with appropriate seasoning/mentoring/opportunities.

The screening process is extremely steep with very high attrition rates. The intake phase, which is where my younger buddy is, basically has the USSF telling candidates to jump. He has been sent to Dallas, Phoenix, Orlando, Chicago, Minneapolis, Portland and Denver this year. Some of those tournaments pay, others cover expenses and nothing more. He has been called to cover a semi-pro game six hours away eight hours before kick-off. If getting to the MLS is a goal as a referee, refereeing is a full time job. Refereeing full time at the sub-MLS level is a better than poverty level gig but it is below first job out of college gig. He can do this because refereeing is his primary source of income, but he has a small sideline gig as a web designer and is on his mom’s insurance for another year.

Frequent and active refereeing hurts. In the past three years I’ve had a hip flexor injury, turf toe, bursistis and a couple of bone bruises from reffing. Quite a few refs remove themselves from consideration because they can not afford to take the risks. If health insurance is available to the cohort of potential future MLS at a price of one or two decent game fees a month, the MLS pipeline won’t be artifically restricted to guys who are both good and can afford to take the risk of running naked without health insurance.

We won’t see on field results for another five years as the refs who are halfway through the pipeline have already passed (on average) the point of deciding whether or not reffing without insurance is a tolerable risk. But the refs in the next few years who are just starting the pipeline won’t be forced through the chokepoint of health insurance risk. They’ll be included or excluded based on skill on the field.

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Notes from day 1

by David Anderson| October 2, 20137:54 am| 47 Comments

This post is in: Anderson On Health Insurance

Just a few notes from Day 1 of the Exchanges and what they mean:

From Business Insider:

About 2.8 million people visited healthcare.gov – the main website for the 36 state exchanges being run by the federal government – between midnight and mid-afternoon, theU.S. Department of Health and Human Services said….

Kentucky’s exchange, kynect, saw 57,625 unique visitors from its midnight launch until 2:30 p.m., according to the Kentucky governor’s office. Nearly 2,000 applications had been started, with 1,235 completed. The kynect contact center fielded 3,243 calls and 110 e-mails. The average visitor stayed on the site for 11 minutes….

Between the Federal and the State exchanges there were ten million web hits. The financing and actuarial tables work out if roughly seven million people sign up for insurnance. The first day conversion rate in Kentucky and other states are fairly low. That is expected as buying health insurance is a big deal with a lot of options. Pricing, networks, benefit configurations are being released for the first time in a comprehensive manner. People should take time to look at their options, figure out what two or three really meet their needs and then think about trade-offs. My company has been modelling a repeated shopping experience for months now and that is probably what we will get. People will come in, look around, narrow their choices, and leave. Then they’ll come back a couple more times until they choose. I expect spikes in enrollment around the 15th and 30th of the month as well as another spike right after Thanksgiving as people sign up for coverage that can go into effect on Jan. 1.

USA Today:

huge interest and balky technology that led to a series of glitches, delays and even crashes that marred the first hours of the centerpiece of President Obama’s health law.

Responding to mistermix — this system was load tested — the load was just more than anticipated and was more active than anticipated. Thankfully servers are reasonably scalable, and fixes were going into play by mid-afternoon.

The big takeaway is that people are interested, and the technology side of the equation should be quickly patched.

Seven million new people are needed to sign up for the Exchanges including a little more than 2 million young people. I think we’ll hit that by Thanksgiving if yesterday is an indicator. As a side note, it is seven million covered lives, not seven million contracts. This is a slight difference. If I insured my family on Exchange, we would be one contract but four covered lives. I think it is safe to say that of the 10 million hits, those hits represent at least and probably a good deal more than 10 million potentially covered lives. Having enrollment in Exchange go over 7 million would be a very good problem to have.

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Wave around the Waiver

by David Anderson| September 30, 20138:22 am| 57 Comments

This post is in: Anderson On Health Insurance

In the previous post, there were a couple of good questions about the Arkansas Medicaid “private option” waiver. The big one is would the Bronze plans on the Exchange be effectively useless to someone making 75% of FPL as they could not even look at the co-insurance and deductible as plausible payments.

Here is a bit more news on the Arkansas waiver (amazing what happens when one read’s the application!)

Arkansas will be submitting a SPA in addition to the submission of waiver requests for this Demonstration which includes eligibility limits for the newly covered population, updated cost-sharing requirements and the state’s selection of an ABP. Consumer cost-sharing obligations under the Demonstration will be identical to those under the State Plan for all individuals receiving the ABP. The SPA describing the ABP will include the cost-sharing design for all individuals receiving the ABP. As will be described in the SPA, Private Option beneficiaries with incomes below 100% FPL will not have cost-sharing obligations in year one of the Demonstration; Arkansas plans to submit amendments to the waiver to implement cost-sharing for Demonstration participants with incomes from 50-100% FPL to be effective in years two and three of the Demonstration. Individuals with incomes of 100-138% FPL will be responsible for cost-sharing in amounts consistent with both the State Plan and with the cost-sharing rules applicable to individuals with comparable incomes in the Marketplace. . For individuals with income between 100-138% FPL, aggregate annual cost-sharing will be capped at 5% of 100% FPL ($604 for 2014). Providers will collect all applicable co-payments at the point of care. QHPs will monitor Private Option beneficiaries’ aggregate amount of co-payments to ensure that they do not exceed the annual limit.

Let’s break it down.

Year 1, people under poverty line won’t have any cost-sharing.
Year 2 and 3 people under poverty line will have some cost sharing.
People over poverty line but MA eligible will have cost sharing up to 5% of federal poverty line.

§ 1902(a)(17): To permit the State to provide different delivery systems for different populations of Medicaid beneficiaries. The State is not requesting a waiver of comparability with respect to benefits, eligibility, or cost-sharing.

Earlier in the waiver, Arkansas is making a big deal about dealing with churn as its justification for the “private option:”

Continuity of coverage – For households with members eligible for coverage under Title XIX and Marketplace coverage as well as those who have income fluctuations that cause their eligibility to change year-to-year, the Demonstration will create continuity of health plans and provider networks. Households can stay enrolled in the same plan regardless of whether their coverage is subsidized through Medicaid, CHIP (after year one), or Advanced Premium Tax Credits.

I think this is a good policy justification for this option. We know that income variance is high at the bottom of the economic scale. Some people could have a good couple weeks of overtime at working that knock them out of one program to another, or someone who had just missed qualifying by $22 a week now qualifies after they lost the Thursday morning shift. People shifting between dissimilar plans and dissimilar networks and different providers are a problem because the continuity of their care (to use a highly technical term) sucks.

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Arkansas waiver news

by David Anderson| September 29, 20139:14 pm| 35 Comments

This post is in: Anderson On Health Insurance

CMS approved a waiver for Arkansas for Medicaid expansion. Instead of doing the mechanically simple thing of just expanding Arkansas Medicaid for individuals up to 133% of poverty line, Arkansas will engage in premium support. Individuals who are newly qualified for Medicaid in Arkansas will get a voucher to buy a policy on the Exchange.

The Hill blog:

Under the waiver, Arkansas will expand Medicaid to cover individuals whose income is less than 133 percent of the federal poverty line — the expansion contained in the Affordable Care Act.

But rather than placing those newly eligible residents on traditional Medicaid, Arkansas will offer them private coverage. Residents will be able to buy the private healthcare plans offered in the state’s insurance exchange — the other half of ObamaCare’s coverage expansion.

Iowa, following Arkansas’s lead, has already proposed a similar waiver, and state officials have said Arkansas’s plan could serve as a broader model.

This is big news with a couple of levels if implications:

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First, as a purely technocratic wonk, this is asinine. It is reinventing the wheel and adding some right angles to the second prototype for the hell of it. Medicaid has a system for enrollment that is scaleable and a set of providers who are willing to take it. Premium support will lead to the ineffecient use of a couple billion federal dollars over the next ten years. It will also lead to the waste of a few hundred million Arkansas dollars.

However, screw that. This is a political exercise that will make sure that tens of thousands of people who otherwise would not have gotten coverage will get coverage. A 8% or 10% inefficiency tax that allows people to benefit from Obamacare without calling it Obamacare is a net societal win. Furthermore, since it now builds in a layer of middle men that have minimal real value, there is a rentier class in Arkansas that will now be interested in keeping their income stream. A new advocate for Medicaid will be created which will make Medicaid sustainable in Arkansas.

Furthermore, several other states (Indiana and Iowa) have applied for very similar waivers from CMS. I think they will get the same waiver in the next couple of weeks. Pennsylvania’s expansion request will not be going through the same expedited approval. Pennsylvania wants to do a premium support model, but Gov. Corbett also wants to do some serious poverty shaming and lifetime limitations on both expansion and current Medicaid populations. I don’t think that waiver request has been filed yet, nor do I think that we can draw any conclusions from the Arkansas waiver to the Pennsylvania plan.

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Sitting here in limbo waiting for the dice to roll

Let me file that under fuck it.

Shut up, hissy kitty!

Yeah, with this crowd one never knows.

You don’t get to peddle hatred on saturday and offer condolences on sunday.

You can’t attract Republican voters. You can only out organize them.

There are a lot more evil idiots than evil geniuses.

Books are my comfort food!

Trump’s legal defense is going to be a dumpster fire inside a clown car on a derailing train.

Hi god, it’s us. Thanks a heap, you’re having a great week and it’s only Thursday!

Never entrust democracy to any process that requires republicans to act in good faith.

Red lights blinking on democracy’s dashboard

“What are Republicans afraid of?” Everything.

The cruelty is the point; the law be damned.

No one could have predicted…

fuckem (in honor of the late great efgoldman)

Another missed opportunity for Jamie Dimon to just shut the fuck up.

Fuck the extremist election deniers. What’s money for if not for keeping them out of office?

Chutkan laughs. Lauro sits back down.

Republicans: The threats are dire, but my tickets are non-refundable!

Republicans do not pay their debts.

rich, arrogant assholes who equate luck with genius

I’m pretty sure there’s only one Jack Smith.

Since when do we limit our critiques to things we could do better ourselves?

Tipping and paying for performance

Does this Qualify?

Better MLS referees in 2019

Notes from day 1

Wave around the Waiver

Arkansas waiver news