Come for the politics, stay for the snark.

How any woman could possibly vote for this smug smarmy piece of misogynistic crap is beyond understanding.

If you tweet it in all caps, that makes it true!

“Can i answer the question? No you can not!”

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

Within six months Twitter will be fully self-driving.

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

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

… pundit janitors mopping up after the gop

We’ve had enough carrots to last a lifetime. break out the sticks.

Yeah, with this crowd one never knows.

Republicans in disarray!

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

If marriage is the equivalent of selling yourself into slavery, women with self respect should reject the offer.

We’re not going back!

I really should read my own blog.

It’s all just conspiracy shit beamed down from the mothership.

Wow, I can’t imagine what it was like to comment in morse code.

Prediction: the gop will rethink its strategy of boycotting future committees.

You come for women, you’re gonna get your ass kicked.

It could be worse. Vance could have said “post-menopausal sows.” Waiting for that audiotape to surface.

Nikki Haley, who can’t acknowledge ‘slavery’, is a pathetic shill.

We know you aren’t a Democrat but since you seem confused let me help you.

Stamping your little feets and demanding that they see how important you are? Not working anymore.

Balloon Juice has never been a refuge for the linguistically delicate.

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North Carolina anti-gerrymandering and Medicaid Expansion

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As I noted yesterday, the North Carolina state courts have struck down the state legislature gerrymander that has made Raleigh a foregone Republican conclusion since 2011 despite Democrats winning a majority of the two party vote in 2018. The state Republicans are not appealing the decision.

There are a lot of policy angles here. The biggest one to me is Medicaid expansion.

Right now, North Carolina has not expanded Medicaid. The Democratic Governor Cooper wants to expand Medicaid, the Republican State Assembly Leader Berger does not. The state does not have a budget as Cooper has vetoed the last budget that did not expand Medicaid. The Legislature is passing a series of mini-buses funding significant chunks of the state government.

There has been some interest from Republicans to pass a fairly restrictive, work requirement and administratively burdensome Carolina Care Medicaid expansion for the past couple of years but the bill won’t get pass gatekeepers. It has gone nowhere.

There are now two paths forward for Medicaid expansion. I am assuming that the new maps will put a lot of Republicans in districts that instead of being R+8 or R+10 are now R+2 or even. Those incumbents will be facing new voters and voters with a different preference profile. The incentive for a larger band of Republicans than those currently pushing Carolina Care would be to do something about Medicaid Expansion much like their counterparts in Virginia did after the 2017 election.

The other pathway is that the maps will be significantly friendlier Democrats and more politically elastic in general. At that point the 2020 state election can be fought over Medicaid Expansion and if the Democrats can get the governors’ mansion and at least one gavel, the path forward to expansion gets a whole lot clearer.

I’ve upped the probability of a North Carolina Medicaid expansion in the next three years significantly in the past twenty hours.

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Annals of the Horrible

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Thought I’d share some (late) lunch joy by cleaning out a couple of browser tabs I’ve been meaning to share with the Jackaltariat.

First up in the catalogue of awful…

Nothing says more about a society than how it treats its most vulnerable.  Which is why this, from Pennsylvania coal country last month, says all you need to know about a certain kind of Republican* values:

Wyoming Valley West School District, one of the poorest districts in the state as measured by per-pupil spending, is located in a former coal mining community in Northeastern Pennsylvania, known affectionately by locals as “The Valley.”

When officials there noticed that families owed the district around $22,000 in breakfast and lunch debt…

…school council president Joseph Mazur thought that this would be a good next move:

…the now-infamous letter to about 40 families deemed to be the worst offenders in having overdue cafeteria bills — those were children with meal debt of $10 or more.

“Your child has been sent to school every day without money and without a breakfast and/or lunch,” said the letter signed by Joseph Muth, director of federal programs for the Wyoming Valley West School District. “This is a failure to provide your child with proper nutrition and you can be sent to Dependency Court for neglecting your child’s right to food. If you are taken to Dependency court, the result may be your child being removed from your home and placed in foster care.”

That this was about performative cruelty, and not fiscal prudence can be shown with two facts. The $22,ooo in arrears comes to about 1/4 of one percent of the district budget; you gotta know that if this was about keeping the school doors open, proposing a (surely) expensive round of child theft would not be the first move the financial folks would make.


Just to drive the point home, the guy behind the move, school council president Mazur went on to refuse an offer from a guy in Philadelphia who wanted to pay off the whole debt.  Mazur was eventually forced to reverse course.

Next up, an even more grotesque example of cruelty for cruelty’s sake from July.  I believe some commenters pointed out this incident, and I’ve been meaning to vent rage about it ever since, but here it is:

At a Border Patrol holding facility in El Paso, Texas, an agent told a Honduran family that one parent would be sent to Mexico while the other parent and their three children could stay in the United States, according to the family. The agent turned to the couple’s youngest daughter — 3-year-old Sofia, whom they call Sofi — and asked her to make a choice.

“The agent asked her who she wanted to go with, mom or dad,” her mother, Tania, told NPR through an interpreter. “And the girl, because she is more attached to me, she said mom. But when they started to take [my husband] away, the girl started to cry. The officer said, ‘You said [you want to go] with mom.’ “

 

I rate that child abuse, and those who did the crime should be in prison, as far as I am concerned. Een if the family separation followed the letter of the law, putting the kid in that position was gratuitous immiseration, and will deliver lasting trauma, doled out, it seems, for the agent’s amusement.

 

There is a word to describe such behavior and such people:  evil.  This was evil.  I say this as one with more memory of than current participation in organized religion, but it seems to me that those who welcome evil into our republic commit a grievous sin.

 

Happy lunch!  Open thread.

*Luzerne County, in which the relevant school district operates, went 58-39% for Trump in 2016.

 

Image: Pieter Breughel the Elder, The Massacre of the Innocents, c. 1565-7

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Changing Minimum premiums in California

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The least expensive premium (net of any applicable subsidy) determines the size and health status of the individual market ACA risk pool.  We assume that the marginal buyer is flipping a coin as to whether or not they want to buy insurance.  These buyers tend to be healthy and price sensitive.  The point of the individual mandate was to make not buying insurance more expensive than buying heavily subsidized insurance so as to at least nudge if not hip-check healthier buyers into the risk pool.

Yesterday, I outlined that Covered California will see lower silver premiums and higher bronze premiums.  This action will compress subsidized spreads and potentially increase the net of subsidy premium for the cheapest bronze plan. Kevin Drum thought this was no big deal, but the details matter as I ran the numbers.   I used the Robert Woods Johnson Foundation (RWJF) HIX Compare April 1, 2019 data set to calculate expected minimum premium for the cheapest Bronze plan in 2019 and 2020 for a single 50 year old non-smoker at 200% and 300% FPL for each rating area.  A rating area is a group of counties where insurers have to offer a particular plan at the same premium.  California has nineteen rating areas including two that split Los Angeles County.  I used actual data for 2019 and projected a 5.7% increase in the cheapest bronze premium and a 4.3% decrease in the benchmark silver premium. I then calculated net premiums and changes from 2019 to 2020.

This is a significant set of changes in several rating areas in California.

The short version is that the changes in spreads will mainly hit folks earn between 200%-400% FPL if they are looking to buy the cheapest coverage possible. The new state funded subsidies will be smaller than the premium increases that we should expect. The state will be spending a lot of money to partially and incompletely back fill a problem that an actively managed market is creating. Previously the Feds were bearing the entire cost of making the cheapest plan very cheap and now the state is taking on some of that cost from the Feds as the spread is being compressed.

The ACA is complicated, and California is showing that seemingly good things have negative consequences for some groups.
 

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State discretion and the ACA

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At Health Services Research**, I have a commentary out this morning that looks at the wide amount of discretion that states have in promoting a wide variety of goals for their specific individual health insurance market.  The ACA has always been a story of 51 states (including DC) and 3,000 counties but since October 2017 with the termination of CSR payments, the possibility space has widened dramatically.

Here the big decisions state regulators and elites can make:

  • Expanding Medicaid to 138% FPL instead of not expanding or expanding only to 100% FPL — Yes lowers non-subsidized premiums and slightly increases subsidized net premiums
  • Silver loading and/or Silver Switching vs Broad Loading — 3 states broad load which raises costs for everyone and lowers enrollment
  • Managing Monopoly and spread games
  • Messaging support and advertising
  • Reinsurance and subsidization to support net prices paid by people earning over 400% FPL
  • Managing the allowable parallel markets such as Short Term Plans and Farm Bureau Plans

State regulators and insurers have tremendous discretion to shape their states’ markets however they wish.  Some states will make choices that I normatively like and others will make choices that make me gag.  The ACA requires states to make decisions and states will choose who to prioritize and how to do so from a very wide toolbox.

 

 

** https://doi.org/10.1111/1475-6773.13189

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Another co-op acting oddly?

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Charles Gaba is doing his regular job of collecting all initial rate filing requests. He looks at New Mexico and something is odd in the filing. The largest individual market insurer (Molina) and two smaller carriers all initially filed effectively flat rates. To me, this implies that the 2019 premiums were slightly overpriced and we should expect to see Medical Loss Ratio (MLR) rebates of decent to significant size in September 2020. However, the second biggest carrier by enrollment in the ACA individual market, New Mexico Health Connections (NMHC), a co-op, filed for a 30% rate increase.

ACAsignups.net accessed 6/12/19

I wonder if NMHC will be a going concern in 2021.

My question comes from a pricing perspective. Molina has been an aggressive spread strategy player in New Mexico. They have a low cost, Medicaid-esque network that allows them to significantly underprice insurers that pay their provider networks something closer to standard commercial rates instead of significantly under those rates. Molina’s pricing advantage is especially notable for their Bronze plan in 2019. Their 2019 Silver plan is only $8 below benchmark for a single 40 year old non-smoker so it is price superior but not price dominant for the 138-200% FPL group that makes up a huge chunk of the individual market. NMHC has a slight pricing advantage on Gold compared to Molina. Blue Cross and Blue Shield priced 2019 a bit above NMHC.

That all changes in 2020

I am making some very quick estimates of the premium spread changes in Bernalillo County, New Mexico, the largest county in the state. I am assuming no change in plan offerings by any current 2019 carrier and flat rates for all non-NMHC carriers.

Assuming no other changes, Molina has a dominant pricing position. They would have the cheapest Bronze, Silver and Gold plan by a significant margin. A significant portion of the subsidized population would see a Molina plan that has a zero dollar premium. That is likely to be important for both attraction and retention as it is hard to terminate a policy for non-payment of premiums when there is no consumer facing premium. Gold plans from Molina will have a very significant pricing advantage over other insurers’ golds. NMHC will be priced over Blue Cross so if people are looking for a non-Molina product, NMHC is a second choice on price after an initial quality/attribute assessment.

I am assuming that the rate requests are approved as is. That is implausible but a realistic starting point. I am assuming that the other insurers don’t alter their product offerings. That, too, is a large assumption. If I was running Molina, I would introduce a 59% AV Bronze plan that I could price $30 or $40 below the current Molina Expanded Bronze offering. Doing that would pull in even more people to a zero premium plan. I am assuming that the NMHC currently covered population is no more intrinsically sticky than the rest of the ACA market. I think that is reasonable.

If these assumptions are true (enough), then NMHC has problems as they will be losing a good percentage of their current, low cost members while perhaps holding onto a morbid pool of high cost patients whose expenses may not be appropriately compensated by risk adjustment. At this time, I think that keeping an eye on one of the few operating co-ops is worth the time and attention. I don’t anticipate much news until the summer of 2020 but there is a possibility of failure if the current pricing is approved in magnitude if not in exact number.

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Moving to state based exchanges and catastrophic reinsurance

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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.

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Performative instead of performing marketplace protection

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There are many ways a state can improve its own individual marketplace. Some are effective at lowering premiums and increasing enrollment and others merely are full of sound and fury and contain no real money flows. We need to differentiate these actions as some states do a bit of both but have rules and cultural/political norms that hobble the markets more than anything that they have done since January 20, 2017.

New Jersey is a good example of both performing protection of their marketplace and performative projections.

New Jersey has a Democratic trifecta. It has passed a state based individual mandate that went into effect on January 1, 2019. It uses the revenue from the state based mandate to partially fund reinsurance. It is in the process of transitioning to a state based marketplace. It can free ride on New York and Maryland state based exchange awareness advertising.

These steps all actively improve the guaranteed issue, community rated individual market. There are also some performative protections as Andrew Sprung at Xpostfactoid lays out:

On May 31, New Jersey legislators introduced, with Governor Murphy’s support, a raft of bills* that  codify in state law the ACA’s coverage rules in the individual and small group health insurance markets, including protections for people with pre-existing conditions

Separate bills maintain a ban on medical underwriting or exclusion of pre-existing conditions (S626), mandate coverage of the ACA’s Essential Health Benefits (S562) and a set of preventive services (S3803), and limit age rating — the degree to which the oldest enrollees can be charged more than the youngest adult enrollees — to the ACA’s 3-to-1 ratio (S3810).**

Many other states with Democratic governors and legislatures have passed or have in progress similar laws that duplicate the ACA’s federal standards. Such laws are redundant by definition; they are designed as protection against future further Republican action to undermine the ACA.

Some of these are typical state insurance regulations of varying degrees of wisdom. But there is a fundamental challenge to a state trying to protect the ACA benefits and regulations without federal funding — money matters for the ACA market to by functional:

State-based ACA-mirroring laws would not mitigate the damage if the Supreme Court strikes down the entire ACA, however — including the marketplace subsidies and the Medicaid expansion. Guaranteed issue, modified community rating and Essential Health Benefits together would render coverage unaffordable for the majority of current enrollees without the federally funded subsidies, which the states could not afford to replicate.  Pre-ACA, states like New York and New Jersey that had enacted guaranteed issue were prohibitively expensive. New Jersey enacted guaranteed issue in the individual market in 1993; by 2003, enrollment had been halved and stood at 78,000, compared to about 300,000 today…

It is a statement of values and intent but without the money, it is also a statement of unaffordability.

New Jersey has another step that it could take that would increase coverage in the state, improve affordability for both on and off-exchange individuals and make the markets more functional but so far they have not done anything about a state based policy that makes the market smaller and more expensive than it could be.

New Jersey has fairly strong requirements of allowable cost sharing within a metal band. Silver plans in New Jersey are all at or over 70% actuarial value and Bronze plans must hover around 64% actuarial value. The possible spread in New Jersey is between 6 and 8 actuarial value points. The Center for Medicare and Medicaid Services (CMS) allows for Bronze plans to range from 58% to 65% actuarial value and Silver plans to range from 66% to 72% points. The maximum allowable spread is 14 points. As a rule of thumb, the bigger the spread in actuarial value points for the same insurer and network between the benchmark plan and the least expensive plan, the cheaper the plan is for subsidized buyers.

We have talked about premium spread strategies on this blog for years. I have several papers under review/accepted that play with this idea that should be out sometime in the second half of 2019 or early 2020. This is not a new idea.

New Jersey has the ability to maximize the spread. It could mandate all Silver plans to have actuarial values above 70% while mandating all insurers offer a low actuarial value Bronze plan and then anything else that the insurer wants. It could do that. Doing so could potentially double the spread which would dramatically increase affordability for subsidized buyers. Improved affordability for subsidized buyers brings in a healthier and cheaper, on average, risk mix which lowers non-subsidized premiums.

Yet, the decision New Jersey has made is that it wants to lower top end exposure for people who are insured at the trade-off of having more people uninsured and facing an infinite deductible. That is a viable trade-off to make, but it is one that weakens the market.

We need to separate signal from noise and make trade-offs explicit when we look at what states are doing to their individual health insurance markets.

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