Friday fast facts and catch-up

Here in no particular order are items of interest that have come up this week.

  • Heath care spending growth in 2012 was a low 3.7 percent – the fourth consecutive year it has been under 4 percent.  Moreover, health spending grew less than GDP growth, so health care’s percentage of the economy actually decreased.

  • Rumors persist that bill review and auto insurance tech company Mitchell International is buying bill review tech company Stratacare.  Word from multiple sources is the deal is close to done – that said, this one is especially tough to pin down… That said, there’s a lot of buzz out there.  IF this pans out we’ll dive into the implications – but as of now that’s a definite “IF”.

  • There’s a new book out on insurance regulation; it isn’t specific to WC however it is a good quick reference on PPACA, Dodd-Frank, and other timely topics.  It’s the Insurance Regulation Answer Book 2014.

  • On a much narrower but critically important issue, I direct you to the current issue of The Back Letter.  A colleague described the key takeaways thusly: “the ongoing Medtronic food fight around BMP (bone morphogenic protein)…The Back Letter has done a nice job identifying that the core issues here go way, way beyond a single product, and focuses appropriately on the pervasive evils (OK, those are my words) that conflicts of interest bring.”
    There’s also an excellent piece on doctor shopping for opioids in this issue; Thanks for the tip Doc.
  • A terrific paper by Milliman addresses the “adverse selection” and “Obamacare death spiral” nonsense.  Briefly, newborns, adult females, and older folks look to be the most profitable members – turning the industry on its head.  Back in the good old days – two weeks ago – insurers wanted healthy folks only.  Now, thanks to risk adjustment baked in to PPACA, things are a LOT different.

Enjoy the weekend!

4 thoughts on “Friday fast facts and catch-up

  1. The Milliman report is very interesting, thank you for posting the link. However, I’m not sure you should be pointing to this report to support an argument that the possibility of death spirals is “nonsense” or that “adverse selection” is still not possible over a longer term.

    As they point out, at least twice in the report, their results are based on a model with an underlying assumption that “market as a whole enrolls a standard mix of members” (see page 2 of the report). The possibility that this does not happen is very real in which case actual results would be quite different (see page 5 of the report).

      • In the short term (1, maybe 2 years) and on an individual carrier basis this report suggest you are correct.

        However, in the long term I think you’re mistaken. The profits companies reap from insuring the sicker don’t come from the premiums they are charging the sick, rather from the premiums they are charging the healthy (and reinsurance reimbursements from the gov’t). So, over the long term, if the mix of healthy and unhealthy who are insured changes (if the healthy don’t participate in the market) then the risk adjustment pools get out of whack as there isn’t enough premium coming from the healthy to to subsidize the cost (and profit) of the unhealthy. (this is mentioned on pages 2 and 5).

        This report also says that the reinsurance provisions of the 3Rs are lending to the profits on the sicker as well, as carriers can double dip from both reinsurance and risk adjustment. I believe the reinsurance reimbursement is changing if not going away over the next two years. This report specifically states that the results are only based on 2014 reinsurance reimbursements, if the reinsurance reimbursements go away the profits from the sick will be less, perhaps significantly less.

        So, in a scenario where less of the healthy participate in the market only three things can happen: 1. the carriers will lose money 2. premiums will need to go up, possibly by a large degree 3. the Federal gov’t will need to increase reinsurance reimbursements instead of removing them (where will that money come from?)

        • Mike
          The risk program is in place for three years.

          I would not assume carriers won’t figure out how toake money on heir entire book of business. Their world has changed dramatically and so has their business model. Carriers that succeed will do so by effective population health management.

          I’d suggest thinking about this from the perspective of the market as it is today and will be tomorrow. The old models operations and metrics no longer apply.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>