Monday, January 18, 2016
Friday, January 8, 2016
Not so fast!!!!
 |
D . Joy Flower |
Obamacare is failing? Not so fast.13
By JOE
FLOWER
“See?
Obamacare is failing!” according to industry expert C. Little, citing Wolf
Report 712A just filed by Boy W. Cried.
What is
the hue and cry about this time? United Healthcare is saying it has lost large
bales and wads of money on Obamacare exchange plans, and just may give up on
them entirely. Anthem and Aetna allow that they are not making very much
either. Some new not-for-profit market entrants have gone belly up, and the
others are having a hard time.
Before we
perform the Last Rites over Obamacare, perhsp we should think for a moment
about the hit ratio of the first 711 Wolf Reports from Boy W. Cried and ask a
few questions.
First: Do
we trust implicitly the numbers that the health plans are giving out in press
releases, citing unacceptably high medical loss ratios? Medical loss ratios
(MLRs) are self-reported. Yes, there is a certain amount of accountability. The
numbers have to square with expenses given on their corporate tax forms and so
on, but there is wiggle room in just what is reported and how. If is a
reasonable supposition that if you wanted to look for the professionals with
the greatest skill in juggling numbers, you would find them working for
insurance companies, especially health plans, because the stakes are so high.
These numbers people at the top of their game have huge incentives to report a
high MLR, so if there is wiggle room, I am sure they will find it.
Beyond
that, MLR is reported by state, by market segment (large group, small group,
individual), against what portion of a premium is “earned” within that
reporting period, and by calendar year rather than any company’s financial
year. To say, “Our MLR is X” is to claim that X the correct aggregate number
across their entire multi-state system, from all their subsidiaries,
appropriately weighted for the size of each region. We don’t have access to
those numbers, just to what they are telling us. There are plenty of reasons
for them to want to report the highest MLR they can get away with, plenty of
reasons to be skeptical of the numbers they are giving out, and plenty of
reasons not to base drastic policy changes on such pronouncements.
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