Monday, October 31, 2011

Pushback on rates

This is interesting.  A large health insurer is suing Maine for setting rates below what would be required for a "a fair and reasonable return."  The margins in question are

  • 2009 3%
  • 2010 0.5%
  • 2011 1%

For context, Oregon (cited in the article) set rates at negative returns, specifically saying they wanted to take insurer surplus and give it to consumers.

This kind of “taking” looks fair if you don’t think about it.  After all, why shouldn’t consumers benefit if insurers have excess capital?  The problem in a nutshell is that the excess capital wasn’t paid in by the same people who would be getting it out.  People who are policy holders in 2011 are not necessarily the same people who were policy holders in prior years when the surplus was built up.  Even more so, there are differences in product mix.  If an insurer is making “fat” profits off large group customers, what is the moral reasoning behind taking that money and giving it to small group or individual customers?  It subsidizes small business at the expense of large, or even worse subsidizes employers that don’t offer insurance by taking from those that do.  Anthem leaves this to section III-A-3 in their brief, but to me it’s their best argument.

I hope the Anthem suit fails because regulators should have maximum flexibility to respond to market place needs.  But at the same time the concept of “taking” deserves much more public scrutiny, and for that I’m glad the suit was filed.  Scheduled for oral arguments 11/8/2011.

Saturday, October 29, 2011

Women and the City

One of the angles I don’t see covered enough in public discussions of urban living is gender.  For instance, the desirability of standing alone in the dark at a bus or train station may change markedly depending on who you ask.  I’d expect that to filter down to residential choices, that women faced with income constraints would be more likely to move out until they found affordable housing rather then stay in and accept the trade-off in neighborhood quality.

Here in a roundabout way is empirical evidence.  The MTO study didn’t show the educational effects for children its authors were looking for, but it did find significant health benefits for women who moved out of high poverty neighborhoods to those with low poverty.  In essence better neighborhoods are healthier neighborhoods for women in a way that doesn’t apply to men.

Worth considering for a region like Portland with specific goals for densification and urbanization.

Friday, October 21, 2011

Blue Shirts Unwanted

"You're probably used to seeing TSA's signature blue uniforms at the airport…"  When I see the signature blue uniforms an announcement goes off in my head.

"Attention! You are now entering a liberty-free zone. What you once understood to be inalienable rights are void. So long as you are here your rights are the equivalent to what they'd be if we lost World War II. Thank you and have a good day."

The prospect of seeing signature blue uniforms more often and in places other then airports is both depressing and unsurprising.

Sunday, October 16, 2011

Hospital Pricing Regulation: A History (as of 1997)

I came across an extremely readable short history of state level hospital pricing regulation.  I highly recommend it for getting a broad overview of what was going on in the 70’s, and why it stopped. 

The short version is that prices were gamed, particularly by urban and teaching hospitals.  It created a situation where everyone, from the insurers to businesses to unions to the states themselves decided they could negotiate lower prices than the official rates.

The author notes the influence of politics on deregulation but suggests it was mostly symbolic, providing a rallying point for existing interests.  I think that gives short shrift to the power of ideology.  It’s a reverse Lake Woebegone effect- its mathematically impossible for everyone to negotiate costs below average, but everyone in the 80’s suddenly became convinced that’s what they could do.  Whatever you call it, the Reagan ethos had an effect.

It’s kind of funny, you wouldn’t guess from the paper’s tone that 14 years later HMO would be a 4 letter word.  The paper is actually a sort-of defense of regulation.  From the conclusion:

…viewed by the standards of the era in which they were created, and seen in the context of the tools that were available and usable at that time, mandatory hospital rate-setting programs were able to leave an overall legacy of effective intervention. In future years, when the shape and effects of the emerging system are more clear, we may yet come to a greater appreciation of the challenges and accomplishments of this health policy epoch.

I wonder if the author expected we’d be taking another look at this.

Saturday, October 15, 2011

History and Heart

I thought this column on learning from history was trivial, is it possible to engage analytically with the world without referencing history?  To do otherwise is an exercise in mythmaking or religion.  But he ends with a provocative question:  America came out of the Great Depression stronger and more unified, but does anyone think that will happen this time?

Friday, October 14, 2011

Book Review: Ghosts of Cannae

I finished reading Ghosts of Cannae. Very readable and enjoyable military history of the Second Punic War. Hannibal invaded Italy with enormous success, winning devastating tactical victories at Trasimene and Cannae. But he never translated those victories into strategic success, Rome stood undeterred. In a sense Hannibal was outclassed. Rome was not ruled by any warlord or Greek despot willing to make peace based on a rational calculation of interest. Instead it was already an empire with unmatched manpower and a Senate determined to win at all costs. If that meant sacking their own major cities like Capua then so be it.

Capua is instructive. They accepted Hannibal's offer to break off from Rome on the condition that they didn't need to contribute soldiers. That left Hannibal with the liability of protecting the city but no additional assets to do the job. An impossible situation, one quickly exploited by Rome. Hannibal couldn't win by being a mere warlord, he needed to make the conflict with Rome into a civil war instead of just a foreign invasion. That meant giving dissident latins something to fight for, they needed an ideology or an idea that was worth dying for. Hannibal couldn't just break up Rome, he needed to create an alternative. Instead, Rome created a new Hannibal in the form of Scipio Africanus and the rest is history.

The book references a provocative thesis I hadn't seen before: That the Republic fell because Rome couldn't meet its military challenges without powerful and charismatic generals, and that this was Hannibal's ultimate legacy. This seems a bit off- Rome did quite well isolating and marginalizing Hannibal without a superstar. The only way Scipio is necessary is if you think Rome would have run out of willing soldiers, and there's nothing to support that. How different would things be if Publius Scipio died at Cannae!

Saturday, October 8, 2011

Auto Enrollment vs. Mandates

The Incidental Economist looks at the Republican version of health care reform.  One interesting concept picked out is the idea of auto-enrollment:

Mechanisms include “ERs, submission of state tax forms, workplaces, and state dept of motor vehicles offices, such as when people renew their drivers license.”  Presumably by using these to boost enrollment other incentives such as the mandate/tax penalty would be unnecessary.

Two thoughts: 

  • What a whopper of hypocrisy to protest the mandate as unconstitutional because “the government can’t force you to buy something”, then propose something like this.  Here, the DMV or IRS is actually buying it for you without your consent.
  • Is there anything stopping a less coercive measure at the state level to supplement the mandate?  Make it as easy and mainstream to sign up for the exchange as it is to register to vote.

Friday, October 7, 2011

Good Quote from Robert Gates

Speaking at the National Constitution Center, he says,

I have worked for eight presidents, and I have known many politicians of both parties over nearly five decades, and I never met one who had a monopoly on revealed truth.

At a time when our country faces deep economic and other challenges at home and a world that just keeps getting more complex and more dangerous, those who think that they alone have the right answers, those who demonize those who think differently, and those who refuse to listen and take other points of view into account—these leaders, in my view, are a danger to the American people and to the future of our republic.

Worth remembering.