• First IPAB cost control hearing, 2015

    While the first IPAB hearings are years off (best case), we got a glimpse of the future today in Massachusetts. Monday was the first day of the MA health care cost hearings, with lots of politicians (good coverage by WBUR and HCFA). My Best Slides Award goes to Deborah Chollet, Ph.D., Mathematica Policy Research (download full ppt here). All you need to know is that Medicare and Medicaid fix prices but not volumes while private insurance can use managed care technology to constrain volume, but provider market power drives prices. The result in Massachusetts?

     

    The Best Chart Award goes to Dianna K. Welch, F.S.A., M.A.A.A., Oliver Wyman Actuarial Consulting, Inc. (full ppt here), for showing how small group beneficiaries increasingly have more skin in the game (prior TIErades here), and yet the MLR for small groups hasn’t budged much.

    

    Note the dramatic increase in small groups with low actuarial values and the decline of those with high values – costs are being rapidly shifted to beneficiaries. And now the MLR chart, which actually shows an increase in small group MLR in 2009. Cost shifting did not result in savvy shoppers.

     

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    • Kevin
      “Note the dramatic increase in small groups with low actuarial values and the decline of those with high values – costs are being rapidly shifted to beneficiaries. And now the MLR chart, which actually shows an increase in small group MLR in 2009. Cost shifting did not result in savvy shoppers.”

      –MLR increasing a good thing
      –Not associating savviness of shoppers, cost shifting, and MLR connection, espeically in view of complexity and factor contributing to shift.

      Thanks
      Brad

      • Increased MLR = more of the health premium dollar went to paid claims rather than insurance company costs + profits. I agree that in most contexts, high MLR is a good thing. ACA regulates MLRs that are too low, as a proxy for excessive insurance company profits.

        As for the second point (which was mine, not Welch’s). Under CDHC, with lower moral hazard and higher cost sharing, consumers should buy less health care (or perhaps, buy health care more efficiently). That should show up in the MLR – paid claims should decline. A better measure would be total medical expenditure by the consumer. Better yet would include health outcomes.

        Kevin