Wednesday, June 24, 2015

Oregon Health Insurer Giant Moda Having Problems; Oregon Insurance Division Bailing Them Out with Rate Payer Money?

MaxRedline has an interesting post on the Oregon Insurance Division refusing to allow Oregon health insurance providers to reduce their rates. In fact its preliminary determinations are forcing two providers to charge almost $60/month more than they want to charge.

Health Net wanted to charge a $240 monthly premium for its silver plan for a 40 year old. Zoom, a new provider, wanted to charge $233 per month for its silver plan. But the Oregon Insurance Division has given a preliminary determination that Health New will have to charge $297/month and Zoom will have to charge $291/month for the silver plan.

Why is the Oregon Insurance Division asking health insurance providers to charge more than they think is necessary? The Oregonian reports that state regulators are doing it to keep the health insurance industry "stable".
"State Insurance Commissioner Laura Cali said that while her job is to make sure consumers are not overcharged, she also has to ensure rates cover insurers' costs. Otherwise, predatory pricing could over the long term drive some companies out of the market. She said that Oregon is likely to still enjoy better rates than other states thanks to one of the most competitive markets in the country.

"Pat Allen, director of the state Department of Consumer and Business Services, said 'We need to ensure a market that long term is stable, competitive and ensures pricing that is much closer to the cost of delivering health care.'"
Zoom is new to Oregon, and Health Net covers only about 1,000 individual policy buyers out of an Oregon market of over 220,000. But, do state regulators know more about running stable long term health insurance plans than Kaiser Foundation Health Plan or Providence Health Plan who insure about 1/5th of Oregon's individual plan market? Kind of doubtful.

So, why would Oregon health insurance regulators ask Kaiser and Providence to raise their proposed rates $26/month ($271 instead of $245/month) and $27/month ($284 instead of $257/month)respectively?

Maybe to help other insurers stay in business who have not made wise decisions?

Moda, Oregon's biggest insurer with 46% of the Oregon individual market is asking for a 25.6% monthly premium raise from $245/month to $307/month. It took a big loss in 2014. It expected claims and administrative costs to equal 99% of premium income. But, instead they equaled 165% of income. Ouch!

Then there is LifeWise Health Plan which serves a tenth of Oregon's individual health care insurance market asking for $318/month (a 38.5% premium increase) in 2016.

Where were the wise state regulators on higher premiums bringing stability when they approved Moda for second lowest premium $221/month in 2014 and LifeWise for lowest premium $222/month for 2015? If $222/month is fine this year, why shouldn't $233 or $245/month be fine in 2016?

Could it be that the state regulators like Laura Cali and Pat Allen are really trying to shield big players like Moda and LifeWise from their bad business decisions? Two years into ACA coverage they aren't doing well. They insure 56% of the Oregon individual market. Too big to fail so all the individual plan premium payers of the other providers have to cough up increases too?

Tuesday, June 23, 2015

Effects of Unstable Currency: Brazilian Credit Cards Now Charge 360% Interest a Year

Brazilian credit card interest has now risen to 360% a year.

In the 1980's and early 1990's Brazil faced runaway inflation. One of the main tools to reign it in was high interest rates. This, of course, impacted both consumer spending and business expansion (fewer products bought = fewer products manufactured).

Out of control spending and money printing leads to disastrous side effects in any economy including the eighth largest economy in the world: Brazil.


Juros = interest
Cartão de crédito (Rotativo) = credit card (revolving)
Cheque Especial = bank credit line
Variação porcentual ao ano = yearly percentage variation
Fonte: Banco Central = Source: Central Bank

Tuesday, June 02, 2015

Newspaper Woes Continue: 3% Slide in Circulation

The Pew Research Center reports that newspaper circulation fell 3% in 2014 as compared to 2013. (Though 2013 was the only positive year in a decade long -47% slide in circulation.)
"After a year of slight gains, newspaper circulation fell again in 2014 (though tracking these data is becoming more complicated each year due to measurement changes)[*]. Revenue from circulation rose, but ad revenue continued to fall, with gains in digital ad revenue failing to make up for falls in print ad revenue. Despite widespread talk of a shift to digital, most newspaper readership continues to be in print."
Total revenue has fallen from $46.1 billion in 2003 to $20.7 billion in 2013**--about a 55% drop. Interestingly, newsroom employment has not dropped as fast as revenue. It went from 54,200 employees in 2003 to 36,700 in 2013--only a 32% drop. So, newsroom employees have felt only about half the impact of the drop in newspaper revenue.

The sad story is perhaps told best by the drop in daily readership by age. There has been a significant drop in newspaper readership among all age groups since 2000, but especially among those under the age of 45.Currently those under 45 are half as likely to read a newspaper as their under 45 counterparts in 2003.

2003 daily newspaper readership:
18-24 year olds - 40%
25-34 year olds - 41%
35-44 year olds - 50%
45-54 year olds - 59%
55-64 year olds - 64%
age 65+ - 71%

2014 daily newspaper readership:
18-24 year olds - 17%
25-34 year olds - 20%
35-44 year olds - 23%
45-54 year olds - 32%
55-64 year olds - 40%
age 65+ -  52%

The only bright spot for Oregon newspapers is that the Oregonian is in the "Top 25 Newspapers by Digital Traffic" coming in at number 21 with 6,339,000 unique visitors in January, 2015. Unhappily, that doesn't translate into actual circulation since the Oregonian doesn't make the top 25 in digital circulation.

The Alliance for Audited Media remains useless for daily circulation numbers, but Pew Research gamely puts together a top 25 list for Sunday newspapers. Here are the top 25 in Sunday circulation and Sunday digital circulation:

Total circulation, Sunday edition, September 2014:
The New York Times - 2,502,367
Los Angeles Times - 965,598
Houston Chronicle - 925,065
The Detroit News and Free Press - 835,661
The Washington Post - 776,806
Chicago Tribune - 769,215
The Dallas Morning News - 707,792
The Atlanta Journal-Constitution - 665,056
San Jose Mercury News - 634,001
(MN) Star Tribune - 589,725
The Denver Post - 573,542
(NY) Daily News - 558,057
(NY) Newsday - 510,683
The Philadelphia Inquirer - 497,142
(CA) Daily News - 491,480
The Arizona Republic - 462,477
New York Post - 454,007
St. Louis Post-Dispatch - 438,058
(OH) The Plain Dealer - 397,891
Chicago Sun-Times - 387,604
The Boston Globe - 377,405
(NJ) The Star-Ledger - 359,820
The Seattle Times - 352,131
Tampa Bay Times - 350,216
U-T San Diego - 334,723

Digital circulation, Sunday edition, September 2014:
The New York Times - 1,321,207
Los Angeles Times - 280,125
New York Post - 238,655
(NY) Newsday - 217,816
The Denver Post - 153,682
Chicago Tribune - 146,448
(NY) Daily News - 145,497
The Philadelphia Inquirer - 138,800
The Dallas Morning News - 121,917
(NJ) The Star-Ledger - 119,494
The Salt Lake Tribune - 109,568
(UT) Deseret News - 101,094
The Boston Globe - 94,965
(OH) The Plain Dealer - 80,799
Chicago Sun-Times - 76,716
Honolulu Star-Advertiser -72,491
San Jose Mercury News - 71,440
Houston Chronicle - 71,087
(MN) Star Tribune - 67,573
The Seattle Times - 66,347
Saint Paul Pioneer Press - 59,915
The Atlanta Journal-Constitution - 50,645
San Francisco Chronicle - 43,636
(MD) The Sun - 42,982
(WI) Milwaukee Journal Sentinel - 42,612

One presumes that subtracting the Sunday digital circulation from the Sunday total circulation for newspapers on both lists will give the print circulation. But, that is iffy given the Alliance for Audited Media's bizarre circulation metrics.
*Due to Alliance for Audited Media's measuring changes.
**Total Revenue in 2014 was $19.9 billion--a -$0.8 billion drop from 2013.