This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.\
“brand recognition, we have analyzed slice and dice from every possible perspective what we’ve uncovered is that there is a distinct advantage to the blues brand, it gives us multi-point advantage in the markets, we believe some pricing differential compared to competitors, may in fact be ameliorated by virtue of the blues brand.”
“we average about 30% market share across our 14 states. But if you would had delve deeper and actually curve out where the individual consumer makes the buying decision which is what the exchange was going to look like, the average of 47% market share. ”
“when you are thinking about pricing product and you are moving into this new market density matters. It just really matters because you are no longer in a medical underwriting world and you are trying to price based on statistical averages of what the population health status might be.”
“we know the individual market quite well, its almost 50% market. We have an average kind of consensus of what we think the medical loss ratio will look like for that group. We have a consensus what small group looks like because of our large market share in small group.
We don’t know the uninsured population, but we have enough data that says we can probably get a reasonable proxy and as we price for the new world though, its important to recognize that I mean, tow-thirds of the equation is not enough and you have to be somewhat conservative on the other third of the equation so you get more data. But at the same time, the way the risk coders work, the way the reinsurance works and the risk adjusting. No members created equal from the standpoint of targeting. There used to be a history that healthier was always better. But in the new world, its more about a balance pool.”
“So to try to go on strategically and only target healthier, or target only unhealthy is not an appropriate approach to pricing because you really need the law of large numbers as you move forward in this world.”
“The reinsurance is put in place to protect all carriers from getting adverse selection at a significant level. And the risk corridor is simply set up to cap profits in someway but to ensure that over time you are in an average margin as a pool, a broad industry pool.”