Friday, October 20, 2017

Bronze and gold plan discounts in California, 2018

As I noted recently, Covered California has acted on its plan to shield marketplace enrollees from the effects of Republicans' CSR sabotage.  For 2018, a surcharge averaging 12.4% has been loaded onto silver on-exchange plans only (the only plans with which CSR is available) to cover the cost that until now has been reimbursed by the federal government.

We can now examine the effects of the surcharge, which I've done below.  The effects should theoretically be as follows (more detail here):

  1. Off-exchange plan pricing should be unaffected by CSR; price differences between metal levels should remain proportionate to actuarial value at each level.
  2. Enrollees with incomes under 200% of the Federal Poverty Level (FPL), for whom strong CSR is available, should be unaffected. Subsidies will rise to cover the additional premium, and silver plans will continue to offer outsized value, covering 94% (at incomes up to 150% FPL) or 87% (for incomes from 150-200% FPL) of the average user's costs.
  3. Subsidized enrollees in the 200-400% FPL income range will see discounts in bronze and gold plans, since premium subsidies, which are keyed to silver plans, will rise to cover the inflated silver premium.

Let's look at how the expected bronze and gold discounts play out in some of California's 19 rating regions. Because California has standardized plan benefits at each metal level, relatively clean comparisons are possible -- though I would note that last year, relatively expensive PPOs (plans with broader provider networks) were popular in many areas.

Wednesday, October 18, 2017

Does the Alexander-Murray bill adequately protect vulnerable groups?

The changes to the ACA's Section 1332 state innovation waivers in the Alexander-Murray marketplace stabilization bill  have broad support, having been proposed by multiple HELP Committee hearing participants and endorsed by bipartisan outside advocates including  former acting CMS director Andy Slavitt, one of the ACA's most vocal defenders. These include providing for an expedited waiver process, an emergency waiver process, and the creation of "cookie cutter" waiver templates that multiple states may opt to adopt. (There are dissenters, however, as discussed below.)

Also a matter of broad consensus: easing the terms by which states meet the requirement that a waiver proposal be budget-neutral by 1) allowing states to combine Section 1332 waivers with Medicaid and CHIP waivers and using savings from one to offset extra spending on another, and 2) considering budget impact over the 6-year term of the waiver and a ten-year budget plan.

There is one alteration, though, that gets to the crux of the debate over state flexibility, and was probably a matter of intense negotiation. That is a change to the so-called "guardrails" pertaining to quality and affordability of coverage.

Monday, October 16, 2017

Wrong, wrong, wrong, wrong, wrong

Quick, ACA marketwatchers: what's wrong with the headlines below?

Trump didn't end the Cost Sharing Reduction benefit,  of course, He didn't end government funding for CSR, either -- he just redirected it into a less efficient channel that will cost the Treasury hundreds of billions, hurt unsubsidized enrollees in states that don't make insurers price in CSR in the most efficient way, and provide a windfall for many more affluent subsidized enrollees in states that do concentrate the premium hike where it belongs, in on-exchange silver plans.

Those headlines did a real disservice. A lot of people in this country must be under the impression that a major ACA benefit has been stripped away.  The ledes in many cases did not repair the damage.

Sunday, October 15, 2017

60% of ACA marketplace enrollees with CSR are in nonexpansion states

In February of this year I noted that the 19 states that refused to implement the ACA Medicaid expansion comprised 38% of the U.S. population but 53% of ACA marketplace enrollment and 60% of enrollees who accessed Cost Sharing Reduction (CSR) subsidies.

That seems relevant now that Trump has abruptly cut off federal funding for CSR, stiffing insurers for the remainder of this year and leaving them to price the benefit into their 2018 premiums. I've pasted the whole of the post below. Enrollment stats are as of March 31, 2016. There's a state-by-state breakout at bottom of population, CSR enrollment and APTC (premium tax credit) enrollment. This year's enrollment breakout would be roughly proportionate: nationwide, the same 57% of enrollees access CSR. As of the end of the first quarter 2017, CMS reported 10.3 million total enrollees (which, per Charles Gaba, may well have been an undercount, leaving out up to a half million late enrollees), compared to 11.1 million at the same point in 2016.

Before getting to the repost below, a few notes:

1. Many observers are drawing a somewhat misleading conclusion from the high concentration of CSR enrollees in red states. They will be hurt by the CSR funding cutoff only insofar as insurers pull out of the market -- and, longer term, by the thinning of the risk pool caused by unsubsidized enrollment dropping off, which will reduce competition and so plan choice. Unsubsidized enrollees bear the brunt of the premium increases driven by the cutoff of federal funding for CSR. And most of the damage on that front is already done, as most insurers in most states filed rates assuming that CSR would not be reimbursed in 2018 (and/or accounting for more general politically induced uncertainty).

Friday, October 13, 2017

Trump is stiffing health insurers for three months in 2017. States can make Treasury eat the cost.

Oregon's last-minute adjustment to enable insurers to cover the cost of Cost Sharing Reduction (CSR) subsidies for ACA marketplace enrollees in 2018 after Trump abruptly cut off federal reimbursement for those subsidies gave me an idea for how states could also make insurers whole for the last quarter of this year.

Trump is cutting off federal reimbursement for the subsidies, which insurers are obliged to provide but until now have not been able to price into their premiums, later this month.  In most states, insurers have been able to or will be able to adjust premiums to cover CSR in 2018. But they have  to eat the cost for the rest of the year. Unless....

Here's how Oregon will make insurers whole in 2018:
In order to ensure carriers can continue to offer coverage in Oregon, DCBS is ordering health insurance companies offering plans on to increase their already approved silver metal tier 2018 plan rates by 7.1 percent.

Thursday, October 12, 2017

Can blue states protect their health insurance markets from Trump's executive order?

Can a state that wants to preserve ACA consumer protections protect itself from the executive order Trump signed today, which opens paths to segmenting the risk pools in the individual and small group markets? Consider the case of New Jersey, which had guaranteed issue (and, with no individual mandate, sky-high premiums) pre-ACA.

The Trump EO instructs Treasury, DOL and HHS to expand availability of short-term insurance, allowing it "to cover longer periods and be renewed by the consumer."  That's understood to mean allowing coverage for up to a year -- and so, via renewal, indefinitely, though subject to medical underwriting at renewal as well as at first purchase.  Short-term plans are not subject to ACA coverage rules.

At present, plan duration is limited to three months. Since  that rule only went into effect this April, extending the term to up to a year is not a radical shift from the ACA status quo.  But combined with weak enforcement of the individual mandate, and more exemptions from the mandate stemming from rising premiums, temporary plans available continuously are likely to weaken the ACA risk pool.

Temporary plans are subject to state regulation, however, and health law scholar Nicholas Bagley expects that to continue:

Wednesday, October 11, 2017

States vary in their responses to CSR uncertainty

Note: this post is a joint effort with colleagues who have closely tracked the CSR chaos induced by Trump and Republicans in Congress. Dave Anderson is a former health insurance analyst, now a healthcare scholar at Duke, and a blogger at Balloon Juice; Charles Gaba is the fabled chronicler and analyst of ACA enrollment, marketplace pricing, and healthcare policy; Louise Norris is co-owner with her husband Jay of a health insurance brokerage for individual market customers, and a top source of marketplace information and analysis at her own blog (link in byline) as well as at and elsewhere.

Note 2 Today, the Maryland and California exchanges opened their plan preview tools for 2018, with premiums listed. California has implemented its planned CSR surcharge, adding 12.4% to the premium of silver on-exchange plans only. In some regions, the cheapest gold plan is cheaper than the cheapest silver.

Update, 10/14: David Anderson has mapped out the choices states have made to cope with CSR uncertainty (and now, CSR cutoff) here, and Charles Gaba is charting them here.

The open enrollment period for the 2018 ACA Marketplace that begins on November 1, 2017 is likely to confront enrollees with more challenges than any open enrollment since the troubled launch of the ACA Marketplace in October 2013. The time period is shorter, the outreach will be far less robust, and the pricing of plans will behave in ways that people do not expect.  Much of the pricing variance will be a result of choices that states and insurers have made in response to the uncertainty over whether the federal government will continue to reimburse insurers for the Cost Sharing Reduction (CSR) subsidies that insurers are legally obligated to provide to qualified exchange enrollees.