CSRs

2018 MIDTERM ELECTION

Time: D H M S

A couple of months ago, I sounded a (semi-muted) alarm about the future of Silver Loading and Silver Switching of Cost Sharing Reduction costs when CMS Administrator Seema Verma not only failed to state flat-out that she wouldn't attempt to stop these workarounds, but started giving indications that she was actively considering doing just that.

If this were to happen, then it would be devastating to millions of people while helping almost no one, as my colleagues Dave Anderson, Andrew Sprung, Louise Norris and I explained in Health Affairs a few weeks back.

Well, it appears that this particular bullet will be dodged for at least one year, anyway:

HHS won’t ban silver-loading this year, Azar admits after being pressed. No time to write broad-loading regs for 2019 plan year.

I had actually already written about Vermont doing this back in March, but seeing how it was one of only 2 states (+DC) which didn't allow Cost Sharing Reduction (CSR) costs to be loaded onto premiums at all this year, I figured I should mention it here as well. Once again:

  • 20 states went the full #SilverSwitcharoo route (the best option, since it maximizes tax credits for those eligible for them while minimizing the number of unsubsidized enrollees who get hit with the extra CSR load);
  • 16 states went with partial #SilverLoading (the second best option: Subsidized enrollees get bonus assistance, though not as much as in Switch states; more unsubsidized enrollees take the hit, but they aren't hit quite as hard);
  • 6 states went with "Broad Loading", the worst option because everyone gets hit with at least part of the CSR load except for subsidized Silver enrollees;
  • 6 states took a "Mixed" strategy...which is to say, no particular strategy whatsover. The state insurance dept. left it up to each carrier to decide how to handle the CSR issue, and ended up with a hodge podge of the other three
  • 3 states (well, 2 states + DC, anyway) didn't allow CSR costs to be loaded at all. Their carriers have to eat the loss, which makes little sense, but what're ya gonna do?

99% of what I write is posted either exclusively here at ACASignups.net or, at most, is cross-posted over at Daily Kos. Once in blue moon I've written a freelance piece for healthinsurance.org, and I even wrote one piece for Cracked.com last year. Today I'm proud to announce that an article which I co-wrote with three other healthcare wonks (David Anderson, Louise Norris and Andrew Sprung) has been published by HealthAffairs:

Implications Of CMS Mandating A Broad Load Of CSR Costs

In October 2017, the Trump administration eliminated federal funding to reimburse insurers for cost-sharing reduction (CSR) subsidies, which they are obligated to provide to qualifying enrollees in the Affordable Care Act (ACA) Marketplace. President Donald Trump had threatened to eliminate CSR funding throughout 2017, so insurers and insurance regulators in many states had anticipated the move by adding the cost of CSRs to premiums for 2018.

Well, Keith Hall, Director of the Congressional Budget Office, just confirmed pretty much everything that we've been saying for a year or more now:

The Affordable Care Act (ACA), in section 1402, requires insurers who participate in the marketplaces established under that act to offer CSRs to eligible people who purchase silver plans through the marketplaces. CBO views that requirement as establishing an entitlement for thoseeligible.

To qualify for CSRs, people must purchase a plan through a marketplace and generally have income between 100 percent and 250 percent of the federal poverty guidelines (also known as the federal poverty level, or FPL). The size of the subsidy varies with income.

CSRs reduce deductibles and other out-of-pocket expenses like copayments. For example, in 2017, by CBOs estimates, the average deductible for a single policyholder (for medical and drug expenses combined) with a silver plan varied according to income in the followingway:

(sigh) OK, gather 'round children, and let me tell you the story of how Cost Sharing Reductions went from being a thorn in the side of the Obama Administration to becoming a massive tree branch jammed into the kidney of Congressional Republicans. The following is an updated version of a lengthy post of mine from about six months ago.

The Cost Sharing Reduction (CSR) payment controversy has only really been sucking up a huge amount of political and policy oxygen for the past year and a half, since Donald Trump took office, but actually started long before then. Why? Because the whole reason the CSR payments were discontinued in the first place is a federal lawsuit filed by John Boehner on behalf of the House Republican Caucus back in 2014.

A few weeks ago I posted an entry title, "Will Trump's HHS Dept. do the stupidest thing possible? Reply Hazy; Try Again Later."

The "stupidest thing possible" being referred to was whether or not CMS Administrator Seema Verma is planning on putting the kibosh on Silver Loading and the Silver Switcharoo starting in 2019:

The head of the Centers for Medicare and Medicaid Services would not say Thursday if the Trump administration is considering setting limits on how insurers that sell Obamacare plans structure subsidies for their customers.

"I'm not going to comment on the agency's deliberations," CMS Administrator Seema Verma said when asked by the Washington Examiner about rumors that had circulated about the issue. When pressed about whether any conversations had occurred, Verma said, "I'm just going to leave it at that."

Welp. The Congressional Budget Office just released their latest 10-year economic outlook. There's a whole mess of stuff in there, but let's focus in on one area of particular interest to the healthcare wonk community:

Health Insurance Subsidies and Related Spending. Outlays for health insurance subsidies and related spending are estimated to increase by $10 billion, or 21 percent, in 2018.8 That jump mostly stems from an average increase of 34 percent in premiums for the second-lowest-cost “silver” plan in health insurance marketplaces established under the Affordable Care Act. (Those premiums are the benchmark for determining subsidies for plans obtained through the marketplaces.) Over the 2019–2028 period, the average growth in spending is projected to lessen considerably, to just under 5 percent per year, as per-beneficiary spending rises with the costs of providing medical care. CBO estimates that, under current law, outlays for health insurance subsidies and related spending would rise by about 60 percent over the projection period, increasing from $58 billion in 2018 to $91 billion by 2028.

Yup, thanks to deliberate sabotage from the first two years of the Trump Administration, premiums have spiked by ~30% this year and will do so again next year, requiring federal spending on subsidies to increase accordingly.

Regular readers know that I've developed a tradition over the past three years of tracking the average unsubsidized premium rate increases for the ACA-compliant individual market, painstakingly poring over the rate filings for every carrier in every state and running a weighted average by their market share.

Every year there are numerous challenges and headaches which get in the way, including things as obvious as "not every carrier publishes the number of enrollees they have covered" to complex situations like "carrier X is dropping out of the on-exchange market in half the counties of the state but is sticking around in the off-exchange market". In addition, many carriers submit an initial rate request...followed a few months later by a revised one...neither of which might end up matching the final premium changes approved by state regulators. Sometimes there may be 2-3 more revised filings along the way which muddy the waters even further.

NOTE: I've modified the headline to clarify that it's CSR reimbursements which are dead, not the actual CSR subsidies. Those eligible for CSR assistance will still receive it from the insurance carriers..it's just that the carriers aren't/won't be reimbursed for doing so. In response, they've jacked up the premium rates on others to cover their losses.

And in the end...neither Alexander-Collins, Alexander-Murray, Collins-Nelson or any other "ACA stabilization bill" was included in the final version of the "must-pass" omnibus bill last night.

As I understand it, this means that unless a standalone bill of some sort passes, there will be no significant legislative changes to the ACA exchange/individual market status for the 2019 Open Enrollment Period at the federal level...and that's extremely unlikely to happen this year.

A few days ago I warned Congressional Democrats that while I agree that appropriating CSR reimbursement payments at this point would be a net negative move thanks to the clever Silver Load/Silver Switcharoo workaround developed last year, there's one possible cloud surrounding that silver lining, so to speak: What if the Trump Administration were to attempt to put the kibosh on Silver Loading altogether?

I don't know the legality of such a move, mind you, but It has been thrown around the rumor mill of late, so I figured I should remind them to keep that possibility in mind.

Well, today I received some reassurance...

Azar Says He Is Not Aware Of Discussions On Blocking ‘Silver-Loading’ in 2019

I just did a light analysis of how many people would be helped or hurt by CSR funding in 2019 in Rhode Island, and concluded that at least 28% of exchange enrollees would see their premiums increase if CSR funding was restored, while only perhaps 2-3% would see their premiums drop.

It turns out that over the weekend, my colleague Xpostfactoid did a much deeper analysis of the same situation in Maryland:

So there you have the enrollment results of full-bore on-exchange silver-loading of CSR costs in one state. In all, 49,993 on-exchange enrollees with incomes up to 400% FPL chose plans other than silver. About 48,000 of them were subsidized. That's 31.2% of all enrollees, within striking distance of Aron-Dine's upper bound of 36% for all marketplace enrollees.

This is exactly what Dave Anderson, Colin Ballio and I have been talking about for awhile now:

Under the Guise of “Health Insurance Stabilization,” Congress Should Not Axe Financial Help for Low-Wage Families

In negotiations over stabilizing the individual health insurance market, lawmakers are considering slashing federal health care assistance for low- and moderate-income consumers by more than $27 billion a year. In dollars terms, this would be a greater blow than completely eliminating, in one stroke, the Low-Income Home Energy Assistance Program, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Child Care and Development Block Grant, the Community Development Block Grant, and federal grant programs for community-based mental health services and substance abuse prevention and treatment.

 

via Caitlin Owens of Axios...

Sens. Lamar Alexander and Susan Collins have proposed a market stabilization package that would include funding for the Affordable Care Act's cost-sharing reduction subsidies for three years, three years of federal reinsurance at $10 billion a year, additional ACA waiver flexibility for states, and expanded eligibility for "copper" plans.

Alexander presented the plan yesterday to America's Health Insurance Plan's board of directors, adding that if Democratic leadership supports the bill, “it’ll be law by the end of next week." Alexander has long said the package should be included on the omnibus spending bill.

Last fall, Dem Senator Patty Murray and GOP Senator Lamar Alexander (among the few Republican Senators actually interested in improving the ACA) got together and hammered out a deal called Alexander-Murray. At the time, the bill would have done the following:

  • Two years of subsidy funding, along with funding for the rest of 2017. There will also likely be additional steps to help enrollees with their premiums in 2018.
  • A "copper plan" for people older than 30, which would be less comprehensive than other ACA plans but would have a lower premium.
  • $106 million in enrollment outreach funding in 2018 and 2019.
  • Shorter review time for states seeking waivers from some of the ACA's coverage requirements. It's unclear what other waiver changes have been agreed to at this time.
  • Authorization for funding to help states launch reinsurance programs, which would defray the costs of covering the sickest consumers.

Of these five items, it's really the first two which would have the biggest impact: CSR reimbursement payments and a low-end "Copper Plan".

SOME GUY, OCTOBER 2017:

With the 2018 Open Enrollment Period coming up just 5 days from now, it's time to put this to bed: After 6 months of painstaking research and analysis, I've compiled a comprehensive analysis of the weighted average rate changes for unsubsidized ACA-compliant individual market policies in 2018, including both the on- and off-exchange markets. It's already been confirmed by a different analysis by healthcare consulting firm Avalere Health, which used a completely different methodology to arrive at the exact same conclusion: The national average increase is between 29-30%, ranging from as low as a 22% average premium drop in Alaska (thanks to their successful reinsurance program) to as high as a painful 58% increase in Virginia.

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