Wednesday, November 15, 2017

Who'll go to the mat for the individual mandate?

I fear that the trio of Republican senators who killed "skinny repeal" in late July (Collins, Murkowski, McCain) are going to have a hard time rejecting the tax cut bill in the name of the individual mandate.

Skinny repeal was linked to a (somewhat uncertain) presumption that the bill would be merged in conference with the House bill, which included repeal of enhanced federal funding for the Medicaid expansion and imposition of per-capita caps on federal Medicaid spending. Defense of Medicaid was the heart and soul of the Resistance, as it should have been.

Now, we may well get a partial birth abortion of the ACA - - mandate now, massive cuts to Medicaid (include expansion repeal) later. As Andy Slavitt has warned, that splits the "23 million uninsured" baby.

The individual mandate has always been unpopular -- and frankly, after years of both self-inflicted wounds and sabotage of the ACA marketplace, it has cause to be.  Health economists say that the mandate penalty was too small and too lightly enforced to be fully effective. The counterpoint is that a stricter mandate requires stronger subsidies - e.g., a cap on insurance premiums as a percent of income for all buyers, perhaps one that that matches the "affordability" threshold (currently 9.56% of income for employer-sponsored insurance and 8.05% of income for an ACA-compliant bronze plan).

For many who don't qualify for marketplace subsidies but must look to the individual market for coverage, the mandate is already effectively dead - -and so is the market.  To cite just a couple of cases I've had cause to look up lately:
  • For a 58 year-old in Pottsville, PA -- a small city in the middle of nowhere -- the cheapest bronze plan available is  from Geisinger at $898 per month. The deductible is $6,100, though doctor visits are not subject to it.. The cheapest silver plan is $1069 per month, offered off-exchange only, with a $5000 deductible.  This person would have a mandate exemption if her income is below $133,863 (898 x 12/.0805).  That means she could also buy a catastrophic plan for $748 per month if her income is below that level. 
  • The choices are somewhat better in the Philadelphia suburbs. For a 62 year-old in Montgomery County, the cheapest bronze plan is $671 per month and the cheapest silver, $701. Independence Blue Cross is the only insurer, on- or off-exchange. This shopper is exempt from the mandate if his income is below $100,024.
[Update, 11/16: Thanks to Dan Diamond, it's come to my attention that 80% of those who paid the mandate penalty in 2016 had household incomes under $50,000, meaning that most were probably subsidy eligible -- though some below that threshold were likely ineligible for subsidies because of an offer of insurance from an employer. Some households with incomes over $50,000 would be subsidy eligible as well.  There were 6.7 million unsubsidized enrollees in ACA-compliant plans in 2017, according to Kaiser's estimate, and a good number of those may drop out in response to this year's premium hikes. Of those, many may be exempt from the mandate, as in the examples above.]

It's easy to see the space opened up by the massive premiums hikes of the last two years for Trump's planned unregulated market, offering insurance not subject to ACA coverage rules. If I were faced with these premiums and not subject to a mandate I'd sure as hell look for something unregulated (or lightly regulated) that might work -- at least if my health had held out and medical underwriting did not make non-ACA-compliant coverage unaffordable.

In the name of people in this situation, I suspect that at least one of the Republican holdouts against skinny repeal will be willing to go along with mandate repeal.

We may well end up with a tripartite market, if mandate repeal passes and HHS opens up non-ACA-complaint options. The subsidized market, thanks to the inflation of subsidies driven by Trump's cutoff of CSR reimbursement, offers somewhat richer subsidies it did than pre-Trump-sabotage, including free bronze coverage for many -- though it may well be harmed by further insurer exits. The ACA market for the unsubsidized will be a de facto high risk pool for people who need the $7350 out-of-pocket maximum for Essential Health Benefits. The unregulated market -- temp plans and association plans -- will be a compelling choice for many unsubsidized who need to buy their own insurance. And many will choose to go uninsured, per CBO estimates of the effect of mandate repeal (including many with access to employer-sponsored insurance or Medicaid).

While I hope Republicans are punished electorally for their purposeful wreck of the individual market (and possibly for a coming wreck of Medicaid), that strategy have already "worked" in the sense of rendering the individual market as structured by the ACA untenable. The individual market is unaffordable for too many of the unsubsidized. A sound solution would be to boost subsidies and restore the reinsurance program that phased out after three years (making that program temporary was an own-goal for Democrats). As long as that route is blocked politically, a back-to-the-future parallel market may be inevitable.

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