xpostfactoid

Saturday, December 21, 2024

Paul Krugman asks whether health insurance is purely parasitical; doesn't quite answer

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Paul Krugman, noting that most U.S. healthcare spending is filtered through private insurers, takes aim (in his new post-NYT retirement Substack) at private health insurance in the U.S.:

Let me offer a somewhat, but only somewhat, caricatured view of U.S. health care: It’s a system in which taxpayers bear the cost of major medical care, but this taxpayer money flows through private companies that take a cut, spend a lot on administration, and do their best to deny care to people who need it.

His argument as to whether private insurers add value is sketched in lightly, and focused entirely on Medicare Advantage:

What service do private insurers provide in return for the tolls they in effect collect on a largely taxpayer-financed system? Medicare Advantage plans generally offer more extensive coverage than traditional Medicare. But there doesn’t seem to be any clear evidence that this is because private insurers provide efficiency gains the public sector doesn’t. What happens instead is that Medicare Advantage plans appear to be able to game the system sufficiently that they receive more taxpayer funding per enrollee than traditional Medicare spends on recipients in equivalent health…So you could make the case that at this point private health insurance is, in large part, a parasitical racket.

You could make that case, but leading with “you could” is a pretty equivocal way to make it. My take on the evidence (adapted from my comment on Krugman’s post) is below. The first point is a footnote to Krugman’s overview of private insurance’s share of U.S. healthcare spending.

1) Most Medicaid coverage is now also administered through private insurance companies (MCOs). Per KFF, 74% of Medicaid enrollees are in MCOs.

2) According to a KFF literature review, including a review of enrollee satisfaction surveys, Medicare Advantage enrollees are about as satisfied as traditional Medicare enrollees. By all accounts, problems in MA tend to come when you need serious care (especially post-acute care) — and denials appear to be on the increase. According to a Senate investigative report (inspired by reporting from STAT’s Bob Herman and Casey Ross), coverage denials from UnitedHealthcare MA plans for acute care more than doubled between 2020 and 2022 after the company adopted an AI tool (owned by UHC subsidiary NaviHealth, and also used by Humana and CVS Aetna) to assess claims.

3) Insurers "save" healthcare spending by denying not only needed but unneeded care -- and it's difficult to parse out the proportions of each. Surveys indicate that MA plans do encourage people to get screenings and so may prevent more acute care down the road. According to the KFF literature review, “The analyses consistently found that Medicare Advantage enrollees had higher utilization of preventive services and lower utilization of post-acute care and home health services.”

4) Some healthcare economists (e.g., Austin Frakt) find evidence that Medicare Advantage treatment protocols "spill over' into traditional Medicare and so save money there.

5) Private companies (MACs) also administer traditional Medicare, but with a very broad coverage grant and few coverage denials. MACs have no incentive to deny coverage.

6) In countries that deliver universal healthcare through private insurers, such as Germany and Japan, major medical insurers must be nonprofit. Germans can opt out of the nonprofit Statutory Health Insurance system into private plans, as 11% of the population did in 2019. But the government sets provider payment rates for private plans and limits premium increases. In Japan, as in many countries that deliver universal coverage through private plans, supplemental insurance can be for-profit.

7) In the U.S. whatever money insurers save by managing (denying) care is swamped by overpaying providers, which happens because we have no uniform payment rates, so providers divide and conquer. In the case of Medicare Advantage, where providers are paid Medicare rates or less, the savings are negated by payment formulas that overpay MA plans on a capitated basis, via a) a ridiculous risk adjustment system that incentivizes massive gaming, b) over-generous payment benchmarks, and c) bonus payments based on quality ratings that don't measure quality effectively.

8) Private insurers probably do have the capacity or potential to add administrative and care management value. But in the U.S., profit skews the incentives. In fact, it skews incentives for providers as much as for insurers. Almost all participants (e.g., those owned by giant insurers or private equity) are geared toward revenue maximization ("nonprofit" or not).

P.S. My own two-part assessment of Medicare Advantage (from 2022) starts here.

Photo by Arthur Uzoagba

Saturday, November 23, 2024

On the pending expiration of the ACA's ARPA subsidy enhancements

ARPA subsidy boosts going, going...

I’d like here to highlight some factors that will affect how much ACA marketplace enrollment is likely to shrink if Republicans decline to extend the increases to ACA marketplace premium subsidies and eligibility first enacted by the American Rescue Plan Act (ARPA) in March 2021, and later extended through 2025 by the Inflation Reduction Act. I’ll assume no other major changes to the ACA (perhaps a dubious assumption).

The ARPA subsidy boosts made benchmark silver plan coverage free for enrollees with income up to 150% of the Federal Poverty Level (FPL), removed the ACA’s notorious income cap on subsidy eligibility (400% FPL), reduced the percentage of income required for a benchmark silver plan at all income levels between 150-400% FPL, and capped benchmark silver premiums at 8.5% of income for those with income above 400% FPL.

Since the Open Enrollment Period (OEP) for 2021, the last OEP before the ARPA subsidies took effect, ACA marketplace enrollment increased by 79% (9.4 million) through OEP 2024 (see Table 1 below). That enrollment growth was overwhelmingly concentrated at the 100-150% FPL income bracket, where silver coverage with strong Cost Sharing Reduction (CSR) is available for $0 premium, and in the ten states that have refused to date to enact the ACA Medicaid expansion. In those “nonexpansion” states, eligibility for marketplace subsidies begins at 100% FPL, whereas in the expansion states it begins at 138% FPL, the Medicaid eligibility threshold for almost all lawfully present adults.

The Urban Institute estimates that in 2025, the total number of people with subsidized marketplace enrollment (92% of total enrollment) will be 7.2 million higher than it would be without without the ARPA subsidy boosts. One might assume a similar drop in enrollment in years following 2025 if the ARPA enhancements expire. Urban further estimates, “In 2025…household net premiums will be lower by 50 to 100 percent for the lowest income groups under a policy of enhanced PTCs compared with a policy of original PTCs. Net premiums will be lower by about one-quarter for people with higher incomes who receive subsidized Marketplace coverage.” Reverse that for the effects of ARPA expiration.

Without venturing an overall estimate, I want to highlight the concentration of marketplace enrollment (and post-ARPA enrollment growth) at low incomes and the extent to which zero-premium coverage will still be available to low-income enrollees (albeit with lower actuarial value). I assume that Urban’s estimates of premium impact are for benchmark silver premiums, not premiums for plans actually selected, which will change if the ARPA enhancements expire.

Consider the following as to the makeup of current marketplace enrollment:

From OEP 2021 to OEP 2024, enrollment nationwide increased by 79%, from 12.0 million to 21.4 million.
59% of that growth was in the 100-150% FPL income bracket, where benchmark silver coverage was rendered free by ARPA (see Table 1 below).
In 2024, 73% of enrollment in the 100-150% FPL income bracket was in the 10 nonexpansion states (78% if you count North Carolina, which enacted a Medicaid expansion on 12/1/23*). In 2024, 6.9 million enrollees in nonexpansion states (excluding NC) had income in the 100-150% FPL range.
In OEP 2021, enrollment was flat nationwide except for in the nonexpansion states, where it increased 10%. Since OEP 2020, enrollment growth in nonexpansion states has accounted for 74% of enrollment growth nationwide.
Before ARPA passed, the ACA’s income cap on subsidy eligibility was politically fraught, as the ACA’s guaranteed issue and Essential Health Benefits requirements raised premiums, and, after steep premium hikes in 2017 and 2018 ,several million subsidy-ineligible people were priced out of the market. Removing the income cap on subsidies went a long way toward fulfilling the ACA’s promise of “affordable care.” For all that, in 2024, enrollment of those who reported income higher than 400% FPL (i.e., expected premium subsidies) was 1.5 million, about 7% of total on-exchange enrollment. Another 856,000 enrollees did not report income and so paid full price (Table 1).

Keeping in mind the heavy concentration of ACA enrollment at low incomes, various factors will preserve some availability of zero-premium coverage for most enrollees with income up to 150% FPL, and often well beyond, or foster enrollment in other ways. These include:

Silver loading, Part I. In October 2017, Trump cut off federal reimbursement of insurers for providing the Cost Sharing Reduction (CSR) subsidies mandated by the ACA to low-income enrollees in silver plan. (His basis: while the ACA mandated this reimbursement, it left funding those reimbursements up to Congress, and Republican Congresses declined to do so. The Obama administration had found reimbursement funds in couch cushions.) CSR increases the value of a silver plan to a roughly platinum level for enrollees with income up to 200% FPL. The move had been anticipated, and most state regulators responded by allowing or encouraging insurers to price CSR directly into silver plans, since CSR is available only with silver plans. Since ACA income-adjusted premium subsidies are set to a silver benchmark, this “silver loading” led to sharp reductions in net-of-subsidy premiums for bronze and gold plans (and less often, for the one silver plan priced below the benchmark in each market). As a result, the Kaiser Family Foundation (KFF) calculated that beginning in 2018, most enrollees with income up to 150% FPL, and a good number with higher incomes, had access to $0 premium bronze plans.

Silver loading, Part II. As direct CSR reimbursement had been contested from the start, prior to Trump’s cutoff, analysts at CMS, the Urban Institute, and CBO had anticipated the effects of pricing CSR into silver premiums. All three analyses anticipated that gold plans would be priced below silver plans, because most silver plan enrollees have incomes qualifying for strong CSR, and silver plan enrollees on average therefore obtain higher actuarial value than gold plan enrollees. It mostly didn’t shake out that way, as insurers have strong incentives to underprice silver plans. In about fifteen states, however, varying by year, gold plans are available at premiums below benchmark silver, sometimes by regulatory or statutory requirement, and sometimes by insurer choice (usually of a dominant insurer). Most notably — and astonishingly — Texas enacted a law requiring marketplace insurers to price gold plans far below silver. (That makes sense, since 75% of enrollees in Texas have income below 200% FPL, and the average actuarial value of a silver plan in the state is over 90%, compared to 80% for gold plans.) Accordingly, Texas’s 2.2 million enrollees with income under 150% FPL will have access to $0 premium gold plans if the ARPA subsidy boosts expire, barring other changes.

Zero-deductible bronze plans. While median bronze plan deductibles were $7,200 for a single enrollee in 2023, bronze plans with $0 medical deductibles have become an increasingly common marketplace option. At low incomes, the premium is often $0 as well. These plans have their coverage traps, like a $3,000 drug deductible (usually not applicable to generics) or a $1,500 first-day hospital inpatient copay, but they can be attractive to healthy enrollees, or those willing to trade risk and out-of-pocket cost for a more expansive provider network and doctor visits not subject to the deductible.

Agent/broker commitment. The first Trump administration cut ACA marketplace advertising and nonprofit enrollment assistance, but they did cater to and encourage participation from agents and brokers — implementing a “help on demand” feature on HealthCare.gov, and encouraging development of commercial “enhanced direct enrollment” (EDE) platforms that streamline brokers’ work and organize their client files. Thanks in part to that support, along with the ARPA subsidy boosts and insurers’ re-commitment to the marketplace, broker registration with HealthCare.gov increased from 49,000 in 2018 to 83,000 in 2024. In OEP 2024, 78% of active enrollments in HealthCare.gov states (which includes all the nonexpansion states) were broker-assisted. This growing broker engagement has been something of a mixed bag, as the widespread availability of free coverage, coupled with inadequately controlled broker access to client data in EDE platforms, has led to a major outbreak of broker fraud and encouraged entry into the market of high-volume, high-speed call centers that likely provide poor service short of outright fraud. Broker participation will probably also be pared back as offerings become less affordable (assuming ARPA subsidy expiration) — e.g., if insurers also pull back and/or reduce broker commissions. But pre-ARPA, one of the marketplace’s chief limitations was the general public’s ignorance of what was on offer. Several years of broker outreach have probably increased awareness and the likelihood of being approached among those who may need coverage.

Year-round enrollment at low incomes. In early 2022, CMS implemented a rule enabling people with income under 150% FPL to enroll year-round, via permanent availability of a monthly “Special Enrollment Period.” The model here was Medicaid; the presumption is that circumstances change often for low-income people. As a result, the gap between marketplace enrollment totals as of the end of OEP and annual “average monthly enrollment” (AME) has narrowed considerably, and AME has grown even more dramatically than end-of-OEP totals (AME was 99% of OEP enrollment in 2023 and may have actually exceeded it in 2024, when the Medicaid unwinding sent a stream of newly uninsured people into the marketplace). This too has been something of a mixed bag, as the monthly SEP has facilitated broker fraud in the form of unauthorized plan-switching of enrollees. Year-round first-time enrollment could be maintained without providing a monthly SEP. More likely, the Trump administration will rescind the rule. (Originally, the rule was contingent on $0 premium silver coverage remaining available at incomes up to 150% FPL, but that condition was later withdrawn.)

A preview of low-income options in a post-ARPA marketplace

Pre-ARPA, enrollees with income up to 138% FPL paid 2% of income for a benchmark silver plan. We can preview what options may look like in this lowest income bracket by looking at what’s available to someone paying 2% of income for benchmark silver in the 2025 marketplace — that is, a single enrollee with an income of $30,000. That’s a shade under 200% FPL, and at that income, benchmark silver is currently $49/month.

Let’s look at what’s available for a single 40 year-old at this income in Houston and Miami. (You can replicate these results or look at other markets most easily via HealthSherpa’s plan shopper.) In Florida and Texas combined, as of the end of OEP 2024, 4.1 million enrollees had income in the 100-138% FPL range — about 60% of the 6.9 million enrollees in that income range nationwide.

In Houston in 2025 (zip code 77005), a single 40 year-old earning $30,000 would pay (as noted above) $49/month (1.94% of income) for the benchmark silver plan, which has a $500 deductible and a $3,000 out-of-pocket (OOP) maximum. That’s what enrollees with income up to 138% FPL will pay for benchmark silver if the ARPA subsidy boosts expire and there are no further changes. That premium could be prohibitive at a lower income (100% FPL in this year’s marketplace is slightly over $15,000/year). But in 2025, this same Houstonian also has access to two gold plans for $0 premium, as well as to a bronze plan with a $0 deductible for $15/month (and to the one silver plan below benchmark for $38/month). Both of the $0 premium gold plans are from Blue Cross, a desired brand in Texas, whereas the lowest-cost silver BCBS plan available to this person is $61/month.

Switch the scene to Miami (zip code 33134), and the 40-year old with the $30k income, paying 1.94% of income for the benchmark silver plan, does not have cheap gold available, nor any premium difference between the benchmark and lowest-cost silver (both $49/month). But this Miamian does have access to two $0 deductible bronze plans for $5 or $6/month — not to mention a ridiculous eleven zero-premium bronze plans with high deductibles.

The zero-deductible bronze plans both have OOP maxes of $9,200, whereas the two cheapest silver plans for enrollees with income under 150% FPL in Miami this year have OOP maxes of $1,800 and $2,000 respectively. Forgoing CSR vastly expands financial risk. Nonetheless, in two of the largest ACA markets for people with income that would put them in Medicaid in expansion states, no-premium or ultra low-premium options would be available if they had to pay 2% of income.

Zero premium, but more risk

Expiration of the ARPA subsidy enhancements will exacerbate a negative long-term trend in marketplace coverage: reduced silver plan selection by enrollees with income low enough to qualify for strong CSR, which raises the actuarial value of a silver plan to 94% (at income up to 150% FPL) or 87% (at income from 150-200% FPL). That compares to 60-65% AV for enhanced bronze (the commonest bronze type now) or 80% for gold. Perhaps most damagingly, those who forgo strong CSR give up an OOP max that’s capped at $3,000, and averaged just $1,388 in 2024 at incomes up to 150% FPL), in favor of bronze and gold OOP maxes that usually top $7,000 and are often set at the maximum allowable $9,200.

At incomes up to 150% FPL, silver plan selection has dropped from 89% in 2017 to 76% in 2024 (see Table 2 below). At 150-200% FPL, silver selection has plummeted from 83% in 2017 to 57% in 2024. Competition among marketplace insurers to offer lowest-cost coverage has narrowed provider networks over time, and some enrollees may be forgoing CSR to access a lower level of coverage from an insurer with a more robust network. I look at such tradeoffs in specific markets here.

ARPA subsidy expiration will be a major blow to coverage availability for those who lack access to other affordable options. It will probably be combined with other blows: it may be coupled with a major Trump 2.0 effort to stand up and promote an alternative market of medically underwritten, lightly regulated plans, and/or, most damagingly, with major assaults on Medicaid eligibility and funding. “This won’t be the worst harm you suffer” is pretty cold comfort when staring down the barrel of an ignorant, cruel, corrupt government in formation. But the ACA marketplace proved resilient during the Trump 1.0 regime, and it may prove resilient once again.

Table 1: ACA Marketplace Enrollment Growth by Income, 2021-2024

Table 2: Silver Plan Selection at Incomes up to 200% FPL

CMS’s marketplace enrollment Public Use Files are available here.

Photo by cottonbro studio

If the ACA is not repealed

Trump said during the campaign that he would not work to repeal the Affordable Care Act. Of course, Trump’s promises are not worth the breath polluted by his utterance of them, and Republicans in Congress, flush with the Republican trifecta, are talking about block-granting Medicaid. that would probably go hand in glove with phasing out the ACA Medicaid expansion — the ACA’s most important and effective program, responsible for most of the drop in the uninsured rate achieved by the ACA.

But let’s undertake the dubious exercise of taking Trump at his word. Repealing and replacing (or, in the case of the Medicaid expansion, declining to replace) the ACA’s core programs may fail, as it did in 2017. Congress may take some hacks at the law, as they did in 2017 (remember the individual mandate? or the tax on insurers?) without changing the core subsidy structure of the ACA marketplace (minus the subsidy enhancements enacted in the American Rescue Plan, which expire in 2026) or entirely eliminating the Medicaid expansion. And the Trump administration may do much to reshape the marketplace administratively — as Trump 1.0 did, but much more. As I noted earlier this fall, JD Vance sketched out how Trump might, um, “build on” (that is, partially dismantle) the ACA marketplace.

Let’s look at the various means by which the Trump administration and Republican Congress might reshape the ACA’s core programs (Medicaid expansion and Marketplace) short of wholesale repeal.

Medicaid work requirements. Billed as a way to help “able-bodied” (read: unworthy, largely nonwhite) Medicaid enrollees discover the joys and dignity of wage labor, this Republican favorite is actually a means pushing eligible people off the rolls, as brief experiments in Trump 1.0 demonstrated. As the Kaiser Family Foundation never tires of documenting, a large majority of Medicaid expansion enrollees do work, and almost all the rest are otherwise constructively engaged, e.g., in school or caring for loved ones, or disabled. During Trump 1.0, CMS administrator Seema Verma enthusiastically promoted work requirements, inviting states to file waivers enacting them. While thirteen states had waivers approved, only Arkansas implemented them, with reporting requirements so onerous and so incompetently administered that the D.C. Circuit Court shut the program down after some 18,000 had been gratuitously disenrolled, holding that the waivers were unlawful because CMS failed to consider the impact on coverage, as required for Medicaid waivers. The pandemic then interrupted other states’ waiver plans, and the Biden administration removed approvals. Various court challenges were paused or dismissed as moot. Get ready for Round 2.

Medicaid de-expansion. The path on this front is laid out by the Trumpist Paragon Institute, headed by Brian Blase, who was on Trump’s NEC. The Paragon proposal, like the 2017 ACA repeal bills, would end the federal government’s 90% match rate (FMAP) for Medicaid enrollees rendered eligible by ACA criteria (eligibility for legally present adults (except recent immigrants) with income up to 138% of the Federal Poverty Level, reducing the FMAP to each state’s FMAP for other Medicaid programs, which ranges from 50% in the wealthiest (a.k.a. blue) states to 77% in Mississippi. The proposal would allow states to drop the eligibility threshold to 100% FPL, which would then be the starting point for marketplace subsidy eligibility, as it is now in the ten remaining states that have refused to implement the ACA expansion (Paragon notes gleefully that those states, which include Texas and Florida, will never enact the expansion under this proposal). In an extra swipe at wealthy (blue) states, Paragon would drop the minimum FMAP from 50% to 40%. This proposal nominally does not end the expansion, and allows states to avoid a “coverage gap” on the current Wisconsin model (Medicaid to 100% FPL, marketplace from 100% FPL). As the federal government pays 100% of marketplace premium subsidies, the shift of enrollees in the 100-138% FPL range offset a bit of the cost to states of the reduced match rate. But most states would probably find maintaining expansion at the reduced FMAP unsustainable — especially if the Republican Congress also imposes block grant funding or per capita caps on federal Medicaid spending, which would slow-strangle Medicaid over the course of a decade or two.

Undercutting the ACA marketplace. With Republicans in control of Congress, the enhanced premium subsidies enacted through 2022 by the American Rescue Plan Act and extended through 2025 by the Inflation Reduction Act are almost certainly dead. (Had Democrats won the House, they might have leveraged the expiration of Trump’s income tax cuts to preserve the ARPA subsidy boosts.) Those subsidy increases were doubtless the main cause of a 78% enrollment increase nationally from 2021-2024 and a 123% increase in the nonexpansion states, where the enhanced subsidies rendered benchmark silver coverage free for enrollees with income in the 100-150% FPL range. That means that the pre-ARPA income cap on subsidy eligibility, 400% FPL ($60,240 annually for a single person in 2024), will snap back into place, rendering ACA-compliant coverage unaffordable for several million people.

From there, a supercharged version of Trump 1.0’s parallel, ACA-noncompliant market will go to work to reduce the ACA marketplace to a sort of high risk pool. Vance sketched out how this might work, as I noted a few weeks ago. If more wholesale repeal/redesign does not happen, Trump 2.0 might

rebuild Trump 1.0’s alternative market of medically underwritten, ACA-noncompliant plans (so-called Short-Term Limited Duration, or STLD, plans*), and 2) prompting states to implement measures like the waiver concepts put forward by Trump’s former CMS administrator, Seema Verma. These “concepts” included 1) replacing ACA premium subsidies with a lump-sum health savings account that could be used to pay premiums for any plan; 2) inviting states to restructure the federal premium subsidy as they wished; 3) allowing states to grant premium subsidies for ACA-noncompliant plans; and 4) creating state high risk pools. Options 1 and 3 could effectively convert the ACA-compliant marketplace as we know it into a high risk pool of sorts, and in combination with option 4, could create the multiple stratified risk pools that Vance described in followup comments.

Verma’s waiver concepts plainly violated the ACA statute, as alternative state schemes outlined in an ACA Section 1332 “innovation waiver” proposal has to provide coverage at least as comprehensive as that stipulated in the ACA; provide coverage and cost sharing protections that are at least as affordable; and cover a comparable number of residents. Amending the waiver provision to allow Verma-esque concepts would be low-hanging fruit for a Republican Congress, and in fact was under negotiation after Republican repeal attempts failed in 2017.

Georgia made a brief attempt to take Verma up on her waiver concepts, filing a waiver proposal in late 2020 that would have eliminated a state-sponsored exchange, relying on commercial Enhanced Direct Enrollment (EDE) platforms commissioned by the federal government, and, in one early iteration, allow plans that did not include all Essential Health Benefits to be paid for with federal subsidies. That provision was cut from the submitted waiver, as it violates the ACA statute too plainly even for Trump 1.0’s administrators. But this may be the ACA’s future, if it has any future: some semblance of the ACA subsidy that can be used for ACA noncompliant plans — including, perhaps, medically underwritten plans. As those plans would be cheaper for healthy people, ACA-compliant marketplace enrollment might be reduced to those who would a) pay very little for comprehensive coverage because of low income and a favorable shakeout of price spreads, and/or b) those who know they need comprehensive coverage or who could not get a viable offer when subjected to medical underwriting.

The big enchilada, now as ever, is the ACA Medicaid expansion — and behind that, sustained federal funding for Medicaid programs generally. Perhaps Republicans will divide the baby, and cut the ACA expansion’s enhanced FMAP, say to 80% instead of 90% — and/or cut it disproportionately for states with higher per capita income. Under the best scenarios, the uninsured rate will rise substantially, and the individual market for health insurance will degrade considerably. Just one set of the many pillars of our society likely to come crashing down in coming months and years.

Update: It’s worth noting that when the Trump administration created an ACA-noncompliant market by extending the allowable limit of so-called Short-term, limited duration (STLD) plans to a full year, renewable twice, many states imposed or preserved strict limits of their own. (The STDL plans are medically underwritten, don’t have to cover the ACA’s ten Essential Health Benefits, and are not subject to medical loss ratio limits, e.g., the requirement to spend at least 80% of premiums on patients’ medical expenses.) As of this year, 14 states have either banned STDL plans outright or effectively regulated them out of existence, and others had either imposed other duration limits (often six months) or new coverage rules. If the ACA is not substantially repealed, state markets will doubtless diverge further in how they regulate and reshape coverage.

Update 2, 11/16/24: Charles Gaba, by means of Georgetown’s Edwin Park, runs down the more extreme scenario, Republicans enacting their proposals to destroy Medicaid

* Borrowing my last quick rundown of the Trump admin’s STLD program:

The Trump administration’s major initiative to “build on” the ACA marketplace after repeal failed was to stand up (by administrative rule in 2018) a parallel market of medically underwritten, lightly regulated plans by extending the allowable duration of already-existing so-called “short-term, limited duration plans” (STLD) to up to one year, renewable twice. The Obama administration had limited STLD duration to three months, though not until 2016. In combination with the Republican Congress’s zeroing out of the tax penalty for failing to obtain ACA-compliant insurance, the STLD market was an alternative for people who were priced out of the regulated ACA marketplace — as several million people were before the Biden administration removed the income cap on subsidy eligibility via the American Rescue Plan Act (ARPA) in March 2021. (The ARPA subsidy enhancements were temporary, and extended by the Inflation Reduction Act only through 2025.)
STLD plans can refuse access to people with pre-existing conditions or exclude coverage for the condition. They do not have to cover the ACA’s Essential Health Benefits and generally offer very limited prescription drug coverage, if any, and no substance abuse coverage. They are not subject to the ACA requirement to spend at least 80% of premiums on members’ medical bills (and on a few allowed other expenses) and have been reported to spend as little as 45% of premiums on claims. They do not have to offer a provider network and can pay providers what they deem appropriate, exposing enrollees to balance billing. They do not have to provide an annual out-of-pocket cost cap on covered benefits, though some do. They are much like the plans offered in the pre-ACA individual market.

Sunday, November 03, 2024

Just prior to launch, Georgia Access culls the EDE crop

Georgia Access has culled the EDE crop

ACA marketplace participants and observers will recall that this past August CMS suspended BenefitAlign and Inshura, Enhanced Direct Enrollment (EDE) entities owned by Speridian Global Holdings, which also owns the health insurance brokerage TrueCoverage (Inshura is simply TrueCoverage’s rebranded version of BenefitAlign).

Speridian, TrueCoverage, BenefitAlign, and Inshura are principle defendants in a putative class action lawsuit alleging a massive fraud scheme in which insurance agents used BenefitAlign to switch the plan selections of hundreds of thousands of marketplace enrollees without their knowledge or consent.*

In a September letter explaining the suspension, CMS states that it has reason to believe the BenefitAlign is hosting CMS data, including personally identifiable information (PII) at Speridian data centers located overseas, in violation of CMS regulations. The suspension letter also cites the lawsuit’s allegations:

Further, the Speridian Companies, BenefitAlign and True Coverage dba Inshura, are defendants in a pending lawsuit, filed by private parties in 2024, alleging that they engaged in a variety of illegal practices, including violations of the RICO Act, misuse of consumer PII, and insurance fraud that they allegedly carried out by misusing BenefitAlign’s access to the Marketplace. Plaintiffs in the lawsuit likewise claim that BenefitAlign allows access to the Exchange from abroad and houses CMS data overseas.

Rather incredibly, CMS notes that Speridian Companies (TrueCoverage and BenefitAlign) have been terminated or suspended four times since 2018.**

BenefitAlign has been a major player in broker-assisted ACA enrollment. In a suit filed on Sept. 6 seeking to force CMS to end Benefitalign’s suspension, Benefitalign [sic - the suit does not capitalize the “a”] and TrueCoverage aver that in OEP 2024, “Benefitalign’s Enhanced Direct Enrollment platform accounted for at least 1.2 million ACA applications, making it the second largest channel for ACA enrollments” (p. 4). (Note that the count is of “applications,” not “enrollments.”) By comparison, HealthSherpa, the dominant EDE in the federal exchange, says it executed 6.6 million enrollments in 2024 — slightly more than half of the 12.7 million “active” enrollments registered in HealthCare.gov states. (“Active enrollments” excludes passive auto re-enrollments, which constitute 22% of total enrollment on HealthCare.gov and which are not credited to any EDE.)

Enter now Georgia Access, the newest-minted state-based exchange (SBD), launching today. GA is the first SBE (there are now 20) to enable EDE, which will make it easier for agents serving the Georgia marketplace to transition to the state exchange. In states using the federal marketplace, some 80% of agent-assisted enrollment is via EDE — and in 2024, 78% of active enrollments were agent-assisted.

Georgia is ideologically committed to EDE. In 2020, it filed a waiver proposal that would have eliminated any government-run exchange for the state (along with, in one early iteration, allowing premium subsidies to be credited to ACA-noncompliant plans, which would have created a market something like what JD Vance has sketched out). The Trump administration approved that waiver, but the Biden administration suspended most of it (except for a reinsurance program). Georgia came back with a more conventional EDE proposal, which CMS conditionally approved this past August. While establishing a conventional state-based exchange, the Georgia initiative remains largely focused on EDEs. The state has approved virtually all of the EDE platforms — and until this week, the list included BenefitAlign and Inshura.

This apparent inclusion of the suspended EDEs was an ongoing mystery that I’ve been tracking. Some weeks ago, a spox at Georgia’s Office of the Commissioner of Insurance and Safety Fire, Ethan Stiles, told me, “BenefitAlign’s license has been suspended, not terminated. We are monitoring the situation and do not foresee changing tack. BenefitAlign met all of our standards.” At the same time, Stiles said, “We will work with CMS. I have no reason to think GA would use products not of the highest quality. “

Two subsequent voicemails to the Department went unanswered. Could Georgia, a champion of free enterprise in health insurance, be dismissing CMS’s security concerns about a major player in the ACA marketplace that’s also a suspected engine of large-scale fraud? Fortunately, no.

Yesterday, I caught up with Bryce Rawson at the Office of the Commissioner, who told me that Georgia Access had waited until BenefitAlign’s 45-day curative period under the CMS suspension was complete. As BenefitAlign/Inshura was unable to to allay CMS’s concerns, Georgia Access has “frozen” both EDEs. The Atlanta Journal-Constitution learned this a day ahead of me and reported yesterday:

King’s office told the AJC on Thursday that two of the web brokers that the state originally approved, Benefitalign and Inshura, will be blocked from Georgia’s website barring further developments. Those two are also banned by the federal site and have been sued for allegedly unethical practices. They deny wrongdoing.

Interestingly, though, CMS had previously told me that an SBE could deploy an EDE not approved by CMS. A spokesperson wrote: “states that utilize a direct enrollment technology do so under their own rules, though some follow federal rules. Please reach out to Georgia directly regarding its enhanced direct enrollment partners.”

That seemed a surprising response to my query (sent when BenefitAlign and Inshura were still on Georgia Access’s approved EDE list) as to whether GA could in fact deploy the two suspended EDEs. As I pointed out in my query, CMS’s August letter of conditional approval authorizing Georgia Access to deploy for OEP 2025 states, in a chart itemizing “notable requirements Georgia Access must maintain or continue to meet, to keep conditional approval:

FFE certification as an EDE is a core requirement for application as a GAEDE partner, so organizations failing to pass FFE review for compliance are not considered for certification with GA.

I have asked CMS to clarify how Georgia might go its own way on EDE approval, given that strict requirement — which, as it turns out, is specific to CMS’s dealings with Georgia Access.

For SBEs generally, while CMS’s 2025 Notice of Benefit and Payment Parameters (NBPP) for the ACA marketplace took pains to specify that web-brokers commissioned by state-based exchanges must conform to an array of CMS standards for display of information and consumer protection, and also specifies that the state exchange must be solely responsible for eligibility determinations (with EDEs interfacing with the state’s “centralized eligibility and enrollment platform”), the NBPP did not delegate to CMS the certification of web-brokers and other EDEs (e.g., single-insurer EDEs). That is, while the rule took pains to spell out that states cannot replace a state exchange with an array of EDEs, it also affirmed SBEs’ right to contract with rule-compliant EDEs as it sees fit.

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* The fraud alleged in the suit — and similar fraud documented by CMS — was enabled by the ability of agents registered with the federal exchange, HealthCare.gov, to access and make changes to enrollee accounts via the commercial EDE platforms, needing only the enrollee’s name, date of birth, and state of enrollment. In July, CMS shut down that ability; agents purporting to newly represent enrollees with an existing current account must now either engage the new client in a three-way call with the marketplace, or use a newly launched rather elaborate workaround on an EDE platform, in which the application must be finalized by the enrollee herself (after identity proofing).

** Re Speridian’s four terminations/suspensions,, here is CMS’s summary:

The Speridian Companies have a history of noncompliance with CMS regulations and agreements dating back to 2018. On April 19, 2018, TrueCoverage had its 2018 CMS agreements terminated, which ended their ability to transact information with the Marketplace, due to the severe nature of its suspected and, in some cases, admitted violations of CMS regulations.5 After the termination, the Speridian Companies were not registered with the Exchanges or permitted to assist with or facilitate enrollment of qualified individuals through the Exchange, including direct enrollment. The Speridian Companies admitted that their agents and brokers submitted false Social Security Numbers in connection with Marketplace eligibility applications, and CMS had reasonable suspicions of other fraud, improper enrollments, and misconduct by the Speridian Companies. The Speridian Companies regained their connection to CMS in 2019 after CMS, satisfied with the good-faith evidence provided, entered into Exchange agreements in Plan Year 2019

Photo by Markus Spiske

Friday, October 18, 2024

STAT exposes intense pressure for coding intensity at UnitedHealth

Swell those Wellness Visit codes

It is beyond reasonable doubt that the federal government’s payments to Medicare Advantage plans are grossly inflated by the plans’ gaming of the program’s risk adjustment system, designed to deter plans from cherry-picking health enrollees. The risk adjustment program pays plans more for enrollees with higher “risk scores,” calculated on the basis of enrollees’ diagnosed medical conditions. Plans have various means of inflating enrollees’ risk scores — most notoriously, home risk assessments and chart reviews — a retroactive combing of the enrollee’s medical record to add new diagnoses.

The upcoding has been so egregious for so long that CMS’s is required by statute to cut the plans’ risk scores across the board by 5.9%. It’s not enough. In its March 2024 report to Congress, the Medicare Payment Advisory Commission (MedPAC) estimated that in 2022 MA risk scores were about 18% higher than scores for similar FFS beneficiaries due to higher “coding intensity” — the polite term for inflated risk scores. MedPAC forecast that in 2024, the coding intensity gap would increase to 20%. For the 2024 report, MedPAC adapted the methodology (see Ch. 13) of former CMS official Richard Kronick, who estimated in 2021 that risk adjustment overpayments would total $600 billion from 2023 to 2031 if not adjusted.

For many years, MedPAC has recommended cutting MA plans’ risk adjustment payments by various means, the most straightforward being to increase the 5.9% across-the-board haircut to plans’ risk scores — a minimum imposed years ago by Congress. But cutting payments to Medicare Advantage plans, which now cover slightly more than half of Medicare enrollees, is politically difficult. This year, CMS cut back for the second year running on another source of overpayment — payment bonuses based on quality ratings, which had been boosted by a pandemic measure — resulting in some plans paring extra benefits and others discontinuing service in some regions. Republicans are certain to demagogue these reductions as Medicare Open Enrollment kicks off.

Compelling statistical evidence that coding intensity is steadily increasing MA overpayment has been manifest for years and hasn’t spurred much corrective action. A STAT* exposé this week of pressure exerted on physicians to increase diagnoses (“upcode”) by UnitedHealth Group, the largest MA insurer, could provide more impetus for change than a bevy of quality statistical studies, as it evidence of intentional, incentivized upcoding. As UnitedHealth also owns physician practices employing 10% of U.S. physicians, it’s in a particularly strong position to pressure doctors to upcode — a win-win for the company on both the provider and insurer side.

STAT obtained emails from UnitedHealth executives to physicians in one UHC-owned practice exhorting them to diagnose chronic conditions:

the “#1 PRIORITY” became documenting older patients’ chronic illnesses to generate more revenue from the federal government, the emails show.
UnitedHealth shared with doctors in the practice a dashboard comparing the percentage of chronic diseases they found among their Medicare Advantage patients to other practices within the company. Those who completed the most appointments with older patients got a “SHOUT OUT!!” in the messages and were eligible for up to $10,000 in bonuses. “We can do this!!” another email said, encouraging doctors who were falling behind.

One focus of the documents obtained by STAT was the Medicare annual wellness visit, a free preventive service that, like home-based health risk assessments, can be used as an opportunity to pile on diagnoses:

One document ranked clinicians based on how many annual wellness visits they had completed with Medicare Advantage patients, and cheered those in the lead. “TOP 10 IN AWVs TOTAL!! SHOUT OUT!!,” the email blared, listing the doctors with the most visits. The message also listed bonuses for conducting more visits and explained the weekend clinics were a “win” for patients and providers because they helped increase coding of chronic conditions such as peripheral artery disease, or PAD, a narrowing of the arteries that bring blood to the arms and legs…
the documents show that UnitedHealth’s doctors diagnosed PAD in 47% of their Medicare Advantage patients — three to four times the estimated prevalence of the condition in older Americans. Each diagnosis generates about $3,000 a year in extra payments from Medicare [the STAT reporters have a prior article about UnitedHealth goosing PAD screening].

In 2023, CMS proposed and then passed in somewhat watered-down form adjustments to the risk adjustment program designed to curb “coding intensity” by removing some 75 diagnosis codes “where there is wid[e] variation in diagnosing and coding” — i.e., more opportunity for upcoding. Richard Kronick, perhaps the most trenchant critic of the MA risk adjustment program deemed the adjustments “baby steps,” though he told me, ““I am delighted that CMS has its nose in the tent.” My May 2023 conversation with Kronick delves into the history of MA risk adjustment, the effects, and various proposed solutions, including adjusting the annual haircut to reflect the full extent of coding intensity as calculated by his methodology, which MedPAC subsequently adopted, albeit with adjustments enabled by their unique access to “complete enrollment, demographic, and risk-score data (beneficiary-level risk-score data are available to the Commission but not generally available to researchers) for MA and FFS beneficiaries with both Part A and Part B.”**

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* The story is by Stat News reporters Tara Bannow, Bob Herman, Casey Ross, and Lizzy Lawrence. Casey and Herman are recent Loeb Award winners (and Pulitzer finalists) for a prior exposé of UnitedHealth subsidiary NaviHealth’s use of algorithms to deny post-acute care to patients in MA plans. Increase diagnoses, reduce expensive treatments: that’s MA’s winning formula.

** Limiting the risk comparison on the FFS Medicare side to enrollees who are enrolled in Medicare Parts A and B (omitting those enrolled in only one of the two) is important and reduces the coding intensity estimate significantly, because enrollees in Part A alone in particular tend to be healthier than the vast majority who enroll in both parts (many Part A-only enrollees are still employed). See this post for a look at two views of the effects of excluding single-part Medicare enrollees from the risk calculation.

Friday, October 11, 2024

CMS puts ACA agents and agencies on notice: Immediate suspension if fraud is suspected

Scout's honor won't cut it

Early this month, CMS released its annual proposal to update various rules governing the ACA marketplace, the Notice of Benefit and Payment Priorities (NBPP) for 2026. In one section, CMS proposes to clarify and perhaps expand upon its ability to swiftly suspend health insurance agents, agencies, and web-brokers (commercial enrollment platforms) suspected of fraud.

The proposed rule clarifies the conditions under which CMS will do what it is already doing under existing authority: Seek out and immediately suspend individuals* and entities whose enrollment records suggest a pattern of unauthorized enrollments and plan-switching and/or falsified income or eligibility information. Systemic failure to protect clients’ personally identifiable information is also grounds for immediate suspension.

In clarifying its authority and intent to act swiftly to shut down agent fraud, CMS acknowledges that such fraud has escalated in the past year:

Since the start of PY 2024 Open Enrollment, we have seen an increase in complaints from enrollees, applicants, and other individuals and entities to the Agent/Broker Help Desk regarding enrollments submitted without enrollee or applicant consent, enrollee or applicant eligibility applications submitted with incorrect information and without enrollee or applicant review or confirmation of the eligibility application information, and changes to enrollee or applicant eligibility applications made without enrollee or applicant consent.

The patterns of fraudulent behavior CMS states it will seek out closely mirror the allegations in the putative class action lawsuit filed (and amended here) against agencies TrueCoverage and Enhance Health and TrueCoverage’s captive web-brokers, BenefitAlign and Inshura, which CMS suspended this past August. (Inshura is simply TrueCoverage’s rebranding of the Enhanced Direct Enrollment platform BenefitAlign.) Indeed, the allegations of fraud patterns in the proposed rule read in part rather like an answer to the suit BenefitAlign filed to force CMS to lift its suspension (CMS’s fourth suspension of TrueCoverage, Inshura and/or BenefitAlign since 2018). Among the suit allegations echoed in the proposed rule changes:

Monitoring web-brokers (EDE platforms)

Past investigations using system monitoring data have borne results that show a connection between potentially noncompliant, fraudulent, or abusive behavior and the trends we monitor. For example, we monitor the number of unsuccessful person searches on approved Classic DE and EDE partner sites because, in our experience, there is often a correlation between a high volume of unsuccessful person searches and noncompliant, fraudulent, or abusive behavior. The person search feature is intended to help agents, brokers, and web-brokers find consumer applications to prevent duplicate enrollments, but in our experience, bad actors use this feature to find applications and make plan changes or NPN changes without consumer knowledge or consent, negatively impacting the consumer and compliant agents, brokers, and web-brokers.

(The recently-suspended BenefitAlign alleges in its suit that it processed 1.6 million enrollment applications in Open Enrollment for PY 2024.)

Monitoring agencies

Discovering agency-wide resources, such as company practices or directives, training manuals, or marketing material that suggests agency endorsement of or involvement in misconduct or noncompliant behavior or activities is another source of information we would use to determine whether to engage in a compliance review or take an enforcement action…
we have seen agency documentation instructing agents and brokers who work at the agency to fabricate enrollee or applicant incomes on eligibility applications submitted to the FFEs or SBE–FPs to ensure the enrollee or applicant has a zero-dollar policy….
Additionally, as part of these investigations and actions, we have reviewed agency procedures and directives instructing agents and brokers who work at the agency to not speak with the enrollee or applicant prior to enrolling them in a plan.

Monitoring agents

A non-exhaustive list of agent or broker data we monitor to identify behaviors or activities that may be indicative of misconduct or noncompliance with applicable HHS Exchange standards or requirements includes: (1) the number of Exchange transactions submitted to the FFEs or SBE–FPs to change enrollee or applicant eligibility application information or plan selections, (2) the volume of person search activities, (3) the number of submitted eligibility applications with missing Social Security Numbers (SSNs), (4) the number of enrollments submitted within a specified timeframe, and (5) the volume of submitted eligibility applications with NPN changes. We also review and consider complaints from enrollees, applicants, and other individuals or entities concerning agent and broker activities.

In elaborating its intent to respond to suspicious activity with immediate suspensions, CMS stresses that it already has the authority to do this. Part of the proposed rule is devoted to affirming CMS’s intent to focus not just on individual agents but also on agencies that employ many agents and exhibit a pattern of encouraging or mandating noncompliant behavior. CMS notes that some 640,000 enrollments record the National Producer Number (NPN) of an agency, rather than an individual agent. In cases where agency-level misconduct is suspected, CMS affirms its intent to direct enforcement action “at the lead agent(s) and any other agent, broker, or web-broker who is discovered to be involved in the misconduct or noncompliant activity.”

While CMS points toward a significant number of enrollments that show an agency’s NPN rather than an individual’s, agents who have had their clients poached complain that when rogue individual agents are identified, there is often nothing to tie them to an agency that may be training and directing them in bad practice. Hence, perhaps, CMS’s emphasis on analyzing EDE data (hello, BenefitAlign) and getting hold of actual agency training materials as well as on including applications with agency NPNs in its analysis.

With regard to imposing immediate suspensions of agents, agencies and web-brokers suspected of fraud or noncompliance, CMS stresses that it already has that authority. Its only proposed change to the existing provision granting that authority, CFR 45 § 155.220 (k)(3), is the addition italicized below:

HHS may immediately suspend the agent's or broker's ability to transact information with the Exchange if HHS discovers circumstances that pose unacceptable risk to the accuracy of the Exchange's eligibility determinations, Exchange operations, applicants, or enrollees, or Exchange information technology systems, including but not limited to risk related to noncompliance with the standards of conduct under paragraph (j)(2)(i), (ii), or (iii) of this section and the privacy and security standards under § 155.260, until the circumstances of the incident, breach, or noncompliance are remedied or sufficiently mitigated to HHS' satisfaction.

The first part of the federal code alluded to, paragraph (j)(2)(i), (ii), or (iii) of CFR 45 §155.220, lays out the conditions generally violated by the agent fraud or sloppy practice that’s come into focus recently. These include requirements that the agent provide both the client and the marketplace with accurate information; document that the client has taken positive action to affirm that the information provided to the marketplace is accurate; provide contact information that verifiably belongs to the client; provide an income estimate calculated by the client; and document that the client has taken action to confirm consent for the agent to assist with the application.

As much of the fraud of the past year-plus was at least initially enabled by vague rules concerning the obtaining of client consent, the NBPP also proposes modifying a Model Consent Form created in 2023 as part of the 2024 NBPP. The update would “include a section for documentation of consumer review and confirmation of the accuracy of their Exchange eligibility application information.” Startlingly, CMS confesses, “Until we finalized new requirements related to consumer consent in the 2024 Payment Notice, there was no mandate to document the receipt of consent of the consumer or their authorized representative, or to maintain such documentation.” That was the loophole that the unauthorized plan-switching/unauthorized enrollment gravy train drove through. While the requirement was in place for Plan Year 2024, enforcement lagged behind.

The second section of CFR 45 alluded to above, §155.260, lays out the exchange’s responsibility to protect applicants’ personally identifiable information (PII) and the responsibility of non-exchange entities that gain access to PII to maintain the security of that information. CMS cited failure to protect PII (by sharing it with overseas subsidiaries) in suspending the EDE BenefitAlign.

CMS more or less explicitly states that the purpose of the proposed added language is to send a message:

Though we believe our current authority in § 155.220(k)(3) allows HHS to implement system suspensions broadly based on circumstances that pose unacceptable risk to Exchange operations or Exchange information technology systems, in light of the increasing complaints about unauthorized enrollments, we propose amendments to § 155.220(k)(3) to increase transparency concerning the reach and application of system suspensions and more accurately capture in regulation when HHS may invoke this authority. These proposed amendments would allow HHS to immediately respond to discovered risks to the accuracy of Exchange eligibility determinations, Exchange operations, applicants, or enrollees, or Exchange information technology systems. They would also provide agents and brokers with an increased understanding of our approach to implement system suspensions. The proposed amendments would also better encapsulate the original intent of the § 155.220(k)(3) suspension authority, which included protecting against unacceptable risk to consumer Exchange data.

Agents and agencies are thereby placed on notice: ‘We will shut you down if you can’t document that your clients have attested to the accuracy of information provided on the application and confirmed their permission for you to act on their behalf.’

* Suspension under the provision in question, CFR 45 §155.220 (k)(3), does not terminate an agent’s registration with the marketplace, and agents can submit evidence that the suspension is unwarranted, or that the flagged conduct has been remedied or mitigated to HHS’ satisfaction. Agents suspended under this provision can continue to assist clients with enrollment, either by phone or “side-by-side” on Healthcare.gov, but not independently on an EDE platform. Suspension under other provisions, §155.220 (f) or (g), in contrast, suspend or terminate the agent’s exchange agreement.

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Photo by Bryce Carithers

Tuesday, October 01, 2024

VanceCare without Legislation

Which risk pool will you land in?

In a recent post, I argued that JD Vance’s rendition of Trump’s “concept of a plan” for healthcare was mainly a sketch of how a second Trump administration would “build on” (tear down) the ACA marketplace administratively, without repeal/replace legislation.

In brief, that would entail 1) rebuilding Trump 1.0’s alternative market of medically underwritten, ACA-noncompliant plans (so-called Short-Term Limited Duration, or STLD, plans), and 2) prompting states to implement measures like the waiver concepts put forward by Trump’s former CMS administrator, Seema Verma. These “concepts” included 1) replacing ACA premium subsidies with a lump-sum health savings account that could be used to pay premiums for any plan; 2) inviting states to restructure the federal premium subsidy as they wished; 3) allowing states to grant premium subsidies for ACA-noncompliant plans; and 4) creating state high risk pools. Options 1 and 3 could effectively convert the ACA-compliant marketplace as we know it into a high risk pool of sorts, and in combination with option 4, could create the multiple stratified risk pools that Vance described in followup comments.

Vance’s comments could also be read as an outline of repeal/replace legislation along the lines of the failed repeal/replace bills of 2017, which a Republican Congress would probably push through under a more authoritarian Trump 2.0 and a more MAGA Republican caucus than that of 2017-18. (In that case, Vance, the MAGA convert, would have to get on board with the massive Medicaid cuts, beginning with repeal of the ACA Medicaid expansion, which he criticized in the 2017 repeal bills.) But a second Trump presidency with Democrats in control of one house of Congress (if Trump 2.0 does not effectively neuter Congress by extra-Constitutional means) is as likely as a Republican trifecta. And should that scenario play out, Republicans in Congress are laying the groundwork for a third plank in an assault on the ACA marketplace as we now know it — that is, undermining a marketplace that provides plans with guaranteed issue, Essential Health Benefits, and no caps on coverage to virtually all enrollees in the individual market.

That third plank is blocking renewal of the marketplace premium subsidy enhancements originally provided by the American Rescue Plan Act (ARPA) in March 2021 and extended through 2025 by the Inflation Reduction Act in August 2022. ARPA not only reduced the percentage of income required to pay for a benchmark (second-cheapest) silver plan at every income level — it also removed the income cap on subsidies, which was 400% of the Federal Poverty Level ($51,040 for a single person and $104,800 for a family of four in 2021, when ARPA was implemented). Prior to ARPA, given the high cost of unsubsidized ACA-compliant insurance, the income cap left a major hole in the ACA’s “affordable care” promise — especially for older prospective enrollees, since premiums rise with age. The unaffordability of insurance for several million people dependent on the individual market was Republicans’ main cudgel against the ACA for years. Prospective enrollees who were subsidy-ineligible were the primary constituents for Trump’s alternative STLD market — a bad solution to a real problem.

While ACA premiums came in somewhat lower than expected when the market launched in advance of Plan Year 2014, they spiked in 2017 — a major correction triggered in part by expiration of the ACA’s temporary national reinsurance program. Average benchmark premiums rose 20% in 2017 — and then soared another 34% in 2018, in a market roiled by Republicans’ ACA repeal drive and Trump’s threatened cutoff of direct reimbursement of insurers for the Cost Sharing Reduction benefit attached to silver plans for low-income enrollees, which he executed in October 2017. (Starting in 2018, the value of CSR was priced directly into silver plans in most states.) The premium hikes decimated off-exchange and unsubsidized on-exchange enrollment in ACA-compliant plans. According to KFF estimates, unsubsidized enrollment in ACA-compliant plans dropped by essentially half from Q1 2016 to Q1 2019, from 6.7 million to 3.4 million. That created at least a potential market for Trump’s medically underwritten STLD plans — and would again, should the income cap on subsidy eligibility snap back into place (as it will in Plan Year 2026, if Congress does not act).

Premiums stabilized after 2018 — and the Trump administration can take some credit for that, as the administration invited states to establish their own reinsurance programs with partial federal funding (15 states did so by 2020) and, at insurers’ request, tightened the rules by which enrollees could obtain Special Enrollment Periods outside of Open Enrollment. Average benchmark premiums were slightly lower in 2024 ($477) than in 2018 ($481). This year, however, premiums are on course for a substantial increase, averaging about 6%, according to Charles Gaba’s tracking of rate requests. That’s barely noticed in a marketplace where more than 90% of enrollees are subsidized. It would be noticed if the income cap on subsidy eligibility were removed. Substantial increases in 2026 and thereafter would help a second Trump administration sell lightly regulated, medically underwritten alternatives.

Democrats are ramping up calls to extend the ARPA subsidy increases, as the pending expiration of the income tax cuts for individuals in the Republican-created 2017 Tax Cuts and Jobs Act provides some leverage. Prominent House Republicans are digging in against extending the ARPA subsidy boosts, characterizing them as “ massive taxpayer-funded handouts to the wealthy and large health insurance companies.” That’s pretty funny, considering that Republicans relentlessly hammered the ACA in pre-ARPA years for leaving those with incomes over 400% FPL high and dry. In any case, most post-ARPA enrollment growth is in the 100-150% FPL income bracket (which the statement cited above also decries) — and almost three quarters of those 2024 enrollees* would be in Medicaid if ten states (including big enchiladas Texas and Florida) were not still refusing to enact the ACA Medicaid expansion. Since Medicaid is cheaper, Medicaid expansion should be a top priority of purportedly budget-conscious Republicans.

Republican opponents of ARPA subsidy expansion are leaning heavily on a paper by Brian Blase, formerly a special assistant to Trump’s National Economic Counsel, alleging rampant overpayment of subsidies in the ACA marketplace. Blase does have a legitimate complaint in the recent explosion of unauthorized enrollment and plan-switching by unscrupulous ACA brokers. That fraud was stimulated in part by ARPA’s zeroing out of premiums for benchmark coverage for enrollees with income under 150% FPL (currently $21,870 for an individual), in combination with an administrative rule enacted in early 2022 that allows not only year-round enrollment to people below that threshold, but also a monthly Special Enrollment Period (SEP), enabling endless plan-switching. While I agree with Blase that that monthly SEP should be eliminated, and that CMS needs to act aggressively to quell broker fraud (as it appears to be doing), Blase attacks the subsidy enhancements with more dubious claims fraud in ACA enrollees’ income estimates — that is, raising or lowering income estimates to maximize subsidies (or access them at all). To those claims, I responded in detail here. The TLDR:

1) Most of the Post-ARPA enrollment increase in the ACA marketplace, as well as most of the increase at incomes where Blase alleges fraud is concentrated, is in states that have refused to enact the ACA Medicaid expansion, where most adults who estimate their incomes below 100% FPL get no government help at all. If substantial numbers of enrollees do in fact have incomes below 100% FPL, the solution is to…enact the ACA Medicaid expansion. People with income below 100% FPL should not be left with no access to affordable coverage.

2) ACA subsidies are based on an estimate of future income, which is inherently uncertain, especially for people at low incomes, who often work uncertain hours, change jobs, are self-employed, or depend on tips. Mismatches between income reported to the IRS and income projected in ACA applications probably have as much to do with inaccuracies in tax reporting as with inaccurate income projections in the ACA application. As for mismatches between income data based on ACA enrollment and data from the Census Bureau’s consumer surveys, those, like mismatches between IRS data and survey data, are perpetual.

3) Blase misreads CMS figures regarding former Medicaid enrollees, disenrolled in the post-pandemic “Medicaid unwinding,” who enrolled in the ACA marketplace in 2024. In HealthCare.gov states, according to CMS tracking, about a third of Medicaid disenrollees enrolled in the marketplace — not 70%, as Blase claims.

CMS needs to stop the broker fraud; should probably end the monthly SEP (though not year-round first-time enrollment for those with income under 150% FPL); and perhaps ramp up income checks on enrollees who may be underestimating their income (as opposed to overestimating it to get over the 100 % FPL threshold). Killing the ARPA subsidies to quell broker fraud would be throwing the baby out with the bathwater. But of course that baby — affordable insurance for those who lack access to affordable employer-sponsored health insurance — is a perpetual target for Republicans. And killing the ARPA subsidy boosts would further another core Republican goal — undermining the ACA’s protections for people with pre-existing conditions.

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* In 2024, 6.9 million marketplace enrollees reported income in the 100-138% FPL range. In the broader 100-150% FPL category, 9,407,463 enrolled in 2024. The 100-138% FPL bracket was not reported in 2021, the last pre-ARPA year. From 2021 to 2024, enrollment in the 100-150% FPL bracket increased from 3.8 million to 9.4 million. That’s an increase of 5.5 million, more than half of the total increase of 9.4 million from 2021 to 2024. See the Marketplace OEP Public Use Files. To compare all-state totals at 100-150% FPL for 2021 and 2024 I excluded Idaho, which did not provide income breakouts to CMS in 2021.