Oh, BTW...Trump administration wants Congress to fund CSR

Progressives' alarm bells went off on several fronts yesterday after  CMS belatedly released the annual Notice of Benefit and Payment Parameters (NBPP) yesterday.

Chief among the causes of alarm: the NPBB appears to put silver loading on the chopping block for 2021. Very briefly, silver loading began in 2018 in response to Trump's abrupt cutoff in October 2017 of direct reimbursement to insurers for Cost Sharing Reduction (CSR) subsidies available to low income marketplace enrollees. State regulators and insurers responded by pricing CSR into silver plans only, since CSR is available only with silver plans. Since income-based ACA premium subsidies are based on a silver benchmark, silver loading generated major discounts in bronze and gold plans.

The NBPP suggests that silver loading places an undue burden on taxpayers. But in addition to a call for proposals for "potential action," something else is, I believe, new here:

Silver loading is the result of Congress not appropriating funds to pay CSRs, with the result being an increase to the premiums of benchmark plans used to calculate premium tax credits, and the federal deficit. 112 The Administration supports a legislative solution that would appropriate CSR payments and end silver loading. In the absence of Congressional action, we seek comment on ways in which HHS might address silver loading, for potential action in future rulemaking applicable not sooner than plan year 2021 (p. 190). 

Question: is this not the first time the Trump administration has explicitly (or at least formally) called for a Congressional appropriation to fund CSR the old way -- by reimbursing insurers directly for providing it?  That seems significant to me, and raises the question of whether last year's Alexander-Murray legislation, purporting to strengthen the ACA marketplace, might be revived in a divided Congress.

As originally conceived, Alexander-Murray had three main components: federal funding to states for reinsurance programs, which reduce marketplace premiums; a loosening of the "guardrails" constraining ACA innovation waivers, which empower states to propose changes (and theoretically, complete redesigns) of ACA marketplace structure; and appropriations to fund CSR. It foundered on a poison pill concerning abortion -- as well as on Democrats' recognition that silver loading had improved marketplace subsidies for millions and boosted enrollment, partially offsetting other forms of administration sabotage.

Given those realities, Democrats would have to extract a price for CSR reimbursement. Consider these facts about silver loading:

• By CBO estimate, the cutoff of direct CSR reimbursement and resulting silver loading would cost $194 billion over 10 years.
• According to the NBPP, "For the first half of 2018...16 percent of enrollees were enrolled in a plan with zero premiums after application of advance payments of the premium tax credit, another 19 percent of enrollees paid a premium of less than 5 percent of the total plan premium" (p.10). That's largely a result of silver loading, which made $0 premium bronze plans widely available -- as is a doubling of gold plan enrollments in 2018.
• Silver loading likely boosted enrollment by at least 300,000 in 2018. CBO forecasts that  the enrollment boost will reach 2-3 million annually as silver loading continues.

Given the multiple other steps HHS and the Republican Congress have taken to depress marketplace enrollment -- including  in the 2020 NBPP, such as a threat in 2021 to auto-re-enrollment -- there's no way Democrats can give up the silver loading windfall without trading it for a less haphazard boost to marketplace funding. [Update: OTOH, CMS's clear threat here to end silver loading does reduce their leverage.]

Generous reinsurance funding might be one answer. But that would trade a major benefit to subsidized enrollees for a benefit to unsubsidized enrollees. As New Jersey's experience in 2019 enrollment demonstrates, reductions in base (unsubsidized) premiums don't help subsidized enrollees, and may hurt overall enrollment.  

A cap on premiums as a percentage of income for all enrollees, including those above the current 400% FPL subsidy cutoff, would also benefit more affluent enrollees, but in a more direct, predictable and thoroughgoing way.  Improving subsidies at 200-400% FPL, the range in which CSR is negligible or nonexistent, should also be a major priority. This is the income range in which silver loading had its chief impact.  And frankly, ACA premiums and out-of-pocket costs can look pretty daunting at 150-200% FPL too.

A deal to fund CSR remains unlikely - -and if one were to transpire, the offset to the silver loading loss would probably have to be pretty simple, such as a cap on premiums as a percentage of income, perhaps only to, say, 500% or 600% FPL. But the Trump administration's direct call in official guidance for a CSR appropriation should not pass unnoticed.

Another aspect of Alexander-Murray that might reverberate differently this year is the loosening of ACA Section 1332 innovation waiver barriers. In brief, in the time since Alexander-Murray died, the Trump administration has hacked so violently at the Section 1332 guardrails that the bill's language might actually at least modestly rebuild them, rather than lower them. But I'll have to return to that subject, as the day job calls just now.

Medicare for all (who want or need it): A path for presidential candidates

As working assumptions tend crystalize (or harden) unnoticed, I've long assumed that the U.S. can't achieve or even mandate Medicare for All in one leap. The tax hikes are too much for Americans to tolerate, as is transformation by fiat of enormous (and enormously profitable) industries.

Since at least the early aughts, various plans have mapped out Medicare expansion by degrees. In its early iterations, the 'public option' was essentially a Medicare extension offered to people who lacked access to other insurance -- with a buy-in option for employers and/or employees. Some versions envisioned employer-sponsored insurance dying rather rapidly on the vine; others foresaw permanent competition between ESI and the public plan; and others left the question open.

Plans of this sort include Helen Halpin's CHOICE program (2003), Rep. Peter Stark's Americare plan (2006), and Jacob Hacker's Health Care for America plan (2007), all of which allowed employers to buy in to the public plan via a payroll tax. Current iterations include Jeff Merkley and Chris Murphy's Choose Medicare Act, Tim Kaine and Michael Bennett's Medicare X Choice Act (buy-in for small biz only)  and the Center for American Progress's Medicare Extra.

David Anderson recently outlined the intense challenge Democrats will face, should they gain the presidency and both houses of Congress (with a presumably razor thin Senate majority at best), in prioritizing among a huge list of agenda items demanding Senate floor time in particular (and that's assuming not only that Dems win a trifecta but that all energy isn't absorbed by some megacrisis).  I would add that if an incoming Democratic president chooses not to make healthcare reform priority number 1, patching the ACA would serve as a kind of placeholder. Such patches might start with capping individual market premiums as a percentage of income for all comers and, with varying degrees of cost and complexity, enriching and redesigning the subsidy structure.

What if the newly elected president has run on some kind of commitment to Medicare for all? I suspect the eventual winner (if a Democrat) is likely to hedge, as many Congressional candidates did, and advocate a path to Medicare for all, as the plans outlined above do.

A word from our sponsors

Well, the sponsor is me, and the "our" is royal. A while back, I took the subscribe button off this blog because hundreds of spam subscriptions had flooded in. I've restored it, top right, so please subscribe if you haven't. I've been averaging about one post every three days, so that's roughly how much email you'll get. Thanks...

One more offset from silver loading

It seems clear that the discounts in bronze and gold plans created by silver loading -- the pricing in of Cost Sharing Reduction into silver plans only after Trump cut off direct reimbursement for the benefit* -- have partly offset enrollment losses in the ACA marketplace caused by other forms of sabotage, e.g., the gutting of federal funding for advertising and enrollment assistance and repeal of the individual mandate penalty. Silver loading may have boosted enrollment by 3-4% in 2018.

The effects of silver loading are likely more intense in states that have rejected the ACA Medicaid expansion. Roughly a third of enrollees in those states would be Medicaid-eligible had the state expanded, and about 90% of enrollees in the should-have-been-in-Medicaid income range (100-138% FPL) select silver plans and so access the strongest form of CSR, available up to 150% FPL.  As noted in my last post, more intense silver loading in nonexpansion states may very well be a major factor in why enrollment losses were smaller in nonexpansion states on HealthCare.gov than in expansion states on the platform (though expansion states with their own marketplaces have done better than both).

Silver loading may provide a second form of "offset" to nonexpansion states. In 2016, a CMS analysis concluded that premiums in Medicaid expansion states were about 7% lower than in nonexpansion states,, controlling for various other factors. That's presumably because this lowest income cohort (100-138% FPL) has more intense health needs on average than enrollees at higher income levels.

Why 2019 ACA enrollment drops were concentrated in Medicaid expansion states on HealthCare.gov, Take 3

I have been trying to figure out why (if there is any why) the overall 3.8% enrollment loss in HealthCare.gov states in 2019 was concentrated almost entirely in states on the platform that have enacted the ACA Medicaid expansion. Enrollment in the 21 HealthCare.gov states that have expanded Medicaid (excluding Virginia and Maine, where expansion was in progress or pending) is down 7% in 2019. It's down less than 1% in the 16 nonexpansion states.

David Anderson, while focused elsewhere, may have provided an answer:

we should expect larger #Silverloads between benchmark and cheapest Bronze plan in non-Expansion states compared to Expansion states.

— David Anderson (@bjdickmayhew) January 8, 2019

ACA 2.0 in California: an individual mandate without shame and a move toward all-payer in pharma

Yesterday California's new Governor, Gavin Newsom "announced a series of major, first-in-the-nation executive actions and budget proposals to lower prescription drug and health care costs for all California families and move California closer to the goal of health care for all."

A couple of quick thoughts about the package:

1. The ACA-related proposals are to raise the subsidy cap to 600% FPL while enriching current subsidies -- and to implement a state individual mandate. That pairing addresses the fatal flaw in the ACA individual mandate, which New Jersey's disappointing enrollment performance following passage of a state individual mandate illustrates: subsidies are too skimpy (if available at all) to make the coverage on offer seem like a good deal to many who are required to obtain it.

Try telling someone with an income of $30k that a silver plan with a deductible of $2,500 will cost them $200 a month, or that a bronze plan with a $3k deductible will cost, $137 a month.That was the deal on offer for a 40 year-old in most of Jersey in 2019; in most other states, the deductibles would have been higher, though the bronze premium would in many cases be lower. My duty as an ACA Certified Application Counselor has been light, but I've seen enough to know that that kind of result does not make many prospective enrollee happy* (the case is different at lower incomes -- say, $17-20k for an individual, where strong Cost Sharing Reduction is available).  The case is often much worse for those with incomes above the subsidy threshold. In many states, premiums had risen high enough by 2018 that many people in the 400-600% FPL  income range and above were exempt from the mandate.

New Jersey's disappointing 2019 ACA enrollment: Some perspective

Policymakers in New Jersey were disappointed by enrollment in the state's ACA marketplace in 2019, which came in 7.1% behind 2018 enrollment. In the 39 states using HealthCare.gov, the federal exchange, enrollment was down 3.8%, and in the 12 states (plus DC) that have their own exchanges, it's likely to come in flat (enrollment is not over in several of them).

The state had acted swiftly in the first half of 2018 to pass a state-based individual mandate and get a reinsurance program enacted by legislation  and approved/funded by CMS. As a result, premiums were down an average of 9% in 2019, and 22% below where they would have been had no action been taken.

But base premiums affect only unsubsidized buyers, and in 2019 premiums in New Jersey were actually higher than in 2018 for most subsidized enrollees, as benchmark silver plan premiums, which determine subsidies dropped further than the average for all plans. For a 40 year-old with an income of $30k, the cheapest bronze plan cost 12-22% more in 2019 than in 2018 (varying by region) -- that is, $13-$25 more per month. Cheapest silver was also up slightly in most of the state.  There's some hope that off-exchange enrollment will show some improvement, as that's where the benefit from lower premiums comes home. We'll know when the state publishes first-quarter off-exchange enrollment in the spring.

When states expand Medicaid, is there a multi-year marketplace drain?

Happy New Year to the 200,000 Virginians who have gained Medicaid coverage through the state's Medicaid expansion, which went into effect today. Enrollment began on November 1. ACA marketplace enrollment in Virginia is accordingly down 16%, from 400,000 in 2018 to 334,000 this year. The vast majority of that drop is attributable to the Medicaid expansion, as Virginians with incomes in the 100-138% FPL range, previously eligible for marketplace coverage, are now eligible for Medicaid.

I had previously calculated that just shy of 100,000 Virginians who were enrolled in the ACA marketplace as of the end of open enrollment for 2018 would likely be eligible for Medicaid. the enrollment drop attributable to Medicaid is probably a bit more than half that number. That fits a pattern, I think, established in other states that enacted belated Medicaid expansions. Expansion appears to drive marketplace enrollment reductions for more than one year.

Medicaid expansion states on HealthCare.gov account for nearly all enrollment losses in 2019

In yesterday's post, I  missed the most startling point in the ACA enrollment data I'd been staring at.

It's this: In 2019, virtually all of the enrollment decline in the ACA marketplace was concentrated in states on the HealthCare.gov platform that have expanded Medicaid. That's excluding Virginia and Maine, which are expanding Medicaid in 2019.*

Charles Gaba projects virtually flat enrollment in the states that run their own exchanges, in many of which enrollment for 2019 is still open. In the 16 remaining non-expansion states using HealthCare.gov, enrollment in 2019 is down less than 1% from enrollment in 2018 (excluding late adjustments, which should roughly cancel out similar adjustments made last year). Enrollment in the 21 HealthCare.gov states that have expanded Medicaid (excluding VA and ME) is down 7% in 2019. It was also down 7% in 2018, compared to 4% the in non-expansion states.

As I noted yesterday, outsized enrollment losses in 2018 were concentrated at lower income levels, where enrollment assistance is probably most vital, and where the value of Cost Sharing Reduction (CSR) mostly outstrips the value of  bronze and gold discounts generated by silver loading** (an income breakout is not yet available for 2019). In HealthCare.gov expansion states, enrollment in the 100-150% FPL income band, where CSR is strongest, cratered in 2018, dropping 14%. At 150-200% FPL, enrollment in these states dropped 11%.

At higher income levels, as was the case generally in 2018, silver loading discounts in these states seem to have partially offset the forces driving enrollment down at lower income levels. At 300-400% FPL, enrollment in these states was up 8% in 2018 (it was up 12% in non-expansion states).

Two key factors in state-by-state ACA enrollment performance

Last week, I noted that in the 39 states using the HealthCare.gov platform, enrollment declines from 2018 to 2019 were generally steeper in states that had accepted the ACA Medicaid expansion than in states that have so far refused to expand.

Excluding Virginia and Maine, which are expanding Medicaid as of Jan. 1 2019, 13 of the 18 states with enrollment performance above the hc.gov median are nonexpansion states, while 15 of 18 below the median are expansion states (as is Kentucky, at the median).

My working assumption is that a measure of enrollment stability in non-expansion states is grounded in the one third-plus of enrollees in those states who have incomes that would qualify them for Medicaid in expansion states (100-138% of the Federal Poverty Level). This is the income level at which ACA marketplace offerings are most affordable and comprehensive.  At 100-138% FPL, the premium for a benchmark silver plan with an actuarial value of 94% (average deductible $355) costs just 2% of income.

Apparently cutting against this hypothesis is the fact that in HealthCare.gov states in 2018, enrollment dropped 7% at 100-150% FPL while remaining essentially flat at 200-400% FPL, as at the higher income levels, silver loading discounts (see note at bottom) largely offset the effects of cuts to advertising and enrollment outreach. But the drop at 100-150% FPL was much steeper in the expansion states on the platform, where subsidy eligibility begins at 138% FPL (so that the income band is effectively 138-150% FPL). In expansion states on HealthCare.gov, enrollment in this income band cratered 14% in 2018, compared to 6% in the nonexpansion states.* At 138-150% FPL, a benchmark silver plan -- still at 94% AV -- costs 3-4% of income, compared to 2% of income for those below 138% FPL.  And while silver loading reduced enrollment losses at 200-400% FPL in 2018, the resulting discounts in many cases evaporated in 2019 (though new discounts also emerged).**

The chart below sets 2019 enrollment performance beside the percentage of enrollees in a state who obtain silver plans with the highest level of CSR, which raises the actuarial value of a silver plan to 94%.  That percentage is generally much higher in nonexpansion states, where over three quarters of the enrollees in 94% AV silver would be in Medicaid if their state had accepted the expansion. The relationship is significant, I think,  but can be trumped by silver loading effects, as they are in some (not all) of the highlighted states below, as well as by other factors noted below. In states marked in red, the relationship between the percentage of enrollees at 94% AV silver and enrollment performance is most sharply out of whack; in those marked in tan, more moderately so. The apparent effects (or lack thereof) of premium changes from 2018 to 2019 in highlighted states are discussed below.

The median percentage of enrollees with 94% AV silver plans in these 37 states is 19%. The median enrollment change is Kentucky's -5.38%.  I have excluded Virginia and Maine, as they are in the midst of Medicaid expansion.

Sources: Charles Gaba, CMS state-level Public Use Files, 2018.