Pennsylvania transforms its ACA marketplace with one sentence

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With a two-step regulatory change*, Pennsylvania has transformed its ACA marketplace. The measure is probably the most impactful single step a state has taken to improve its marketplace. And the move won't cost the state a cent. It simply picks up money the Trump administration left on the table when it cut off direct federal reimbursement of insurers for the Cost Sharing Reduction (CSR) subsidies they must provide to low income marketplace enrollees who select silver plans.

The new Insurance Department regulation (Revision 1b here) requires individual market insurers filing rate submissions to make this change:

CSR Defunding Adjustment of 1.20 – all individual silver exchange plans.

In other words, price silver plans proportionately to their real actuarial value (as estimated by the Department) with CSR priced in -- at 1.2 times the value of silver without CSR.  

That change dates back to 2020. For 2021, the Dept. of Insurance added a requirement that insurers must base their estimates of "induced demand" at each metal level on the scale HHS uses for its risk adjustment program, also incorporating the CSR adjustment.  "Induced demand" is a measure of how much each increase in coverage generosity is likely to stimulate more use of medical services. Left to their own devices, insurers have tended to overestimate the "induced demand" imputed to gold plans, leading to their overpricing relative to silver.

The change standardizes, and therefore in almost all cases increases, silver loading -- pricing of CSR into the premiums of silver plans only, since CSR is available only with silver plans (see note below). The result: statewide, the cheapest gold plan costs less than the benchmark silver plan against which premium subsidies are set, and bronze plan discounts have increased as well. 

ACA Medicaid expansion enrollment continues to swell as pandemic surges

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 As our woes show no sign of abating -- 120,000-plus new Covid-19 cases per day, a million new jobless claims per week -- neither does Medicaid expansion enrollment. This part of the ACA is providing a vital safety net. The sampling below (states that have reported expansion category enrollment through October) indicates that enrollment growth did not slow in October.

How representative is the sample? Well, August growth is about 1 percentage point higher in this sample than in the larger (18-state) sample I posted for that month. California, where Medicaid enrollment has been almost flat in pandemic months, drags down the all-state rate of increase by probably another 2 percentage points. I am pretty confident that expansion-category enrollment growth since February tops 20% nationally. For more about my various assumptions, see this post (and this September update).

Pandemic Medicaid expansion enrollment in 12 states
February thru October 2020

 Idaho increase through August is estimated at a rate comparable to Sept-Oct increase.

ACA Ok? Once again, Chief Justice Roberts seems to dismiss an argument from intent

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In his June 2015 decision disposing of King v. Burwell, the last lawsuit before the presenting pending one seeking to cripple the Affordable Care Act, Chief Justice Roberts summarily disposed of the plaintiffs' patently fraudulent argument about Congressional intent. 

The suit was based on a drafting error. While the law envisioned states forming their own health insurance exchanges, but gave them the option of deferring to a federal exchange, key provisions referred only to "an exchange established by a state" as the vehicle for allocating premium subsidies to enrollees. The error was a biproduct of the political warfare that affected the ACA's drafting history, preventing an ordinary reconciliation of Senate and House versions.

Recognizing that spotlighting a drafting error would not suffice to convince the courts to cripple the ACA marketplace, the plaintiffs argued that the omission was no error. They claimed that while Congress intended to authorize state-based health insurance exchanges to grant premium subsidies to qualifying enrollees, Congress intended not to authorize the federal exchange to grant those subsidies. (At the time the suit came before the Supreme Court, 37 states were relying on the federal exchange, HealthCare.gov.) Testimony by those involved in the law's creation was unanimous that no one intended to bar the federal exchange from awarding premium subsidies.

Writing for a 6-3 majority, Roberts' disposed of the intent question thusly:

Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. 

Improving the ACA under gridlock, Part II: Innovation waivers and new revenue sources

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Earlier this week I reviewed the many ways a Biden administration might improve healthcare access and affordability by administrative action, on the assumption that with a Republican Senate majority, major legislation to improve the ACA or revolutionize drug pricing is off the table. The laundry list was courtesy of Elizabeth Warren, except for a final item, maximizing silver loading, would likely have the largest impact on the ACA marketplace.

Now let's think about another non-legislative means by which insurance coverage might be boosted: the ACA Section 1332 innovation waivers available to states. 

Under these waivers, states can propose to change almost any aspect of ACA marketplace coverage -- subsidy structure, metal level, essential health benefits, employer mandate -- in an effort to improve affordability and access. There are tight constraints, however: the proposed alternative must  provide coverage as comprehensive and affordable to as many people as does the existing marketplace design (or rather, will again, with CMS director Seema Verma gone), without increasing the federal deficit. 

That fiscal constraint amounts almost to a Catch-22, as the requirement not to boost spending is on an absolute, not per capita basis. If the state's changes boost enrollment, even while reducing cost per person, the state must foot any excess spending.

I have reviewed potential state innovations many times, e.g., here and here (one major option for states to consider, a Medicaid-like Basic Health Program for enrollees with incomes up to 200% FPL, is enabled by a different ACA provision, Section 1331).

Here I want to focus not on potential alternative schemes themselves, bur rather on fiscal opportunities that have opened up for states in the Trump years and that potentially make waivers more viable. By both accident and design, the federal government has put new money on the table.  Potential revenue sources include:

Trump's corrupt schemes didn't help him -- but they didn't hurt him either

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Some time in the night, I found myself thinking about this claim of Greg Sargent's, which I found clarifying when it was published on October 7:

When you step back and survey the last two years of U.S. politics, one of the biggest story lines that comes into view is this: One after another, a whole string of deeply corrupt schemes that President Trump has hatched to smooth his reelection hopes have crashed and burned.

The "corrupt schemes" run from attempting to extort a bogus investigation of Biden from the Ukrainian president to trying to retail the same Biden smears in U.S. media to a retaliatory investigation of those who conducted the investigation of Russian influence to siccing federal troops on protestors to sabotaging the Post Office, smearing vote-by-mail and promising legal challenges against full vote counts.

While it's true that all of these schemes have failed (so far), it's also true that none of them hurt Trump's standing much. His support is pretty much where it was in November 2016. 

A healthcare reform plan for Joe Biden with a Republican Senate

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If, as seems likeliest but by no means certain, we have a President Biden and a retained Republican majority in the Senate, the ACA's core programs are likely to limp along fully funded but not radically improved.

Biden had proposed major reforms to the ACA, including: 1) establishing a public option, 2) allowing those with access to affordable employer-sponsored insurance to buy in to the marketplace on a subsidized basis, 3) capping premiums for a benchmark plan at a maximum 8.5% of income, with no income cap on subsidy eligibility, 4) boosting subsidies at every income level, and 5) offering free marketplace coverage to low income people in states that refused to enact the ACA Medicaid expansion.

None of that is likely to happen. At best, Biden may be able to convince McConnell to render moot Texas v. California, the case before the Supreme Court seeking to have all or part of the ACA declared unconstitutional on patently fraudulent grounds, by either repealing the individual mandate or raising the penalty to $1. 

There's much that can be done to improve the ACA -- and the entire U.S. healthcare system -- administratively, however. And we have a blueprint -- provided by an indefatigable and aggressive reformer with administrative smarts: Elizabeth Warren.

You may recall that during the campaign, Warren jumped through some convoluted hoops to straddle the gap between Medicare for All and more incremental (though still sweeping) and swiftly achievable reform.  

To that end, she released a transitional plan for her prospective first term as president last November. What's relevant now: a sweeping set of proposed administrative actions.  They include:

If Republicans had succeeded in ACA repeal in 2017: state snapshots

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Last week, David Anderson, Louise Norris and I looked at how many more Americans would be uninsured if the Republican effort in 2017 to "repeal and replace" the ACA's core programs had succeeded, as it very nearly did (90% of Republicans in Congress voted for the main House or Senate bills). 

"Repeal and replace" was a misnomer: the Republican bills would have established an inadequate replacement for the marketplace -- but simply ended the ACA Medicaid expansion, which has had more impact. According to CBO projections, the repeal bills would have reduced Medicaid enrollment by 8 to 9 by this year, and by 14-15 million as of 2024, when the phase-out of enhanced federal funding for the expansion population would be complete. With the expansion intact, Medicaid enrollment has increased by about 8 million during the pandemic. Enrollment by those specifically rendered eligible by the ACA has increased by about 20% since February.

We also prepared several state-specific versions, as frankly we were apparently caught in a pre-election op-ed tsunami and couldn't quickly place the original.  Below, I've pasted state-specific outtakes.

What if Republicans had succeeded in repeal of the Affordable Care Act?

I've teamed up with friends for this final pre-election reminder of what the Republican healthcare agenda is really all about.

By Andrew Sprung, David Anderson and Louise Norris

On November 10, the Trump administration will ask the Supreme Court in oral argument to declare the Affordable Care Act unconstitutional – and nullify the law in the midst of a pandemic, uninsuring an estimated 23 million people. As Republicans rushed to confirm the nomination of Amy Coney Barrett to the Supreme Court, Senate Majority Leader Mitch McConnell  asserted that “no one believes” the Court will strike down the law – implying, as many hard-pressed Republican incumbents have also implied, that Republicans have no wish to do so.

But ACA repeal has been Republican policy since President Obama signed the bill into law in March 2010.  In 2017, a Republican House and Congress came within a whisker of repealing the ACA’s core programs, and 90% of Republicans in Congress voted for repeal. Where would be now if they had succeeded? How many more Americans would be uninsured, and what options would be available to the millions who have lost job-based coverage since the pandemic reached our shores? 

A narrow look at the broad middle of the ACA marketplace

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 This is a rather unilluminating post.  Are you still here?

I have been expecting to see more discounts in gold plans this year than in prior years, given CMS's report showing that lowest-cost gold plan premiums in 20201 are down an average of 6% from the year prior, while lowest-cost bronze and silver plans are down just 1%.  Yesterday's sampling of premiums in the 10 counties with the highest enrollment nationally offered some evidence in favor, albeit with really cheaply gold concentrated mostly in Texas' largest markets, Harris County (Houston) and Dallas.

As a followup, I took a look at middling markets -- literally: zip codes where enrollment was at the median for all 27,365 zip codes in the U.S. That is, 13 zip codes that each had 239 on-exchange enrollees. These markets are scattered through the country's broad middle (four were in Tennessee, but the plan offerings varied considerably among them). Population ranged from 3800 to 11,300.

The one consistent pattern was an increase in participating insurers -- often resulting in higher premiums for lowest-cost plans. Market watchers know that new competition is more likely to weaken discounts for subsidized enrollees than to improve them, and that's the case here (though new entrants may provide important new options where provider networks are concerned).  On average, lowest-cost bronze and silver premiums for subsidized enrollees in these markets rose from 2020 to 2021. Lowest-cost gold was all over the map, but also rose a bit.

Cheaper gold in the ACA marketplace's high-enrollment counties

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Last week, CMS reported that in 2021, average premiums in HealthCare.gov states are dropping for the third straight year. I noted that since lowest-cost gold plans were dropping an average of 6%,  compared to a 1% drop for lowest cost silver and bronze, we should see steeper discounts in gold plans this year. 

Perhaps, that is, the markets will move a bit closer to the gold-cheaper-than-benchmark-silver norm envisioned by the prophets of silver loading prior to Trump's cutoff of direct CSR funding in October 2017 (see this post for an explanation). 

That appears to be the case, to judge by premium changes in the ten U.S. counties with highest marketplace enrollment in 2020. Enrollment in these 10 counties accounts for 17% of all enrollment nationally.