George Orwell's mirror for American leaders

I have been essays that George Orwell wrote in the thirties and during World War II. They hold up a distant mirror* to our current predicament.

Orwell, a "democratic socialist" with an evolving dislike and distrust of hard-line Communists, is not always insightful. His major error was assuming that Britain -- and ultimately, I gather, all countries -- had to make a binary choice between fascism and socialism. He roughs out some national stats, such as how many British citizens were likely to be malnourished circa 1937, but he doesn't seem to have much of a grasp of economics. He's vague about the changes he'd like to see, at least in the essays I've read (and in The Road to Wigan Pier, really an extended essay).

But Orwell did know people -- he was a passionate embedder, becoming a tramp to get to know tramps, staying in the miserably substandard homes of coal miners, talking in depth to hundreds of working and middle class people. And he has a certain moral clarity, a commitment to justice and alleviating suffering. He judges the privileged, but with empathy. He sees that his Marxist quasi allies are driven largely by hatred and he recoils from that.

Thus, while condemning  Britain's leadership through the post-WWI era for myopia, for clinging to their privilege, for cowardice and incompetence, Orwell pays grudging tribute to a certain baseline integrity. And that's where we get, to mangle a metaphor, a kind of mirror-by-contrast held up to the U.S. just now:

Rational choice in the ACA marketplace, Pennsylvania 2018 edition

Pre-script: Looking again at the first chart below, I fear this was one of my bury-the-lead days. In the three income brackets ranging from 200-400% FPL -- subsidized enrollees not eligible for strong CSR -- 42% bought gold plans. Forty-two percent! That is back-door CSR, statewide -- a significant boost in value available to those at the upper end of subsidy eligibility.
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While unsubsidized buyers of health insurance in Pennsylvania's individual market suffered from rate hikes north of 30%, subsidized enrollees got all kinds of  bounty as a result of the state's decision to "silver load" the cost of Cost Sharing Reduction (CSR) subsidies. That is, once Trump cut off federal reimbursement to insurers for CSR, Pennsylvania insurers priced it in to silver plans only, generating discounts in other metal levels  (see note at bottom for an explanation).

In the state's most populous counties, the individual insurance market is dominated either by Independence Blue Cross (Philadelphia and surrounding counties), Geisinger (e.g., counties just to the west of the Philly region) or UPMC (e.g., Allegheny, including Pittsburgh). Thanks to silver loading, Geisinger and UPMC offered gold plans that were cheaper than the cheapest silver available. Independence Blue Cross offered a gold plan that was priced a more or less normal range above the cheapest silver. But as explained in my previous post, thanks to a huge gap between the cheapest silver plan and the benchmark silver plan, that gold plan was free or very low cost to many subsidized buyers.

In fact in all counties except those clustered near Philadelphia and served by Independence BC, the cheapest gold plan was cheaper than the cheapest silver. And in Philly and the surrounding counties, the cheapest gold plan was cheaper than the benchmark silver plan, and so heavily discounted, as subsidies are set against the benchmark. (David Anderson has mapped cheapest gold vs. cheapest silver prices in all counties nationally here; you can select a Pennsylvania-only view.)

As a result, gold plan enrollment more than tripled in Pennsylvania in 2018. Enrollment in bronze plans, which were free to everyone over 30 with an income of $30,000 in large swaths of the state, more than doubled.

A free silver plan with a $0 deductible...What's not to like?

I have been fond of noting that notwithstanding the complexity of health insurance, most enrollees in the ACA marketplace seem to get the most consequential choice right: metal level. In particular, most people eligible for strong Cost Sharing Reduction (CSR), which is available only with silver plans, chose silver and access it.

This year, subsidized enrollees' responses to the anomalous discounts generated by Trump's cutoff of federal funding for CSR (see note at bottom if you're unfamiliar with this) reinforce this narrative. In some states where the cheapest gold plans are cheaper than the cheapest silver, gold enrollment quadrupled or tripled. In the 200-250% FPL income band, where CSR is negligible, silver enrollment fell off a cliff in states where "silver loading" the cost of CSR generated large bronze/gold discounts (on HealthCare.gov, silver selection in this income band dropped from 68% in 2017 to 53% in 2018).

But when it comes to plan complexity, there are layers within layers -- literally, in the form of tiers. While I was working on a post about rational choice in Pennsylvania, where CSR takeup remained fairly strong even as gold enrollment more than tripled to 27% of total enrollment, I came across a mystery.

Two NJ healthcare bills awaiting Gov. Murphy's signature should reduce premiums by 20-30% in the individual market

On April 12, both houses of the New Jersey legislature passed bills to establish a state individual mandate (A3380) and a reinsurance program (S1878). The bills are designed to work in tandem to stabilize and reduce premiums in the individual market for health insurance.

It is not certain that Governor Phil Murphy will sign the bills. A mandate is a tax, and taxes are hard. The reinsurance program will cost the state some money, though not much -- probably an amount in the low tens of millions each year. But the payoff would be dramatic. Taken together, as outlined below, the bills can be expected reduce premiums in the individual market 20-30% compared to what they would be if neither bill is enacted.

If Seema Verma bans silver loading, how many ACA marketplace enrollees will suffer?

A few weeks ago, using ACA marketplace enrollment data available for Maryland, I calculated that about 20% of Maryland marketplace enrollees would lose valuable discounts in gold and bronze plans if federal reimbursement to insurers for Cost Sharing Reduction (CSR) subsidies were restored by Congress, after being cut off by Trump last fall.

Early this month, CMS published enrollment data for all states, with more detail (as always) for the 39 states using the federal exchange, HealthCare.gov, which account for just under three quarters of all enrollment. And while Congress balked at restoring CSR funding for 2019, CMS administrator Seema Verma is now intimating that CMS may ban "silver loading," the pricing practice that produced this year's discounts in bronze and gold plans. With the full enrollment data for HealthCare.gov, we can now calculate roughly how many people would lose access to the kind of de facto subsidy enhancements that emerged this year.

Does marketplace resilience show creator brilliance? Not quite, Krugman

Paul Krugman crows a bit about the ACA's relative resilience:

What’s the secret of Obamacare’s stability? The answer, although nobody will believe it, is that the people who designed the program were extremely smart. Political reality forced them to build a Rube Goldberg device, a complex scheme to achieve basically simple goals; every progressive health expert I know would have been happy to extend Medicare to everyone, but that just wasn’t going to happen. But they did manage to create a system that’s pretty robust to shocks, including the shock of a White House that wants to destroy it.

Um, maybe, sort of. The perspective is a useful corrective to those of us prone to lamenting the ACA's many design flaws and susceptibility to sabotage. And Krugman does highlight a resilience-making feature that I suppose could have been otherwise:

Those subsidies aren’t fixed. Instead, the formula sets the subsidy high enough to put a limit on how high premium payments can go as a percentage of income.

Yes, the subsidy-eligible are insulated from the massive premium hikes of the past two years -- averaging well over 20% in each year -- and that would not be the case if they were not benchmarked to income. The Trump administration even added some accidental extra resilience in an act of spite -- cutting off federal CSR reimbursements to insurers -- which simply boosted the subsidies, and allowed many enrollees to leverage the increase by buying bronze or gold plan (since in most states insurers concentrated the un-reimbursed price of CSR in silver plans, against which subsidies are set).  So the subsidy structure seems to preserve a pool of 8 million subsidized -- if erosion among the unsubsidized, and the Trump administration's fostering of a lightly regulated, medically underwritten alternative market for the healthy among them -- doesn't drive large numbers of insurers out.

But Krugman overstates the case on several fronts -- the most notorious being a straight factual fudge. Noting that 83% of enrollees on the exchanges are subsidized, he concludes:

Getting rid of Trump on the cheap

Shortly after Trump won the presidency, David Frum warned that the gravest danger to American democracy was the likelihood that Republicans in Congress would refuse to hold him accountable and would go along with his multi-front assaults on core American institutions and norms. Ever since then, I've thought that a stupid Trump move that triggers a recession or economic crisis might be the one thing that would induce Republicans to drop him -- "like a hot rock," as McConnell once falsely promised to do prior to Trump's nomination. If so, a recession would be the cheapest way we'd likely find to shake off the various mortal and merely grave dangers Trump poses. Trump's tariffs have markets gyrating and shaking; they could trigger this scenario

Wishes can be calibrated only in superstitious prayer. So much could go wrong with this scenario. Trade war could trigger hot war. Trade war could start, and Trump could set off an unrelated hot war. Trade war could lead to global depression. Republicans could stick with Trump no matter what he does. Various crises could trigger other extreme reactions in Trump -- moves to shut down media or criminalize/jail adversaries of various types. And of course, trade war may not happen -- China may give Trump a fig leaf while cleaning his clock in negotiations.

Nonetheless, a tightrope walk of fortune -- a Trump-triggered financial crisis (hopefully of the short and mild variety), followed by a Republican loss of one or both houses of Congress, followed by Republican acquiescence in various Congressional moves to rein Trump in, up to and including impeachment -- remains possible. Mount to heaven, O superstitious prayer!

New Jersey can sabotage-proof its ACA marketplace next week

Update, 4/12/18: All three bills discussed below passed in both houses of the New Jersey legislature today (info below via the legislature's bill lookup feature). On to Governor Murphy!

1. Individual mandate bill

A3380 Aca (1R) "New Jersey Health Insurance Market Preservation Act." 
Passed both Houses  

2. Reinsurance bill

S1878 ScaScaScs (SCS) "New Jersey Health Insurance Premium Security Act;" establishes health insurance reinsurance plan. 
Passed both Houses  

3. Out-of-network bill

A2039 Aca (1R) "Out-of-network Consumer Protection, Transparency, Cost Containment and Accountability Act." Passed both Houses 

Original post, 4/6:
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Amid all the worry about the effects on the ACA marketplace of individual mandate repeal and administrative rules fostering an ACA-noncompliant market, some really good news is pending in New Jersey.

Bills to establish a state individual mandate (S1877/A3380) and to start the process of seeking a waiver to obtain federal funding for a reinsurance program have passed through committee and are scheduled for floor votes on Thursday, April 12.  The mandate bill would dedicate the revenue collected to the reinsurance program.

While both bills are expected to pass, it's not a sure thing. All Republicans are opposed to the mandate. Governor Murphy has been quiet about it. Mandates are a heavy lift even in blue states. But New Jersey is close, and that's very good news.

"Strong" CSR takeup dropped only slightly on HealthCare.gov in 2018

Update/correction: This year, for the first time, CMS broke out enrollment at each level of CSR (at actuarial values of 73%, 87%, and 94%) -- and separately, metal level enrollment at each income level (indirectly - see note below). As explained below, the percentage of apparently subsidy-eligible enrollees with incomes up to 200% FPL who obtained strong CSR (94% or 87% AV) is somewhat lower than the percentage who selected silver plans. 

I noted recently with respect to Maryland ACA marketplace enrollment, the downside of "silver loading" the cost of CSR is a drop in takeup of the strong CSR available to enrollees with incomes below 200% FPL. CSR is available only with silver plans (please see the prior post to un-abbreviate all this).

That downside (for the subsidized) is outweighed by the upside. In Maryland, about 30,000 enrollees with incomes over 200% FPL obtained steep discounts in bronze and gold plans, whereas about 6,000 fewer enrollees under 200% FPL obtained strong CSR than would have had Trump not disrupted the market by cutting off federal funding for the benefit (see appendices to post linked to above for a quick explanation).

Now we have enrollment numbers for the all states -- with, as usual, more precise breakouts for the the 39 states using the federal exchange, HealthCare.gov, than for the whole country.  In HealthCare.gov states, CSR takeup among those with incomes up to 200% FPL downticked only slightly.  -- to  about 82%. Silver selection among those with incomes ranging from 100-200% FPL dropped from 86.9% in 2017 to 85.3% in 2018. For 2017, we don't know how many silver enrollees in the income bracket did not obtain CSR.

Could Trump's ACA sabotage pave the way to a strong public option?

The Urban Institute's Linda Blumberg and John Holahan, authors of an "ACA 2.0" blueprint, mull healthcare reform after Trump

In August 2015, Urban Institute scholars Linda Blumberg and John Holahan warned that the ACA marketplace as then constituted would probably never perform to expectations. Subsidies were insufficient to draw the robust participation the law's creators had anticipated. They proposed a revamped subsidy schedule that reduced premiums and out-of-pocket costs at every income level. For those with incomes above the current subsidy threshold of 400% of the Federal Poverty Level, premiums for a benchmark plan covering 80% of the average enrollee's costs would be capped at 8.5%.

Hillary Clinton more or less incorporated the Blumberg-Holahan proposal into her healthcare platform. And now, two years later, bills to improve the ACA introduced by Democrats in the House and Senate do likewise. Both bills precisely reproduce the plan's enhanced premium subsidies and offer even more generous reductions in enrollees' cost sharing (see the Appendix below for a summary).

The Senate bill, introduced by Elizabeth Warren and four colleagues,* places several new constraints on insurers in the individual market. These include requiring insurers to provide a better selection of doctors and hospitals, raising the percentage of premium revenue insurers are required to spend on enrollees' medical costs, and standardizing plan design. The preamble to a one-page summary of the bill appears to blame insurers alone for Americans' high healthcare costs.  By generously subsidizing enrollees at all income levels, however, the bill creates conditions under which insurers in the individual market can thrive.

ACA 2.0 -- or a whole new system?

I spoke to Blumberg and Holahan last week to get their reaction to the "ACA 2.0" bills, the Warren bill in particular. Blumberg confirmed that they had been consulted by the bill's creators, though they did not participate in the drafting.