Wednesday, July 04, 2018

Six ways New Jersey is fighting off Obamacare sabotage

Statue of Liberty from Liberty State Park

Since Trump's inauguration, the ACA marketplace has undergone multiple waves of sabotage from the administration and the Republican Congress. Leaving aside some short-term hits, such as the cutoff of advertising at the end of Open Enrollment for 2017, these are the structural elements:
  • Radical reduction in federal funding for enrollment assistance and advertising
  • Cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are obligated to provide to low income enrollees (now priced into premiums)
  • Effective repeal of  the individual mandate, which requires those for whom coverage is deemed affordable to obtain it or pay a penalty (Republican Congress zeroed out the penalty)
  • Regulatory promotion of a parallel market in medically underwritten short-term plans and association health plans -- measures designed to worsen the risk pool in the ACA-compliant market.
The ACA was designed to promote state innovation and autonomy, within fairly firm boundaries. While those boundaries have been breached on multiple fronts, states still have leeway to stay within them or actively reconstitute them. Meanwhile, thanks to the failure of Republicans' repeal legislation, federal funding for the core programs remains in place -- and has even been inefficiently enhanced, via the CSR funding cutoff, since reimbursing CSR is more cost-effective for the federal government than paying premium subsidies inflated by CSR.

It strikes me that New Jersey is unique in the degree to which it has acted to fend off the sabotage. Going into 2019 enrollment, the state has:
  • Implemented a state individual mandate designed to mirror the zeroed-out federal one, effective in 2019.
  • Filed a waiver application seeking federal funding funding for a reinsurance program designed to reduce premiums 15% below where they would be absent the program (forecast to trigger a 10% net reduction in premiums in 2019).
  • Maintained a long-standing ban on short-term plans and added a provision in the individual mandate bill to protect the state's strict regulation of association health plans
  • Directed every state agency to actively promote enrollment in the marketplace and Medicaid.
  • Undertaken more active management and oversight (through the Dept. of Banking and Insurance of health plans sold in the state's individual market.
  • Directed health insurers to concentrate the cost of CSR in silver plans only (since CSR is available only with silver plans), theoretically creating discounts in gold and bronze plans and off-exchange silver plans for the unsubsidized (more on that below).
Other assets: premiums in the state are below the national average ($413 vs. $481 for benchmark silver); the premium increases suffered in 2018, while horrific (22% weighted average), were below the national average (27%); and the state has implemented the ACA Medicaid expansion, which takes lower income and therefore on-average less healthy people out of the marketplace risk pool. 

On the downside, New Jersey suffered sharper enrollment losses in 2018 than the national average -- 11% overall, and 14% in the off-exchange ACA-compliant market, which services the unsubsidized.  That's probably in large part because silver loading, the strategy for coping with Trump's cutoff of CSR reimbursement, was ineffective, whereas in many other states it generated dramatic discounts in gold and bronze plans and offered some off-exchange relief  in silver plan premiums.

Here's how that worked. CSR, which dramatically reduces deductibles, copays and maximum out-of-pocket costs for about half of marketplace enrollees, is available only with silver plans. Silver plans also serve as the benchmark against which premium subsidies, which are designed to leave enrollees paying a fixed percentage of income, are set. When silver plan premiums go up, subsidies go up. Concentrating the cost of CSR in silver premiums only creates discounts in bronze and gold. Gold plan enrollment more than tripled in both Maryland and Pennsylvania, and free or nearly free bronze plans were available to large percentage of subsidy-eligible enrollees.  Off-exchange, insurers in both states also offered silver plans with no "CSR load" that were much cheaper than on-exchange silver.

None of that happened in Jersey. Gold plans were priced out of reach for most people. Horizon, which has over 60% of the market, raised the price of its most popular bronze plan 26%, comparable to its silver plan increases. AmeriHealth did raise premiums on its silver plans more sharply than on its bronze plans, but the bronze discounts were comparatively modest, not enough to make bronze widely free as in other states. Off-exchange, there were no discounts -- no silver free of CSR load, no plans different from the on-exchange offerings at all, with the exception of four prohibitively expensive plans (three of them offered by Cigna and Oxford, which did not participate on-exchange).

As noted in my prior post, the NJ Dept. of Banking and Insurance is actively encouraging insurers participating in the marketplace to offer similar plans off-exchange at lower premiums -- and specifically, "an off-exchange only silver plan that is comparable to a silver plan offered through the FFM [that is,, the federal exchange]." Gold and bronze discounts for the subsidized would likely also boost enrollment. That willing pursuit of individual market business by the state's insurers may be key to the state's strenuous efforts to strengthen the market.


No comments:

Post a Comment