Do CMS's new "waiver concepts" violate even the new waiver guidance?

When HHS and the Treasury first took a meat axe to the so-called "guardrails" to ACA Section 1332 innovation waivers in late October, I argued that the guardrails were not down entirely.

Specifically, even as CMS Administrator Seema Verma actively encouraged proposals that would allow premium subsidies to be applied to short-term or other ACA-noncompliant plans, a state would still have to use an ACA-compliant plan, or something very like it with guaranteed issue, to set the benchmark by which subsidies are calculated.

That's the case (I think) in spite of -- or maybe because of -- the shift in the new guidance from requiring waiver proposals to cover as many people as comprehensively as the ACA to merely making comparably affordable and comprehensive coverage available to as many people. Here's the key language:

The Departments may consider these guardrails met if access to coverage that is as affordable and comprehensive as coverage forecasted to have been available in the absence of the waiver is projected to be available to a comparable number of people under the waiver.

In ACA marketplace, more discount counties -- but which counties count?

Taking the country as a whole, are ACA marketplace offerings more or less attractive to prospective enrollees, subsidized and unsubsidized, in 2019 than in 2018?

The question takes on urgency as a lag in on-exchange enrollment persists into week 4 of Open Enrollment for 2019. In the 39 states using HealthCare.gov, enrollment is down 11% compared to this time last year. If plan offerings are roughly equal in value to last year's, depressed enrollment could easily be accounted for by repeal of the individual mandate penalty, establishment of a parallel lightly regulated, medically underwritten "short-term plan" market, and further drastic cuts to federal spending on enrollment assistance and advertising. Still, in 2018 the windfall bargains generated by silver loading (see note at bottom) partly offset the prior round of Trump administration sabotage, and the question lingers whether something similar may happen this year.

Some top-line facts may suggest that marketplaces are offering better value to more people in 2019 than in 2018. Unsubsidized premiums are down slightly on average. More states are silver loading, creating discounts in bronze and gold plans and/or encouraging insurers to offer off-exchange silver plans with no CSR load. The number of counties where a gold plan is available for less than the benchmark silver plan has increased from 595 in 2018 to 1136 in 2019. And the Kaiser Family Foundation reports that free bronze plans are available to subsidized enrollees at every subsidy-eligible income level in more counties in 2019 than in 2018.

There are counties and counties, however. One county may have 10 million people; another, 95. The Kaiser report includes a map that color-codes counties where free bronze is available to a 40 year-old with an income of $30,000 for the first time in 2019  A mouseover reveals that most of those counties are rural.

Lower benchmark premiums may contribute to reduced on-exchange enrollment in 2019

Three weeks into open enrollment for 2019, ACA marketplace enrollment in the 39 states that use HealthCare.gov is down 11%. compared to this time last year (adjusting for one less open day so far this year).  There's a lot of potential reasons for that: further draconian cuts to advertising and enrollment assistance, repeal of the individual mandate in tandem with allowing medically underwritten short-term plans to provide full-year renewable insurance, election distraction, etc.

One less recognized factor that could have a measurable impact on on-exchange enrollment for 2019 is a likely drop in the subsidy-eligible population at higher income levels, mainly 300-400% FPL.

Though marketplace enrollees are theoretically eligible for subsidies if their incomes are below 401% FPL, subsidies are only credited if the unsubsidized benchmark silver plan premium exceeds the percentage of income deemed affordable. At 300-400% FPL, that's 9.86% of income. Historically, many young enrollees in particular with incomes below 400% FPL did not qualify for subsidies (because unsubsidized premiums are lower for younger adults).

In 2018, benchmark premiums shot up 34%, due in large part to various forms of Republican sabotage. That spike doubtless helped drive a 10% increase in on-exchange enrollment at the 300-400% FPL income level in HealthCare.gov states, while enrollment dropped at every other income level.

Enrollment by income level, 2017 vs. 2018

HealthCare.gov 

Year	Total enrollment	100% to 150% FPL	151% to 200% FPL	201% to 250% FPL	251% to 300%  FPL	301%- 400%  FPL	Other FPL*
2017	9,201,805	3,208,242	2,050,555	1,312,520	752,403	786,678	1,091,407
2018	8,743,642	2,979,236	1,885,778	1,277,488	747,165	867,198	986,777
Change	-5.0%	-7%	-8%	-3%	-1%	+10%	-10%

* "Other FPL" is comprised mostly of unsubsidized enrollees. About one quarter are likely enrollees with incomes under 100% FPL, most of whom are likely legally present noncitizens time-barred from Medicaid, who are subsidy-eligible.

Drop in low income uninsured is partly due to drop in low income population

In 2015, I noted that Democrats had paid in political blood for devising a health reform scheme that primarily benefited people in the lower third of the national income distribution  (those with incomes below 200% of the Federal Poverty level), where more than half of the country's uninsured were concentrated pre-ACA.

Chance led me this morning to take a bird's eye view of how the income distribution of the uninsured changed from 2013 (pre-ACA) to 2017. This snapshot is based on the Census Bureau's annual September report, Health Insurance Coverage in the United States, for 2014 and 2017.

The percentage of the uninsured in the lowest income brackets has shrunk considerably. But that's in part because the percentage of the total population in those brackets has also shrunk.  In 2013, 39% of the population and 59% of the nation's uninsured were in households with incomes below $50k. In 2017, 49% of the uninsured and 34% of the total population were in households with incomes below that threshold.

Here is the breakout by income group.

How the ACA marketplace falls short of Medicare

When Americans turn 65, they're faced with a huge variety in Medicare offerings. In addition to or in place of the three parts of traditional, fee-for-service (FFS) Medicare, two of which require enrollee action to enroll, a typical enrollee may choose from among 10 distinct types of Medigap plan, each with a mandatory benefit structure, or from an average of 24 Medicare Advantage offerings that incorporate, with some tradeoffs, the benefits of  Medicare Parts A, B and D (hospital, medical  and prescription drug coverage). Low income enrollees may need often hard-to-find assistance, and a wheelbarrow full of financial documents, to access supplementary Medicaid or Medicare Savings Program (MSP) benefits that pick up all, most or some of their out-of-pocket costs.

Notwithstanding this Byzantine array of programs and choices, the generous national subsidization and fixed benefit structure of  FFM Medicare provide a stable backbone to the program. The bottom line is that 95% of the over-65 population has access to health insurance with an actuarial value a bit north of  80%  for something under $200 per month, with options that take AV up to 100% for up to about $400 per month. Step-ups for the wealthiest 5% of the eligible population are proportionate and affordable.  Roughly a sixth of some 45 million Medicare enrollees over age 65 are low income "dual eligibles" for whom Medicaid picks up much or all of out-of-pocket costs.

Slow start to Open Enrollment 2019

The Democrats' capture of the House of Representatives has saved the ACA's core programs and funding. Most fundamentally, Republicans have lost their chance to cut the trillion-plus dollars over ten years in federal healthcare spending that they tried to cut last year -- most of it in Medicaid. Instead, the ACA's expanded Medicaid eligibility may be available in seven more states by 2020 than in 2018.  And the ACA marketplace's income-adjusted and relatively generous subsidies (compared to proposed Republican replacements) remain intact.

That said, early reports from Open Enrollment for 2019 suggest that various forms of Republican sabotage -- massive cuts to advertising and enrollment assistance, creation of a medically underwritten market in conjunction with repeal of the individual mandate -- may be taking their toll.  Enrollment on HealthCare.gov, the federal exchange serving 39 states, was down about 13% in the first week (adjusted for a one day difference in days open) and 8% in week 2.

That could mean nothing, or it could mean a lot. Enrollment could catch up with last year's (which was down 5% in hc.gov states from 2017 and 9% from 2016), or fall further behind. Charles Gaba chalks the slow start up to election distraction -- in the media if not for the public at large -- although, weighing all factors pro and con, he'd previously predicted a 5% drop this year. Former HealthCare.gov chief marketing officer Joshua Peck is less sanguine:

New Medicaid expansion + increased silver loading should improve ACA marketplace risk pools

Over the next couple of years, two forces will be at work to make ACA marketplace risk pools somewhat wealthier and therefore healthier -- even as other factors pull the other way.

The factors working to improve the risk pool are Medicaid expansion, which pulls the lowest income  enrollees out of the marketplace, and silver loading*, which creates discounts in bronze and gold plans that mainly benefit (and draw in) enrollees at the upper income range of subsidy eligibility (201-400% of the Federal Poverty Level).

At incomes below 201% FPL, the bronze/gold discounts for the most part are not valuable enough to offset the free, strong Cost Sharing Reduction subsidy available at that income level, and available only with silver plans. At 200-400% FPL, the discounts were attractive enough to offset factors inhibiting enrollment for 2018, such as the huge advertising and outreach cuts implemented by the Trump administration and confusion about repeal and the individual mandate. As I've noted before, compared to 2017 enrollment levels, 2018 enrollment  at 201-400% FPL outperformed enrollment below 201% FPL by about 8 percentage points. That in turn shifted the income distribution of exchange enrollees upwards a couple of percentage points:

Income distribution of subsidized enrollees: HealthCare.gov, 2017-2018

Year	Number enrolled at 0-200% FPL*	Percent enrolled at 0-200% FPL	No. enrolled at 201-400% FPL	Percent enrolled at 201-400% FPL
2017	5,507,246	59.8%	2,851,601	31.0%
2018	5,092,349	58.2%	2,891,851	33.0%

Source: Public Use Files (2018, 2017) published by CMS

Gold in Texas's broad empty spaces

A county is a flexible unit of demarcation, especially in the U.S. Los Angeles County (population 10 million) is 100,000 times larger than Loving County, Texas (pop. 95).

Insurance premiums in the individual market also vary wildly by geography, with county lines often (but not always) marking a rating area boundary. This may make sense from a business standpoint for commercial insurers, but it's a ridiculous principle for social policy. Living on the wrong side of a street can cost a person thousands of dollars.

Assessing the national ACA marketplace by county can create mistaken impressions. In the runup to Open Enrollment 2017, Republicans, ever eager to denigrate the marketplace, were crowing that one third of counties had only one insurer. That was true, but only 19% of enrollees (estimated prior to open enrollment) had a choice of just one insurer. That reflected market deterioration for sure, but 19% is not 31%.

Last year, when Trump cut off direct federal reimbursement for Cost Sharing Reduction (CSR) subsidies, most states and insurers coped  by loading the cost of  CSR into silver plans only, since CSR is available only in silver plans. Since premium subsidies vary by income and are keyed to a silver benchmark, this had the effect in many states and rating areas of creating large discounts for subsidized enrollees in bronze and gold plans. In some cases, gold plans were cheaper than benchmark silver for subsidized buyers. This windfall boosted enrollment at the upper income range of subsidy eligibility, where CSR is weak to nonexistent. Gold plan enrollment quadrupled in some states, and bronze enrollment rose from 23% of total enrollment in 2017 to 29% in 2018.

Plan offerings were finalized last fall shortly after Trump cut off CSR reimbursement in October. David Anderson swiftly and very usefully mapped out the effects of silver loading by county nationally,and he has done so again this year, when more states (almost all) have adopted silver loading.  The map shows broad areas where the gold plans are available for less than benchmark silver. That's the case in 1,136 counties in 2019, compared to 595 this year. On the map, counties with such anomalous gold pricing are marked in green -- the darker the green, the cheaper the gold relative to the benchmark.

There are counties and counties, however. David's map shows a sea of green in Texas, so I've been meaning for a while to check out the offerings.

ACA probably saved, along with democracy

Below, the gist of an email I sent to a local advocacy group I'm involved with, the BlueWaveNJ healthcare committee. Links added here.
--
The election results are something of a Rorschach test for each of us, but the core fact is Dems taking the House and 6-7 governorships. The House win was not a certain thing by any stretch, -- and it means Republicans can't crush democracy, the rule of law....or the ACA. Or Medicaid. Or, next up, Medicare -- which Republicans still want to privatize. The U.S. healthcare system in all its dysfunctional glory has been spared massive despoilment.

While the fate of ACA rules guaranteeing access to individual market insurance for people with preexisting conditions drew all the passion, the battle over ACA repeal has always been fundamentally a funding battle - mainly over funding for Medicaid, which the Republican repeal bills would have cut by some $800 billion dollars. Overall, in 2017 Republicans tried to cut $1 trillion-plus in federal spending to provide access to affordable insurance, eviscerating ACA marketplace subsidies along with Medicaid. That appears to be off the table.  So do Republican plans to cut even more than that going forward (reflected in the 2019 House budget resolution).

Miracle on 45's Watch

On the downside, there's Republicans' multi-front assault on ACA programs and funding. On the upside, there's a health access miracle that we can ratify on Nov. 6 -- if the U.S. doesn't suffer a second straight electoral catastrophe. By way of pre-election encouragement today, I look at the bright side on healthinsurance.org