Friday, January 18, 2019

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.

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