New Jersey Senate passes bill to establish state-based ACA exchange: What was the holdup about?

Updated in 7/10/19 post: the question was how much Medicaid integration to seek, and when.

After an alarming delay,  the New Jersey Senate passed a bill late yesterday afternoon to create a state-based exchange. State Senate President/boss Stephen Sweeney had held the bill (S3807/A5499) up, and if it had not passed by the end of this month, when the legislative session ends, it would likely not have been possible to get the exchange up and running in time for Open Enrollment 2021, i.e. by November 1, 2020 (which may prove difficult in any case).

The state exchange is Gov. Murphy's initiative, and Sweeney may just have been holding it as a pawn in their death match over the state budget. But Sweeney claimed to have a substantive point that he needed fixed, and he appears to have got what he said he wanted -- though why anyone would object, I don't know.  Here is a statement he put out yesterday:

“We are in the process of amending the legislation creating the state health care exchange to include Medicaid eligibility. This is a significant improvement that will provide a single front door access point for enrollees and a single eligibility process for health insurance coverage.

Elizabeth Warren is faking it on healthcare, part 2

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I was deeply disappointment by Elizabeth Warren's response to a question about Medicare for All in last night's debate. In brief, she went all in for Bernie's bill and Bernie's short path.

Charles Gaba usefully contrasts Warren's response last night to her response to a  question from a union member worried about losing good private insurance in a March Town Hall. There, Warren expressed openness to an incremental path either to Medicare for all (lower case "all," given the multiple paths she name-checked) or to universal coverage with a role for private insurance preserved (temporarily or permanently).

I don't think it's wise for Warren to leave herself no wiggle room to pursue health reform short of Medicare for All.  Last night she didn't:

There are a lot of politicians who say, oh, it's just not possible, we just can't do it, have a lot of political reasons for this. What they're really telling you is they just won't fight for it. Well, health care is a basic human right, and I will fight for basic human rights...

Fight, yes, but pick your battles and their pacing. If Warren fights all-out for Medicare for All -- Bernie's bill, which eliminates all other forms of insurance within four years and would require at least a doubling of federal revenue -- what happens to all those other plans she's got? Is she going to "fight for" universal childcare and free public college and near-total student loan forgiveness and a wealth tax and a sweeping new corporate charter -- all while making an industry that accounts for 1/6 of the country's economy in one fell swoop? And all with a razor-thin Senate majority -- if she's lucky.

Warren is doubtless aware of the extent to a drive to remake healthcare would absorb all political capital -- hence her earlier touting of multiple paths to universal coverage. I doubt Warren would disagree with this well informed liberal realist:

If we enact a voluntary public option, and huge numbers of people end up preferring public coverage, we might someday evolve to a public-dominated system. The chances that we will leap to that from our current system are essentially zero.

— Harold Pollack (@haroldpollack) June 27, 2019

Promising to fight for M4A might be tactically justifiable in a Democratic primary -- particularly for someone promising to fight moneyed special interests on all fronts and fighting Bernie Sanders for the left-end vote. But as in the past, Warren's diagnosis of what's wrong with U.S. healthcare is one-dimensional -- and disingenuous.

WARREN: So, yes. I'm with Bernie on Medicare for all. And let me tell you why. I spent a big chunk of my life studying why families go broke. And one of the number-one reasons is the cost of health care, medical bills. And that's not just for people who don't have insurance. It's for people who have insurance.

Look at the business model of an insurance company. It's to bring in as many dollars as they can in premiums and to pay out as few dollars as possible for your health care. That leaves families with rising premiums, rising copays, and fighting with insurance companies to try to get the health care that their doctors say that they and their children need. Medicare for all solves that problem.

She added in a later interjection:

...the insurance companies last year alone sucked $23 billion in profits out of the health care system, $23 billion. And that doesn't count the money that was paid to executives, the money that was spent lobbying Washington. We have a giant industry that wants our health care system to stay the way it is, because it's not working for families, but it's sure as heck working for them. It’s time for us to make families come first

$23 billion! American payers (federal and state government, employers, individuals) spend $3.5 trillion per year on healthcare. Insurers are certainly part of the systemic problem -- but mainly because they pay too much to providers in our divide-and-conquer payer system.  Medicare for All is as much anathema to hospitals and doctors as it is to insurers, as it would radically cut their payments rates. Warren knows this, but she never mentions providers' role in making healthcare ruinously expensive and a source of constant financial threat in Americans' lives.  As I noted after hearing Warren speak about healthcare in January 2018:

...she also presented the unaffordability of healthcare in the U.S., and the huge out-of-pocket costs that many insured Americans face, as purely a product of insurance industry rapine. Not a word about pricing-gouging by hospitals and doctors; the fine science of upcoding; the loopholes allowing self-dealing; the privileging of expensive procedures; the outsourcing to hedge fund- and private equity-backed price maximizers; the predatory balance billing. Providers got a total pass. I sentence Senator Warren to read Elisabeth Rosenthal's An American Sickness, which meticulously documents all these cost inflators and their evolution

I am a Warren admirer. I have heard her deliver her capsule diagnosis of American economic and social woes -- we sold our birthright for a mass of Reaganite pottage -- and I think all her many plans are designed (many if not all well-designed)  to undo galloping oligarchy. But on her policy piano, healthcare gets her left hand.

Warren is willing to take on banks and the tech giants -- and health insurers -- but healthcare providers are spared from her rhetorical fire. That won't make them any the less anxious to defeat her if she remains all-in on Medicare for All.

Related: Elizabeth Warren is faking it on healthcare

Did the Trump administration just open a back door to to a massive "Medicare" buy-in?

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The Trump administration has potentially shaken up American health insurance markets by finalizing a new rule allowing employers of all sizes to fund employees' health insurance premiums in the individual market in lieu of offering them access to an employee-sponsored group health plans. They can do this by funding Health Reimbursement Arrangements (HRAs), currently used for medical expenses excluding premiums for individual market plans, to fund individual market premiums to any level they choose -- e.g., to roughly the percentage of premiums they currently contribute to group health plans.

Many healthcare scholars and stakeholders worry that the alternative will be particularly attractive to employers with older, sicker employees, or that large employers will find ways to send sicker employees to the individual market. As a defense against that, the rule stipulates that a given employee group (sliced various ways, e.g., part-time vs. full time) can't be offered a choice between a group health plan and the individual market -- the employer must offer either/or. The rule also suggests (pdf pg 9) that the narrow provider networks prevalent in the individual market would be more attractive to healthier than to sicker populations -- and presumably, such preferences would influence the choices employers offer.

The administration forecasts that over ten years, about 11 million people will access HRAs to enroll in individual market coverage, while the number of people covered in employer-sponsored plans will drop by about 7 million (current ESI enrollment is about 150 million). The impact on the individual market would be major, but on the employer group health market, relatively modest.

But the HRA rule potentially cracks the door for a future Democratic Congress and president to vastly expand access to public insurance within the current Affordable Care Act structure. Suppose the next Congress, enabled by a Democratic president, injects into the ACA marketplace a national public option, paying Medicare rates to providers or some adjusted version of them, and requiring providers who accept Medicare to accept the public option?

Voters understand Medicare-for-all better than Bernie does

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I would think long and hard about contradicting Larry Levitt (of the Kaiser Family Foundation) and Jonathan Cohn (of HuffPost) together on anything but semantic grounds.  But on semantic grounds...I don't think their framing of the results of a Kaiser poll voters' understanding of "Medicare-for-all" is quite right.

Kaiser asked some 1200 voters what the healthcare system would look like "under a national health plan, sometimes called Medicare-for-all." Majorities, varying moderately by partisan affiliation, assumed:

• Taxes for most people would increase 
• People would continue to pay premiums, deductibles and copays for medical services
• People with private insurance would be able to keep their plans
• Private health insurance companies would not be the primary way Americans can get health coverage*
• All U.S. residents would have health insurance coverage

On Twitter, Larry Levitt alluded to "how confused the public is about Medicare-for-all based on our new poll." Jonathan Cohn, who wrote about the results, tweeted, "Voters like Medicare for All, but there's a catch: They don't understand what it'd do."

I don't think the survey respondents and focus group participants were collectively confused, though they're not informed about current bill specifics. I think they're realistic about the furthest likely extent of next-gen Democratic healthcare reform. Their responses lack coherence only to the extent that "Medicare-for-all" can't be understood to encompass "Medicare access for all," particular in the refracted context of a "a national health plan, sometimes called Medicare-for-all."

New Jersey off-exchange enrollment rose in 2019: Did cheap off-exchange silver help?

Good news for New Jersey's individual market for health insurance: while on-exchange enrollment, announced late last December, was down a disappointing 7%, those losses were partly offset (as some observers had hoped) by off-exchange enrollment gains announced today:


Why was enrollment down on-exchange, and up off-ex?  In brief: the state's swift action in 2018 to stand up a reinsurance program and pass a state individual mandate resulted in an average premium decrease of 9%, That drop did not help the large majority of on-exchange enrollees who obtained premium subsidies. As I explained last January:

base premiums affect only unsubsidized buyers, and in 2019 premiums in New Jersey were actually higher than in 2018 for most subsidized enrollees, as benchmark silver plan premiums, which determine subsidies dropped further than the average for all plans. For a 40 year-old with an income of $30k, the cheapest bronze plan cost 12-22% more in 2019 than in 2018 (varying by region) -- that is, $13-$25 more per month. Cheapest silver was also up slightly in most of the state

The drop did help unsubsidized enrollees, however. And as DOBI notes today, the unsubsidized had some motive to migrate off-exchange:

ACA Medicaid expansion: Lien on me?

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N.B. 6/19: See second update at bottom: there is a bill in the New Jersey legislature, S3489/A5064, that would ended the pursuit of asset recovery for Medicaid enrollees who are not enrolled in long-term care.

I think it's fairly widely understood (at least by me) that Medicaid picks up the tab for long-term care only when the beneficiary has spent down her assets (if she had any), and that when the spouse of such a beneficiary passes the state can claim remaining assets, such as a house.

What I didn't know, and just learned via  New Jersey-based elder lawyer Lauren Marinaro, is that most states can recover assets from any Medicaid recipient over age 55 upon that person's death or the death of his spouse (or any children passing age 21 or blind or disabled). In most states, that's true whether or not the Medicaid enrollee obtained long-term care.

A 1993 federal law required states to recover assets from the estates of recipients of long-term care services under Medicaid. States also have the option of recovering for other Medicaid benefits obtained above age 55. As of 2014, 35 states and D.C. were recovering for other benefits.

The ACA Medicaid expansion complicated the picture. Pre-ACA, Medicaid eligibility generally included an asset test -- as it still does for Aged, Blind and Disabled (ABD) Medicaid. In states that have accepted the ACA expansion, however, Medicaid eligibility is extended to anyone* whose household income is below 139% of the Federal Poverty Level (FPL) -- or $17,236 for a single person in 2019.

There is no asset test for Medicaid eligibility under ACA expansion criteria.  But in many states (including New Jersey) anyone over age 55 who qualifies as an "expansion" enrollee (as well as any other Medicaid enrollee) is potentially subject to lien on assets and state recovery after death. In New Jersey, the tab would include total capitated premium paid to a Medicaid managed care organization (MCO) for enrollment in a managed Medicaid health plan. (A 2017 update to NJ asset recovery rules is here.)

Now they really are a dream team

Congratulations to the Toronto Raptors, a team that everyone seems to admire and wish well, including Golden State. The last time I considered this team's existence, the city of Toronto was holding a contest to name their new expansion team This triggered a happy half hour with my then 11 year-old son Ben, spent dreaming up ever more preposterous names, memorialized some weeks (months?) later in the Globe and Mail...full text below the screenshot, minus a couple of editorial intrusions in the opening lines...nice graphic, isn't it?

Dream Teams

The mayor  said, "Citizens! Dare to dream!
Invent a tag for our basketball team.
Season tickets for the right name:
A reserved seat in history--ten minutes of fame."
     We got right to it with dreams of glory,
Choosing animals fierce and gory:

Just how much does Medicaid expansion lighten the silver load?

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Picking up on a premise explored last week...

Actuaries Greg Fann and Daniel Cruz have pointed out that the effects of silver loading [see note at bottom*] in the ACA marketplace should intensify over time (as CBO forecast), with silver plan premiums rising relative to those of other metal levels, increasing discounts in gold and bronze. Fann and Cruz argue that regulators should help the process along by stipulating that insurers must price plans proportionate to actuarial value, with only limited adjustment for their estimates of "induced demand," the higher usage prompted by lower out-of-pocket costs.

...and on a complicating factor: silver plan AV is substantially lower in states that have expanded Medicaid, because those states have far fewer low income enrollees for whom CSR has boosted silver plan AV to 94%:

In states that have refused to expand Medicaid, silver loads are larger, because eligibility for marketplace subsidies begins at an income of 100% of the Federal Poverty Level (FPL), as opposed to 139% FPL in expansion states. More than one third of enrollees in nonexpansion states have incomes below 139%, which qualifies them the for highest level of CSR -- and close to 90% in this income range select silver plans. Hence the estimated cost of CSR, priced into silver plans, should be higher, rendering bronze and gold plans relatively cheaper.

Most recently I noted that in New Jersey in 2019, silver plan enrollees obtained an average actuarial value of 80%, compared to  87% for the 39 HealthCare.gov states taken together. Today I want to sharpen that contrast with a measure of just how much more silver load the nonexpansion states have to work with generally than the expansion states.

The problem with silver loading in New Jersey

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New Jersey's ACA marketplace disappointed in 2019. Prior to open enrollment, the state passed an individual mandate to replace the zeroed-out federal mandate and also stood up a reinsurance program. Together, these measures dropped premiums 22% below where they would otherwise have  and 9% net compared to 2018. Governor Murphy also directed all state agencies to encourage enrollment outreach and devoted a small sum of state funds to partly offset massive federal cuts to advertising and enrollment assistance.  

Nonetheless enrollment dropped 7% from 2018 levels -- higher than the overall 4% drop in the 39  states using the federal exchange, HealthCare.gov, though right at the median for states on the platform that had expanded Medicaid.

Silver loading* effects were likely a key factor in a wide performance gap between expansion and nonexpansion states on HealthCare.gov in 2019. In states on the platform that have not expanded Medicaid, 2019 enrollment was 99% of the 2018 total and 95% of 2017. In expansion states, enrollment in 2019 was 93% of 2018 and 87% of 2017. Why do nonexpansion states have a silver loading advantage? As I outlined in January (with a hat tip to Dave Anderson):

In states that have refused to expand Medicaid, silver loads are larger, because eligibility for marketplace subsidies begins at an income of 100% of the Federal Poverty Level (FPL), as opposed to 139% FPL in expansion states. More than one third of enrollees in nonexpansion states have incomes below 139%, which qualifies them the for highest level of CSR [94% AV]  -- and close to 90% in this income range select silver plans. Hence the estimated cost of CSR, priced into silver plans, should be higher, rendering bronze and gold plans relatively cheaper.

In New Jersey, the silver loading gap is particularly acute; the practice has yielded essentially no discounts at all for subsidized buyers, though in 2019 it did generate discounted off-exchange silver for unsubsidized enrollees.

Silver loading and 2019 enrollment: A compendium

Well, we've had a few months to digest how open enrollment for 2019 went down in the ACA marketplace. Recently, it's been borne in on me that silver loading effects intensified in 2019; that they should intensify further; that this process should continue to improve marketplace offerings, all other conditions remaining stable (quite an if...)'; and that regulators can help this process along.

Chewing over the data has sent me back to my own posts about 2019 enrollment; as usual, I'd forgotten much of what I'd written. For my own sake if no one else's, here's an index of posts about 2019 enrollment data and/or silver loading worth returning to, for me at least. I'll update as more are added.

A couple of takeaways (or spoilers): 1) nonexpansion states on HealthCare.gov had smaller enrollment losses than expansion states on the platform -- almost certainly a silver loading effect; 2) silver loading intensified in 2019; 3) silver loading has quite a ways to go. especially in New Jersey.

Note to self: there are posts about 2019 enrollment that are not included here, because they don't address silver loading.

The posts:

Silver is platinum. Insurers should treat it as such. Regulators should make them.

Actuaries Greg Fann and Daniel Cruz have pointed out that the effects of silver loading in the ACA marketplace should intensify over time (as CBO forecast), with silver plan premiums rising relative to those of other metal levels, increasing discounts in gold and bronze. Fann and Cruz argue that regulators should help the process along by stipulating that insurers must price plans proportionate to actuarial value, with only limited adjustment for their estimates of "induced demand," the higher usage prompted by lower out-of-pocket costs.

In my last post, I cited evidence that the self-perpetuating engine that should increase silver loading effects over time worked in 2019, the second year that the practice was in effect. The average actuarial value of silver plans sold on HealthCare.gov rose measurably in 2019 as higher income enrollees switched to bronze and gold. Here I want to bring further evidence that this process advanced in 2019, and that silver premiums should accordingly rise more in 2020 than gold or bronze (or now-rare platinum) premiums.

Silver loading is just getting started

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A bit more than a year ago, I calculated that silver loading, a disruption that Trump accidentally injected into the ACA marketplace just in time for 2018 Open Enrollment, had boosted enrollment by several hundred thousand, perhaps in the 350,000-700,000 range.

Silver loading was prompted by Trump's cutoff in October 2017 of direct reimbursement to marketplace insurers for the Cost Sharing Reduction (CSR) subsidies that reduce out-of-pocket costs for low income enrollees who select silver-level plans. State regulators responded by allowing or encouraging insurers to price CSR into the premiums of silver plans only.* Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark , inflated silver premiums create discounts for subsidized buyers in bronze and gold plans.

These discounts are often dramatic. As Stan Dorn notes in Health Affairs this week, "By 2019, 15 states had average gold premiums lower than average benchmark silver premiums, and in 15 other states gold premiums exceeded benchmark silver by less than 10 percent."  In 2018, zero-premium  coverage (usually but not always in bronze plans) was available to more than half of marketplace participants, thanks to silver loading.

What state laws ratifying ACA marketplace rules can and can't accomplish

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On May 31, New Jersey legislators introduced, with Governor Murphy's support, a raft of bills* that  codify in state law the ACA's coverage rules in the individual and small group health insurance markets, including protections for people with pre-existing conditions

Separate bills maintain a ban on medical underwriting or exclusion of pre-existing conditions (S626), mandate coverage of the ACA's Essential Health Benefits (S562) and a set of preventive services (S3803), and limit age rating -- the degree to which the oldest enrollees can be charged more than the youngest adult enrollees -- to the ACA's 3-to-1 ratio (S3810).**

Many other states with Democratic governors and legislatures have passed or have in progress similar laws that duplicate the ACA's federal standards. Such laws are redundant by definition; they are designed as protection against future further Republican action to undermine the ACA.

I can imagine these laws serving a useful function under two circumstances: