Wednesday, January 15, 2020

No mandate penalty, no problem? The jury's still out

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The Kaiser Family Foundation is peerless as a source of data and analysis of the ACA marketplace, and indeed of all U.S. healthcare markets. So it's probably foolish of me to question a simple, unequivocal and important conclusion by KFF president and CEO Drew Altman. Still...

Altman, who has a regular column conforming to Axios' radically short format, begins his latest with this declarative:
The Affordable Care Act’s insurance market has not been materially affected by the elimination of the individual mandate penalty.
Evidence: premiums are down in 2020, marketplace insurers are profitable, the risk pool has not apparently worsened, enrollment is more or less stable, and the Medicaid expansion appears to have been "largely unaffected."

That's a lot of evidence in short space. The marketplace, and the Medicaid expansion are clearly functioning without the mandate. But still, I think it's too soon to declare the effect of zeroing out the mandate negligible.  Caveats:


1. Early days. 2019 was the first year with no mandate penalty. Commonwealth Fund polling in 2019 indicated that barely more than half of adults below age 65 were aware of the repeal. Taxes for 2019 have not been filed yet.  Even if repeal effects are weak, they may increase over time. Changes in marketplace conditions take time to filter through.

2. Offset 1: premium reduction. Steep premium increases in 2017 and 2018 drove a mass exodus of unsubsidized enrollees in the ACA-compliant individual market. By Kaiser's estimate, unsubsidized enrollment in ACA-compliant plans dropped from 5.6 million in Q1 2017 to 3.9 million in 2018. But premiums were flat in 2019, the first year with zero mandate,  and down 2-3% in 2020, as Altman points out. That improvement has probably slowed though not stopped further enrollment drops among the unsubsidized.

3. Offset 2: the discount market.  As is well documented by now, Trump's cutoff in fall 2017 of direct reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are obligated to provide to low income enrollees paradoxically generated dramatic discounts in bronze and gold plans for subsidized enrollees. The mechanism is a practice known as silver loading, adopted in almost all states. Because CSR is available only with silver plans, insurers, losing direct reimbursement, priced CSR into silver plans only. Because income-adjusted subsidies are set to a silver benchmark, the result was discounts in bronze and gold plans, including the availability of zero-premium bronze plans for more than half of subsidized enrollees. Silver loading has probably boosted enrollment by about 5% so far.

4. Medicaid down. According to Kaiser, enrollment in Medicaid and CHIP dropped by 2.6% from December 2017 to July 2019.  Within the zero-mandate period, from January to September 2019, enrollment dropped 1.3%.  Altman is of course aware of this drop, which began prior to the zeroing of the mandate. There are many plausible causes, including the pall cast on Latinx enrollment by Trump's threatened changes to the public charge rule, increased red tape and more aggressive eligibility checks in many states, and income growth, which has reduced the number of Americans with incomes below the 138% FPL threshold for Medicaid eligibility. Nonetheless, the zero mandate may be a factor, and its impact may become more visible over time.

5. Uninsurance goes upscale. The September 2019 Census update on health insurance in the U.S. recorded an uptick in the uninsured population in 2018 that was apparently concentrated at higher income levels. At 300-399% FPL, the insured rate dropped a full percentage point, from 92.9% to 91.9%, and at over 400% FPL, the rate dropped 0.8%, from 97.3% to 96.6%. That change occurred prior to the zeroing out of the mandate and may in part be a response to the steep individual market premium increases of 2017-2018. While subsequent the slight drop in individual market premiums may partly stanch that bleeding, as noted above, the zero-mandate may encourage it. Premiums are still extremely high for people modestly above the ACA subsidy threshold, 400% FPL.

Altman's categorical conclusion has political import. The right-wing ideologue of a judge who accepted the ridiculous premises of the plaintiffs in Texas v. U.S. found that that a) Republicans' zeroing out of the mandate rendered the mandate unconstitutional, and b) the rest of the law is inseverable from the unconstitutional mandate, thus c) Republicans, by zeroing out the mandate, repealed the ACA in a fit of absentmindedness. Time, as well as Republican intent, has proven the mandate severable from the other core features of the marketplace, let alone from the myriad other provisions of the ACA that have nothing to do with the individual market. Judge O'Connor will have to further contort his mind to argue otherwise.  But it does not follow that the effect of mandate negation will ultimately prove negligible.

Update: Today Charles Gaba points out that the zero mandate induced insurers to raise premiums about 6% above where they would otherwise have been in 2019, an increase that's still baked in and costing unsubsidized enrollees. Premiums went down in 2019-20 chiefly because of massive overpricing, bred of overcorrection and overreaction,  in 2017 and 2018. They would be down further with an operative mandate.


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