Does mandatory maximum silver loading require a risk adjustment fix?

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I want to address a somewhat technical issue concerning regulatory action to require that gold plans in the ACA marketplace be priced below silver plans -- that is, regulatory action on the state or federal level mandating maximal silver loading.

Gold plans should be priced below silver plans because silver plans --on average -- carry a higher actuarial value than gold plans. "Actuarial value" refers to the percentage of the average enrollee's costs covered by the plan, according to a formula created by CMS (that formula could use adjustment, but that's another story). Gold plans have an AV of 80%, plus or minus a few percentage points. Silver plans have a baseline AV of 70%, but that's only for enrollees with incomes above 250% of the Federal Poverty Level (FPL). Below that threshold a secondary subsidy, Cost Sharing Reduction (CSR), available only with silver plans, boosts AV to 73%, 87%, or 94%, rising as income falls.  Most silver plan enrollees obtain AV of 94% or 87%.

In Health Affairs: The Biden administration should complete the silver loading revolution

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The Covid relief legislation making its way through Congress would vastly increase premium subsidies in the ACA marketplace for two years but would not touch out-of-pocket costs. Premium subsidies would still be set against a silver benchmark -- that is, designed to make the second-cheapest silver plan "affordable." At incomes over 250% FPL, silver plans have deductibles averaging $4816.

In Health Affairs, David Anderson and I have a post positing that the Biden administration can complement the subsidy boosts by requiring insurers to price gold plans below silver plans. That is, by requiring full "silver loading."

In The American Prospect: My Take on Jonathan Cohn's The Ten Year War

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I have a review in The American Prospect of Jonathan's Cohn's inside-the-creators' heads chronicle of the ACA's embattled formation and enactment:

Jonathan Cohn, a leading contemporaneous chronicler of the ACA’s formation and enactment, and now author of The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage, is well aware of these shortcomings and faulty assumptions, as well as of the law’s resilience and partial success, such as reducing the uninsured population by about 35 to 40 percent. The book’s chief value, for me at least, lies in illuminating the creators’ perspectives at various crunch points in the law’s conception and enactment.

Cohn takes us back to a long time ago, in a galaxy far, far away, in which Democrats still hoped to win Republican support for major legislation...

The nuance with which Cohn captures the various players' assumptions and motives, and the pressures brought to bear on them, provides some real retroactive clarity, from what already feels like a substantial historical distance. I hope you'll read the review, which relies on substantial excerpts.

Medicaid enrollment likely reaches 81 million in January

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Chart updated 3/3/21

This is an update to my recent post estimating total national Medicaid enrollment at upwards of 80 million through December, up from 71.2 million in February 2020, the last month before the pandemic struck the economy.

I've added December updates from four states -- including the big one, California -- to the sample, as well as adding Nebraska, which enacted the ACA Medicaid expansion beginning in October. As I forecast, continued relatively slow growth in California drops the full-sample rate of increase by about two and a half percentage points.  

As always, the official CMS tally for all states, currently stuck in September, is likely to show a somewhat smaller increase than my sample. For September, my sample showed an increase of 9.7% over February, while CMS currently shows a 9.4% increase in the same period.  Conservatively, then, I'll posit that CMS will show a 12.5% increase from February through December 2020, which would put national enrollment at 80.1 million.  (The sample consists of states for which I can find monthly enrollment reports.)[Update, 4/5/21: CMS's preliminary November total shows an increase of 11.6% since February, as I forecast on New  Year's Eve, compared to the 12.0% increase for the same period charted in my sample below.*]

Obama's assumptions about healthcare reform, in 2009 and today

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Jonathan Cohn today published an adapted excerpt from his book about the Affordable Care Act, The Ten Year War, coming out on Tuesday. The article's centerpiece is Obama's own assessment of what went right and wrong in the design, passage, and enactment of the ACA.  Of the ACA's basic design, which had become a consensus Democratic by the time Obama was elected, Cohn notes, "It was a far cry from the government-run insurance plan that Harry Truman once championed, but Democratic leaders embraced it as the best they could get..."

 ― and so did Obama, who repeated in our interview his belief that something like a government-run, “single-payer” system would probably work best, but creating one right away would be too difficult. 

“We have a legacy system that is one-sixth of the economy,” Obama said. “The idea that you could, in some way, dismantle that entire system ― or even transition it entirely ― to a single payer system looked politically impractical and probably really disruptive. ... The best chance to actually get people healthier was going to be to design a system that acknowledged 85% of the American people have health insurance and that plugged the gap for those 15% who don’t.”

Obama's neat foreclosure of other possibilities here reminds me of the technique deployed throughout his memoir, A Promised Land, of showcasing his undeniable rationality within a framework bound by self-imposed limits, or limits imposed by his choice of advisers, or -- sometimes -- by what was politically possible.  I see two fallacies here.

A public option by inches: Bennet and Kaine's Medicare-X

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This week Democratic Senators Michael Bennet (CO) and Tim Kaine (VA) introduced an updated version of their Medicare-X Choice Act, first introduced in 2017 and again in  2019 (summary here, bill here). The bill would introduce a strong public option into the ACA marketplace and small group markets, paying Medicare rates to providers in most markets, though up to 150% Medicare in rural markets. It would also improve subsidies at every income level on a schedule that's become the Democratic legislative default -- e.g., in the Coronavirus relief legislation. Enrollees would pay the following percentages of income for a benchmark silver plan:

Note that benchmark coverage is free at incomes up to 150% FPL (currently about $19k/year for an individual), and there is no income cap on subsidies: no one who lacks access to other insurance (e.g., an employer-sponsored plan) would pay more than 8.5% of income for benchmark silver. The 2019 version capped subsidies at 13% of income -- a measure of how far Democrats have come in adjusting their concept of affordability.

Compared to the healthcare reform plan Joe Biden introduced as a candidate in 2020, the bill has two major limitations. First, it does not offer subsidy eligibility to people who have access to other "affordable" insurance, including an offer of insurance from an employer with a premium below 9.5% of income. (The bill does fix the family glitch, offering subsidy eligibility to employees with families if the employer's family plan costs more than 9.5% of income.) It is not "Medicare for all who want it," notwithstanding presidential candidate Bennet's past claims to the contrary.  

Health Policy Valentines 2021: Institutional edition

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Americans don't have much faith in government, and it's hard to think of our society as one that's pulling together in the face of the pandemic and its revelation of our systemic inequities. But it's not all dysfunction, oligarchy, rising fascism and disregard for the common good.  And we do have a serious new bid from the Biden administration for good government.

This year's #healthpolicyvalentines are from various organs of government and other institutions to the American people.

From the Biden Coronavirus task force

Producing and dispensing fact
is our core Defense Production Act

From SCOTUS

Inseverable?
Did I hear Roberts scoff?
The vestigial mandate
will be cut off.

Obama's inside-out view of the public option

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I have been slowly working my way through Obama's memoir with a kind of wariness of being emotionally sucked in. Like all political memoirists, Obama presents himself as having made the best decisions he could given what he knew at the time. True, in the sense that his motives were good, his process was good, and his intellect is good. But still self-serving, and sometimes disingenuous.  

For all Obama's solicitation of a wide range of views, his narrative presents the predominance of certain views and voices as a given.  For example, regarding the size of the stimulus, Obama recounts this mid-December exchange:

Immediately after the election, examining the worsening data, we had raised the number to $500 billion. The team now recommended something even bigger. Christy mentioned a trillion dollars, causing Rahm to sputter like a cartoon character spitting out a bad meal. “There’s no fucking way,” Rahm said. Given the public’s anger over the hundreds of billions of dollars already spent on the bank bailout, he said, any number that began “with a t” would be a nonstarter with lots of Democrats, not to mention Republicans. I turned to Joe, who nodded in assent.

And that's it: political reality foreclosed, while Larry Summers foreclosed on the economic argument for more stimulus-- and Christine Romer's input is reduced to a "mention."  In Obama's telling, the stimulus his administration proposed was audaciously gargantuan by any current standard. 

Under Covid relief bill, no Obamacare enrollee should have coverage less than valuable than gold

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It's here! After five years in which progressives have dreamed of boosting the generosity of subsidies in the ACA marketplace, the framework for half the Covid relief bill released by the House Ways and Means yesterday would do so temporarily, for 2021 and 2022. The subsidy schedule is even more generous than that of the Affordable Care Enhancement Act passed by the House last June (and left to die in the Senate, natch). Here are the percentages of income required to purchase a benchmark (second cheapest) silver plan (Part 7, beginning on p. 83):

Keep in mind that Cost Sharing Reduction (CSR) raises the actuarial value of a silver plan from a baseline of 70% (which leaves very high out-of-pocket costs) to 94% at incomes up to 150% FPL (where it's free) and to 87% -- better than most employer-sponsored plans at incomes ranging from 150-200% FPL.  This radical change may happen fast, and be effective immediately. The implications are kind of dizzying. Three notes:

Raised minimum wage creates an imperative to improve ACA marketplace subsidies at low incomes

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David Dayen flags a paper by UC-Berkeley economist Michael Reich that finds a budget impact from raising the minimum wage (which should render eligible for the reconciliation bill). The paper

found $65.4 billion per year in savings, through a combination of increased tax revenues on higher wages and reduced federal expenditures on safety net programs due to eligibility thresholds. 

As Dayen points out, the federal savings are not in themselves something to cheer about:

Increased taxes on higher wages still put a worker out ahead, to be sure. But reductions in federal benefits could create a treadmill effect, with the government taking away what the private sector is forced to pay out. As $15 an hour isn’t really a living wage in much of the country, clawing back benefits isn’t a perfect scenario. 

One of the benefits that some people will earn themselves out of as the minimum wage rises is Medicaid. Eligibility for Medicaid as expanded by the ACA is offered to adults with incomes up to 138% of the Federal Poverty Level ($1,468 per month for an individual, $1,303/month for a family of four). To date, 38 states plus D.C. have enacted or will soon enact the expansion, with the last two of those, Oklahoma and Missouri, scheduled to expand eligibility in July of this year.)