Peter Lee to HHS: Marketing makes the risk pool

Covered California, the golden state's ACA marketplace, released preliminary health plan rates for 2018 today. In a marketplace supported by political stability, the top line would be nothing to write home about -- a 12.5% average weighted increase, discounting a surcharge to be added to silver plans if the Trump administration or Congress does not guarantee CSR payments through 2018. 

But given the "unprecedented uncertainty" generated by active administration sabotage and a seven- month effort to repeal core parts of the ACA, those results are impressive. CoveredCA further claims that "If a consumer shops and switches to the lowest-priced plan in their same metal tier, they can reduce their 2018 rate change to an average increase of less than 3.3 percent." More on that in a bit.

In a telephone press conference, CoveredCA's executive director Peter Lee made a striking claim that speaks not only to the current market uncertainty but to the effects of seven years of unrelenting sabotage of the ACA marketplace by Republican senators, congressional reps, governors, state legislators and insurance commissioners. Asked how central marketing would be to enrollment in the coming year, Lee said (paraphrasing here):

If you don't sell, those who knock on the door are sick people.

Cost Sharing Reduction in Covered California

(I'm hoping that dry title sounds like a pop song lyric.)

Covered California today released private plan enrollment data updated to June 2015. The report (available here under "June 2015 profile") shows that California's CSR takeup rate is in line with national averages.

By CSR takeup, I mean the rate at which California buyers whose incomes qualify them for Cost Sharing Reduction (CSR) subsidies selected silver plans and so accessed the benefit, which is available only with silver plans. As in the country at large, 76% of all CSR-eligibles in California bought silver.

Since I've described how CSR works dozens of times, I'd like to cut to the chart here. A quick rundown of the basics is below.

Income level	CSR-eligible	CSR accessed	% CSR accessed
Under 150% FPL (AV 94%)	219,260	195,090	88.9%
150-200% FPL (AV 87%)	438,730	345,720	79.3%
200-250 FPL (AV 73%)	221,310	125,650	56.8%
Total Under 200% FPL	657,990	540,810	82.2%
Under 250% FPL (Total CSR eligible)	879,300	666,460	75.8%

Some sidelights on Covered California's modest rate increases for 2016

Covered California, the state's ACA health insurance exchange, is boasting today with some justice that the state held 2016 rates down to an average weighted increase of 4%. Other talking points: the average (unweighted) increase of the cheapest silver plan in each region went up just 1.5%, and the average consumer can save 4.5% if she switches to the cheapest plan in the same metal tier.

That last point is somewhat...selective: the apples-to-apples question is what will happen to current holders of the cheapest plan in each metal tier if they switch to 2016's cheapest plan.  On the other hand...there are two other hands.

First, the talking point about switching to the cheapest plan in one's metal level has some extra validity in California, where benefits for all plans in each metal tier are standardized. In other words, the only substantial variable other than price is network quality. Hence, price shopping -- balancing premium versus benefits -- is likely to be less fraught and easier to get right in California than in most states.

Second, it's good news that the cheapest silver plan in each region went up an average of just 1.5%-- but the import of that factoid depends in part on a second data point. That would be the average increase for the second cheapest silver plan in each region, which is the benchmark according to which premium subsidies are set. That is, a buyer's premium is calculated to leave him paying a fixed percentage of his income for the second cheapest silver plan available to him. If the benchmark silver plan goes up more than the cheapest silver plan, that's good for the buyer: it increases the affordability of silver-level coverage.  Covered California's full rate report shows that the benchmark plans went up an average of 1.8%, very modestly (on average) increasing the spread and so the affordability of the cheapest silver plan. It also shows that the cheapest bronze plan went up an average of 3.3% -- making the cheapest silver relatively (albeit slightly) more attractive.

Too many choices on ACA exchanges?

The Health Exchange Summit held in Washington, D.C. May 11-13 brought together many of the people most directly engaged in implementation of the Affordable Care Act. All, excepting Michael Cannon,  mastermind of the King v. Burwell suit seeking to cripple the ACA, are committed to extending access to affordable and effective health care to as many Americans as possible and to to making the ACA work effectively.

Given that commitment, I was struck by a persistent chord of uneasiness about the complexity of insurance choices facing Americans. That uneasiness was literally the keynote, delivered by Princeton healthcare economist Uwe Reinhardt, whose  presentation might have been titled, "Why we can't have nice things like the Swiss."  Switzerland's health insurance system served as something of a model for the ACA, as citizens are mandated to purchase private health insurance on an exchange, with the help of means-tested premium subsidies. Reinhardt's presentation drove home the dazzling simplicity of a Swiss health insurance exchange, displayed on screen -- in which  dozens of insurers compete but all offer a standard benefit package

Reinhardt suggested that Americans are unduly enamored by choice, which breeds complexity. Research shows he said, that "People can't choose among more than 5 items. Offering 130 health plans is a prescription for disaster." The Swiss, he said, have never heard of an insurance broker. and the U.S. system would not need navigators if the choice were simple enough. He mocked federalist claims that states need to develop solutions that fit local conditions by flashing photos of identical McDonald's in Massachusetts and Tennessee.

Reinhardt is fond of expressing exasperated bemusement at all things American. Perhaps more surprising was the wistfulness expressed by the second keynote, healthcare consultant Jon Kingsdale, who was the founding executive director of the Massachusetts Connector when Romneycare was implemented. When the Massachusetts Connector first went live, Kingsdale said, "people would come up to me at parties and say, 'this is great -- it's so easy.'" Not so with the ACA.  Gearing up for Year 3, "instead of focusing on how to delight customers, we're still worried about how to get the goddamned back end working."