In Texas Obamacare, a gold patch on the loss of enhanced subsidies

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CMS to Texas: Who told you to put the balm on?

 As expiration of the enhanced ACA premium subsidies created by the American Rescue Plan Act (ARPA) at the start of Plan Year 2026 looms, it’s worth considering the extent to which strict silver loading may mitigate the sharp premium increases resulting from reversion to the ACA’s original subsidy schedule. Here we’ll take a look at how a market in which gold plans are priced way below silver in 2025 is likely to play out in 2026.

Placeholder: silver loading in Texas

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I've had a pretty long blogging hiatus, and that's in part because I've been working on a longer piece about Texas -- Texas! -- passing a law directing the state department of insurance to take on active rate review in the ACA marketplace and in fact "focus its rate review in a manner that uniformly maximizes the benefits of silver loading."  

Mirabilis! The law has been fleshed out in a proposed rule, and in 2023 gold plans in Texas will be priced well below silver plans. 

What's the effect of a gold benchmark in the ACA marketplace? Three states tell a tale. And a platinum benchmark is coming.

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Bloomberg's Sara Hansard reports that six states have now taken action to require insurers in their ACA marketplaces to price plans in strict proportion to their actuarial value -- that is, to increase the effects of silver loading. (Actuarial value (AV) refers to the percentage of the average enrollees costs the plan is designed to cover, in percentages fixed by metal level.)

Maryland, Pennsylvania and Virginia required strict silver loading in 2021 (and some or all in years prior). New Mexico and Colorado have new regulations going into effect in 2022. Texas has passed a law requiring the state insurance commissioner to take the value of Cost Sharing Reduction (added to silver plans only) into account during rate review.

Silver loading as mandated in Maryland, Pennsylvania and Virginia makes gold plans at least marginally cheaper than silver plans, increasing value for enrollees with incomes above 200% of the Federal Poverty Level ($25,520 for an individual in 2021). Below that income threshold, Cost Sharing Reduction (CSR) raises the actuarial value of silver plans to a roughly platinum level.

Cutting off CSR subsidies will hit red state enrollees especially hard

As Republicans gear up to repeal the ACA,  the Kaiser Family Foundation has helpfully broken out how many of the 9.4 million subsidized enrollees in the ACA marketplace (as of March 31) live in each state, and what share of an estimated $32.8 billion to be paid out in premium tax credits this year will be paid out for enrollees in each state.

Greg Sargent, assessing the potential political fallout of cutting off those subsidies, notes:

Some of the states with the highest populations of people getting subsidies are represented by GOP Senators. This includes Florida (more than 1.4 million); Texas (more than 913,000); North Carolina (more than 499,000); Georgia (more than 427,000); and Pennsylvania (more than 321,000). Many other states with GOP senators also have sizable populations getting subsidies.

Today also happens to be the day when a federal appeals court delayed further proceedings in House Republicans' suit to stop the executive branch from funding the Cost Sharing Reduction (CSR) subsidies that reduce out-of-pocket costs for 57% of marketplace enrollees. Since a lower court upheld the suit in May, but stayed any action to cut off the payments, the delay effectively leaves it up to the Trump administration whether to drop the Obama administration's appeal and thus cut off those subsidies, effectively crippling the marketplace instantly* (and disrupting Congressional Republicans' alleged "repeal-and-delay" plans, which would keep the marketplace functioning until a replacement plan is enacted).

It therefore seems appropriate to note that CSR subsidies are particularly prevalent in the 19 states that have refused to enact the ACA's Medicaid expansion -- most of which are Trump country. That's because in those states, a subset of those whom the ACA intended to make eligible for Medicaid, people with incomes between 100% and 138% of the Federal Poverty Level (FPL), are instead eligible for subsidized marketplace coverage.   And since they are in the lowest income bracket eligible for subsidized marketplace coverage, they get the highest level of CSR support for the lowest price.

The NAIC takes on balance billing

Of all the dysfunctions of the U.S. healthcare system, perhaps the most egregious (besides leaving tens of millions uninsured) is the "balance billing" of insured patients at in-network hospitals by out-of-network providers.

Elisabeth Rosenthal has documented some particularly extreme examples -- e.g.,  a man who arranged with his orthopedist for neck surgery at an agreed price -- and was billed $117,000 by an out-of-network assisting surgeon. Sarah Kliff found a particularly sharp illustration of the roulette-like character of hospital care, in which two women working for the same employer and having the same insurance gave birth within weeks of each other at the same hospital. One was billed $1600 for an epidural by an out-of-network anesthesiologist who happened to be at work that day; the other (who also had an epidural) was billed nothing.  A Consumers Union survey conducted this past March indicated that 30% of  privately insured Americans received a surprise medical bill in the past two years, with their health plan paying less than expected.

This week, the National Association of Insurance Commissioners (NAIC) adopted a model act for health plan network adequacy that includes some protections for patients faced with balance billing. Such model acts are meant to serve as templates for state legislatures to adapt to local needs and political propensities.

I plan to write about the balance billing section of the model rule in some depth next week. This post is a sketchboard -- and an invitation for anyone with expertise in the area or a personal experience to relate to comment or contact me.