Medicaid expansion means a richer QHP buyer pool on ACA exchanges

In my close look at silver plan selection in 2015 among healthcare.gov customers who were eligible for Cost Sharing Reduction (available only with silver plans). I expressed some disappointment that CSR takeup had apparently dipped a bit on the federal exchange from 2014 to 2015 (HHS did not provide CSR takeup numbers for states operating their own exchanges). Disappointment on that particular point may have been misplaced.

While I continue to believe that too many low income ACA private plan buyers selected bronze plans, CSR takeup probably did not decline from 2014 to 2015. In fact, since silver plan selection across all exchanges ticked up a bit, from 65% in 2014 to 67% in 2015, CSR takeup probably did too.

My perception that CSR takeup dropped on healthcare.gov in 2015 stemmed from a drop in silver plan selection from 76% to 74% by buyers eligible for any kind of subsidy --including those eligible for premium subsidies but not CSR. But that drop may just reflect a shift in the composition of the market using healthcare.gov -- specifically, it may reflect a higher percentage of customers in healthcare.gov states being placed in Medicaid in 2015. This happened because two states that dropped their own exchanges and joined healthcare.gov in 2015, Oregon and Nevada, had expanded Medicaid, while three other states on the federal platform implemented the Medicaid expansion at some point during 2014 (Michigan and New Hampshire) or as of Jan. 1, 2015 (Pennsylvania).

The poorer the buyer pool, the higher the CSR takeup

States that expanded Medicaid generally have lower CSR takeup because their buyer pool for private health plans is wealthier. In states that refused the expansion, the buyer pool starts at 100% of the Federal Poverty Level (FPL); in states that embraced the Medicaid expansion, it starts at 138% FPL. In hc.gov states that refused the Medicaid expansion, consequently, an astounding 50% of private plan buyers had household incomes under 150% FPL; in expansion states, just 25% had incomes below that level.

The case against King, by Scalia, Kennedy et al

The plaintiffs in King v. Burwell claim that the ACA's creators intended to coerce states into setting up their own exchanges by authorizing state-established exchanges alone to credit subsidies to buyers -- denying that power to the backup federal exchange.

In response to this manifestly absurd assertion of intent, the law's supporters have pointed out that no one involved in the law's design, passage or implementation understood such coercion to exist; that laws that make federal grants to the states conditional on specific state action invariably spell out the consequences of non-participation; that the ACA's clear intent is to provide near-universal coverage; and that the ACA's core provisions were designed to be interdependent, so that denying subsidies to residents of some states would render the law inoperable.

On  all of these points, no participant has been so eloquent as the four dissenting Supreme Court justices in NFIB v. Sebelius, the suit challenging the law's constitutionality, who asserted that the entire law should be struck down.

In their dissent, Justices Scalia, Kennedy, Thomas and Alito argued repeatedly that to strike down any core provision -- e.g., the individual mandate or the Medicaid expansion -- was to thwart the intent of the law's creators and render the remaining parts of the law unworkable -- hence the imperative to strike down the whole law.

Abbe Gluck has highlighted the dissenters' most direct assertions of interdependence of parts, laying particular stress on their observation that the law's "system of incentives collapses if the federal subsidies are invalidated" because without the subsidies, "the exchanges would not operate as Congress intended and may not operate at all" (dissent, p. 60).

Equally striking is the dissenters' argument that making the Medicaid expansion fully voluntary, as the Court majority did, would also thwart Congress's manifest intent to provide universal coverage and would thus render the entire scheme unworkable.

ACA signups: Why is bronze more popular in blue states?

It's good news that more than three quarters of those who bought private health insurance plans on the ACA exchanges selected silver-level plans.  Most of those who qualified for help with premiums also qualified for subsidies reducing deductibles and other out-of-pocket costs.Those subsidies, dubbed Cost Sharing Reduction (CSR) were only available with silver plans.

According to a May 1 HHS issue brief, in the federal marketplace (healthcare.gov), only 15% of buyers eligible for any kind of subsidy bought bronze plans, which have lower monthly premiums but higher deductibles and cost-sharing and render a buyer ineligible for CSR.  Presumably an even lower percentage of those eligible for CSR bought bronze -- again, good news.

The percentage of bronze buyers varies considerably by state, however. Just 5% of subsidy-eligible Pennsylvania buyers selected bronze, while in Washington state, 36% did (Washington breaks out buyers' choices by income level).*  Overall, 25% of buyers in the state marketplaces selected bronze, versus 20% in the federal marketplace.  The outliers in the high-bronze column are all states that ran their own marketplaces.**

Those states are blue-to-purple;they're the ones where state government tried to make the ACA work. How did they end up with higher concentrations of bronze buyers?

The ACA preserved state regulation of health insurance

Yesterday I noted that the state-vs.-federal exchange debate within the Democratic party in early 2010 was focused primarily on which level of government would regulate insurance -- and not, as Halbig proponents are suggesting, on whether the "backstop" federal exchange created by the Senate bill would be enabled to issue tax credits.

Both before and after the Scott Brown earthquake, the question was how the Senate and House bills would be reconciled. The House bill created a federal exchange, with an opt-out for states that wanted to create their own. The Senate bill stipulated that states would establish their own exchanges, with an opt-out for those that chose to cede the function to the federal government.

As it turned out, the reconciliation bill that tacked House modifications on the Senate bill did not substantially alter the Senate bill's state exchange structure -- though it did, by the way, include a tax reporting provision that referred directly to tax credits allocated by the federal exchange, a provision that should lay to rest the Halbig contention that ACA tax provisions preclude the federal exchange allocating tax credits.  And although the federal government did end up running most of the state exchanges, in the sense of running the website processing citizens' applications, regulation of insurance, within the broad coverage parameters set by the ACA, remained mainly in state hands.*

Evidence of that retained state control can be found in the varying steepness of 2015 health insurance premium increases in different states. Overall, the rate hikes are in line with or slightly below the increases of previous years. A heat map by PriceWaterhouseCooper indicates that states that ran their own exchanges, and so more actively oversaw the offerings approved for sale, were on balance subject to more moderate increases (Vermont is an exception). From the data that's come in so far (only about half of the states have so far reported wholly or partly on 2015 rates), Jonathan Cohn extracts an illustrative tale of two states:

No, Ben Nelson didn't scuttle the ACA's federal exchange

[Update, 1/29/15: As Jonathan Cohn reports, Nelson has just precisely confirmed the reading below of his position re federal and state exchanges.]

The latest bit of sophistry deployed by Halbig supporters to convince the world that the Senate Democrats who drafted the ACA deliberately barred subsidies from flowing through any exchange set up by the federal government is a claim that "Ben Nelson made them do it," Here's David Catron in The American Spectator (retailed without value-add by the Wall Street Journal's James Taranto):

Jonathan Cohn advises his New Republic readers, “Like other journalists who were following the process closely, I never heard any of them suggest subsidies would not be available in states where officials decided not to operate their own marketplaces.”

This is an odd statement indeed considering that high-profile publications were reporting a lively debate over this very issue. And Ben Nelson’s name was frequently mentioned. In January of 2010, for example, Politico reported that he regarded federal control of Obamacare’s exchanges as “a dealbreaker.” Nelson said that too much federal involvement would inevitably lead to government-run health care: “I wouldn’t support something that would start us down the road of federal regulation of insurance and a single-payer plan.”

He reiterated his objection to federal exchanges in this 2010 video, wherein Greta Van Susteran presses him to provide a legitimate motive for ultimately voting in favor of health care “reform.” Nelson vehemently insists that no one bought his vote: “I had requirements… no government-run plan, no federal exchange… and adequate language to deal with abortion. Those were requirements, but no one was buying any vote.” Nelson clearly implies that these conditions had been met and this is why he flip-flopped and voted for the bill.

These statements prove nothing, and indicate nothing.There was precisely zero public debate over whether the Senate bill allowed a federal exchange to credit subsidies. Catron strips the context out of the Politico article, which in fact indicates the opposite of what Catron and Taranto imply.

Raymond Scheppach: States wll take back their ACA exchanges (eventually)

Raymond Scheppach, longtime director of the National Governors Association (1983-2011) and a former deputy CBO director, is an expert on the role of the states in the formulation and implementation of public policy.  Currently a professor at the University of Virginia, he recently served as project director for a report, Cracking the Code on Health Care Costs,  produced under the auspices of UVA's Miller Center by a State Health Care Cost Containment Commission co-chaired by Michael Leavitt, former Republican Governor of Utah and HHS Secretary under George W. Bush (interviewed here), and Bill Ritter, former Democratic governor of Colorado.

The report highlights the power of state governments to shape healthcare policy, given their roles administering Medicaid, state employee benefits, and now the health insurance marketplaces established by the Affordable Care Act.  It calls on states to set targets for health care spending; promote various forms of managed care, ACOs and alternatives to fee-for-service medicine in the programs it administers; and help consumers generate competition by reporting cost and quality information about health care providers and insurers.

I spoke to Dr. Scheppach, now a professor of public policy at UVA, about current and likely future state-level healthcare reform efforts.

Scheppach noted at the outset that  state governments administer or oversee health insurance for a large swath of the U.S. population  -- with more to come as the ACA exchanges and Medicaid expansion matures. "If you add it all together, in another year or two, there will be about 75 million people in Medicaid, another 3-5 million in state and local government employees' health plans, and then there's the exchanges." (CBO projections envision 25 million ACA exchange customers by 2018.)

ACA enrollment: driving uphill in a snowstorm.

As George W. Bush's second-term HHS Secretary, Michael Leavitt knows something about rocky rollouts of new government health programs, having overseen the launch of the Medicare Part D prescription drug coverage program, now broadly regarded as a success (e.g., by Leavitt).  As chair of health consultancy Leavitt Partners, he's also contracted with several state governments to help set up their ACA exchanges -- a role that subjected him to fierce conservative fire when he was named head of  Mitt Romney's transition team.  In 2011, he urged Republican governors to be practical and take control of their own state exchanges rather than cede the effort to the federal government. Notwithstanding his many qualms about the Affordable Care Act (e.g., its funding mechanisms), he is a believer both in state exchanges and in extending coverage to uninsured Americans.

It is not surprising, then, that in a January interview with Julie Appleby of Kaiser Health News, Leavitt signaled considerable empathy for the besieged team trying to get the ACA launched. Asked about one of the administration's many adjustments to rules and deadlines -- the extension of catastrophic plan eligibility to those whose 2013 plans were canceled -- he offered a striking metaphor that captures the administration's mindset and m.o.:

They’re trying to find ways to keep enough momentum moving forward.  Think about it like a big snowstorm, and you’re trying to drive a car uphill. The most important thing is to keep momentum and keep it out of the ditch. You might swerve from side to side, or might even do a circle or two. But if you can keep the momentum going up the hill, then you can ultimately succeed. They’re driving on a slick road up a stormy hill. They will do some things they hadn’t anticipated. But forward momentum is their game. At the end of the day, we’ll find out. They may get there; they may end up in a ditch. They may have a collision. Who knows? 

The enemies of the ACA are failing

A couple of days ago, I noted that while the state-run Affordable Care Act exchanges were collectively outperforming HealthCare.gov, that apparent performance gap had been exaggerated by the lag in reporting by states relying on the Federal exchange. Since HealthCare.gov was barely functioning until early December, and some health exchanges were working well much earlier, I noted that the gap should continue to close as new numbers came in.

Today, HHS released state-by-state exchange signup numbers through 12/28. HealthCare.gov states are indeed catching up.  The fourteen states running their own exchanges, along with Washington D.C. (also running its own), encompass just about about one third of the U.S. population (slightly over 100 million people). Their 956,000 signups as of 12/28 comprised about 44% of the total of 2,152,000 signed up on the exchanges.(Honestly, I should have noted a ratio close to this in the prior post, as HHS has for some time claimed about a million signups on HealthCare.gov that it hadn't yet ascribed to specific states.)

Will red states stonewalling the ACA pay for self-inflicted punishment?

The long-term effects of the Affordable Care Act that everyone should ardently wish for are 1) access for all Americans to affordable, adequate health insurance and 2) reduced or reversed health care inflation.

Republican governors and/or state legislatures determined to sabotage the law are causing needless suffering, by denying millions the access to Medicaid the law was designed to provide, and by refusing to run the private insurance marketplaces, forcing the federal government to operate them in 34 states, with so-far disastrous results. State-level stonewalling goes beyond refusal to build a website: it also means abjuring the responsibility both to entice insurers into the exchanges and to impose discipline on those that participate, via state adaptation of the federal coverage guidelines, and by working to prevent adverse selection in the exchanges through state regulation of the individual market outside them.

No real good can come of deliberate misgovernance. But its consequences may trigger self-correction over time. States that try to make the law work may emerge as better places to live than states that don't -- offering Medicaid to the lowest-income adults, and a competitive, well-regulated and subsidized market to those with modest incomes. That creates a range of economic freedoms -- to leave a full-time job to start a business or go to school, to go from full- to part-time to do either, or undertake the kind of de facto apprenticeships that a career change often requires, or care for a sick parent.

On the most basic level, Donald Taylor points out that the states refusing Medicaid expansion are effecting a wealth transfer to states that embrace it: