CSR takeup: Good enough for me* and Emily Gee

Long before the Cost Sharing Reduction (CSR) subsidies accessed by more than half of enrollees in the ACA marketplace became a political battleground zero, I was preoccupied with CSR as the marketplace's primary (and too limited) defense against underinsurance. In dozens of posts, I explored what leads people to accept or reject CSR, i.e. to buy or forego silver plans if they qualify for the benefit (as CSR is available only with silver plans). Among the most basic conclusions:

1. Although a large body of research suggests that health insurance shoppers often make the wrong choice when faced with relatively small tradeoffs between premium and out-of-pocket costs, a large majority of CSR-eligible marketplace enrollees make the right choice That is, they choose not to leave a large subsidy on the table, despite the fact that silver premiums can be a strain on income and bronze plans temptingly cheap. Over 80% of enrollees eligible for strong CSR -- i.e., enrollees with incomes below 201% of the Federal Poverty Level (FPL) -- choose silver plans.

2. CSR takeup declines in step with the weakening of the benefit at higher income levels, with a sharp drop at 201% FPL, where the benefit weakens almost to insignificance.  Based on data released by CMS in July 2016, the chart below shows the takeup rates in the 38 states that used healthcare.gov in 2016. The rates are inflated by probably about 2 percentage points, for reasons explained in this post. The numbers attached to "Silver" under coverage level are the CSR-enhanced actuarial value of silver at each level.

CSR Takeup: HealthCare.gov states, 2016

Income range	CSR coverage level	Enrollees in income range	Enrollees With CSR	Takeup Percent- age
0-150% FPL	Silver94	3.64m	3.18m	87%
151-200% FPL	Silver87	2.21m	1.83m	83%
201-250% FPL	Silver 73	1.33m	866k	65%

What might moderate Republicans do to the ACA?

From the release of the AHCA on March 4 to Sunday night's amendments to Graham-Cassidy, Republican repeal bills have got ten worse and worse -- more conducive to individual market chaos, more draconian in Medicaid expansion rollback and per capita capping of federal medicaid payments. All of the bills would reduce the ranks of the insured by more than 20 million. Which suggests a question: what would a "good" partial repeal bill look like?

To some extent that's a nonsense question. The ACA embodies a Democratic concession to a core conservative concept: That there's inherent virtue in establishing a competitive insurance market, that doing so will drive down costs and improve healthcare quality (i.e., that insurers can make providers deliver better care more cheaply). The ACA's flaws are in any case all in a conservative direction. Real fixes would include bigger subsidies, including via reinsurance; some means of capping the rates insurers pay providers, as in Medicare Advantage or Medicaid managed care; rules more or less compelling providers to accept the insurance (i.e., if they accept Medicare); and strong incentives for insurers to participate in the market (tied to their eligibility to participate in managed Medicaid or Medicare Advantage markets).

A genuinely moderate Republican would not accept such changes but would seek to amend rather than repeal/replace the ACA -- not just in the short term, as Lamar Alexander has called for, but for the long term, as Susan Collins would probably like to do  There's no shortage of proposed conservative tweaks that might do minimal harm and in some cases perhaps even some good. Yevgeniy Feyman and Paul Howard could write such a bill. Here's my sense of what concessions might be won from Democrats in exchange for CSR and reinsurance funding.

A healthcare homepage chorus screaming STOP at Senate Republicans

Last night I went to the American Medical Association website to retrieve the remarkable joint statement of the AMA, American Academy of Family Physicians, American Hospital
Association, Federation of American Hospitals, America’s Health Insurance Plans, and the
BlueCross BlueShield Association unequivocally calling on the Senate to reject Graham-Cassidy.  .

Though I had already absorbed the statement's stark assertions that the bill would "drastically weaken" individual insurance market, undermine safeguards for those with preexisting conditions, uninsure millions by kicking them off Medicaid, and force on states the "impossible task" of completely transforming their individual markets and Medicaid program in little more than a year, I was nonetheless a bit taken aback by the banner dominating the AMA home page

If bipartisan ACA legislation comes back to the House, remember the Problem Solvers

As hope goes stronger that the Senate will reject the ruinous Graham-Cassidy ACA repeal bill, the back-burnered Senate HELP Committee hearings in pursuit of bipartisan legislation to stabilize the individual insurance market may become relevant again. On Sept. 20, HELP chair Lamar Alexander pulled out of the talks to get on team Scorched Earth.  After John McCain came out against Graham-Cassidy yesterday, Patty Murray, ranking Democrat on the HELP Committee, put out this statement:

I  agree with Senator McCain that the right way to get things done in the Senate—especially on an issue as important to families as their health care—is through regular order and working together to find common ground. I’m still at the table ready to keep working, and I remain confident that we can reach a bipartisan agreement as soon as this latest partisan approach by Republican leaders is finally set aside.

That raises the possibility too that at some point the Problem Solvers, the House caucus formed to seek bipartisan solutions on multiple fronts, could also become relevant. On July 31, the Problem Solvers released a five-point outline for bipartisan market stabilization legislation. As in the HELP Committee, "state flexibility" -- i.e. some easing of the process for states seeking ACA Section 1332 innovation waivers -- was a plank.

On September 5, the day before the first HELP Committee hearing, I participated in a call between BlueWaveNJ and Rep. Josh Gottheimer, Democratic co-chair of the Problem Solvers. It seems another lifetime, as the Graham-Cassidy cancer was still in watchful waiting phase, but we were concerned as to what Democratic Problems Solvers might be prepared to yield on the waiver front. Here's what we learned, as reported on the BlueWaveNJ blog:

My letter to Chris Christie on Graham-Cassidy

Graham-Cassidy's sponsors are relying in large part on support from Republican governors to win senators' votes for the bill. Today, Arizona Governor Doug Ducey came out in favor, notwithstanding that CBPP estimates that Arizona stands to lose $1.6 billion in federal funding in 2026 alone under the bill's redistribution formula.

At BlueWave New Jersey, we are calling on NJ Governor Chris Christie this week to defend the state's Medicaid expansion and coverage gains and come out against Graham-Cassidy. I have a letter in today's print Star-Ledger, but it's not online. Here is the text:

Behold the last and worst of the ACA repeal bills, introduced this week by four Republican U.S. senators.The bill ends the ACA Medicaid expansion, ultimately ends all ACA funding to help people gain health insurance, and guts federal spending on all Medicaid programs, which serve 75 million Americans. 

How could Patty Murray "thread the needle" with Lamar Alexander?

Ever since the Cassidy-Collins bill was introduced in January, I've thought that Democrats should engage with Republicans in Congress who were willing to leave the ACA's taxes and core benefits intact. Cassidy-Collins didn't do that, but I thought it came close enough to be a basis for talks.

Triage was the byword. If a handful of the dozen-odd Republican senators who were then expressing qualms about repeal of the Medicaid expansion in particular could be engaged in compromise negotiations, I thought, that would lessen the chances of passage for a bill that would uninsure tens of millions -- as would the AHCA, the BCRA, and now Cassidy-Graham.

Events have almost proved me wrong. The prevailing Democratic strategy -- we'll talk about fixes when they give up on repeal -- has almost worked. Three repeal bills failed in the Senate. Lamar Alexander, HELP Committee chaired, has held hearings on a bipartisan bill to stabilize the individual market.  And on the other end of the equation, Cassidy -- who seemed like a possible partner since he wanted to preserve ACA taxes and so something like its scale of benefits -- is now a driving force behind a bill that would zero out ACA benefits and lay waste to Medicaid.

Still, ironically, we're at a point again where I'm tempted by similar logic: if Patty Murray and other Democrats engage with Alexander and come up with a compromise stabilization bill, that could blunt the drive toward Cassidy-Collins passage. Would co-sponsors of a stabilization bill, led by Alexander, turn around and vote for Graham-Cassidy?

Synthetic single payer

Here's a healthcare reform bill that fits on a postcard:

The Medicare-for-all Biosimilar Act of 2017

Title 1: Uniform Payment Rate
     Sect. 101. All payers for healthcare services shall pay providers at a rate equal to 120% of current Medicare payment rates. Price schedule will be maintained and updated by CMS, with existing alternative payment programs maintained at the 120% payment ratio. Medicare Advantage benchmarks will be adjusted accordingly.

Title II: Healthcare Budget
     Sect. 201. The Medicare tax will be increased to a level sufficient to fund the government's increased payments in Medicare and Medicaid.

Census: ACA cut uninsured rate in half in Medicaid expansion states by 2016

The Census Bureau released its report on health insurance coverage in the U.S. for 2016 today. One striking trend was flagged by Matt Broaddus at the Center for Budget and Policy Priorities: the gap between states that expanded Medicaid and those that refused continues to widen:



To this let me add a sidelight: in expansion states, the uninsured rate has been cut in half since the main ACA programs were implemented in 2014 -- from 12.9% in 2013 to 6.5% in 2016.

Elizabeth Warren is for single payer, sort of. And against healthcare profiteering...sort of.

Elizabeth Warren sent a letter to supporters last week announcing that she's co-sponsoring Bernie Sanders' Medicare for All bill and asking recipients to sign on as "citizen-co-sponsors."

That's interesting, as Warren herself does not sound exactly all-in.   My emphasis below:

I believe it’s time to take a step back and ask: what is the best way to deliver high quality, low cost health care to all Americans? Everything should be on the table – and that’s why I’m co-sponsoring Bernie Sanders’ Medicare for All bill that will be introduced later this month 

Warren is for putting Bernie's bill on the table -- not necessarily for passing it. There's more hedging near the bottom of the letter:

ACA innovation waivers: a need for speed? Not so fast, says Emma Sandoe

For all the relative comity of the Senate HELP Committee hearings on legislation to strengthen the individual market for health insurance (Sept. 6, Sept. 7), a potential battle line of sort was drawn on Tuesday in statements by the chair, Lamar Alexander, and ranking member, Patty Murray. As the Times' Robert Pear reported:

“To get a result,” Mr. Alexander said, “Democrats will have to agree to something — more flexibility for states — that some may be reluctant to support. And Republicans will have to agree to something, additional funding through the Affordable Care Act, that some may be reluctant to support. That is called a compromise.”

The senior Democrat on the panel, Senator Patty Murray of Washington, said: “Threading this needle won’t be easy. But I do believe an agreement that protects patients and families from higher costs and uncertainty, and maintains the guardrails in our current health care system, is possible.”

How to hand the keys to an unfit successor

How do you hand the keys to the Oval Office to a man you've declared in no uncertain terms to be unfit for the presidency?

Obama's handwritten note to Trump, placed before Inauguration Day in the top drawer of the president's desk, is a carefully calibrated document -- a muted "don't be evil" plea on behalf of the nation, with goals distilled to the most basic: justice, security, democracy. Stark in its simplicity, it's generous without warmth, avoiding the hypocrisy of any hint of confidence in the recipient.

It begins with a depersonalized wish:

"Just a little procedural easing"....watch those ACA innovation waiver guardrails!

The Senate HELP Committee's efforts to pass an ACA stabilization bill are likely to hinge on the ACA's Section 1332 innovation waivers, according to Axios' David Nather:

How they'll give states more flexibility: They want to beef up the ACA's "Section 1332" waivers, but Democrats don't want to do anything that undermines the "guardrails" in those waivers — They can't reduce the number of people with health coverage, make insurance less comprehensive or affordable, or increase the deficit.

• Instead, they'll just try to ease the procedural rules, according to a Senate Democratic aide. The question is whether that will be enough for Republicans.

Just a little procedural easing, ladies and gentlemen! Recall, though, that the BCRA nominally left the ACA guardrails in place -- but effectively gave states carte blanche to knock them down "procedurally." Tim Jost explained back in June (my emphasis):

ACA marketplace remake: Iowa leverages Wellmark's warm cooperation

This week the Iowa Insurance Division formally filed an ACA innovation waiver request to radically remake the state's individual market for health insurance.

The plan is cast as an emergency stopgap for a market said to be collapsing -- facing a 53% average requested rate increase for silver plans from its sole remaining insurer. The waiver submission forecasts a loss of 18-22,000 unsubsidized enrollees should the plan not be implemented.

The basic tradeoff in the proposal, dubbed the Iowa Stopgap Plan, seems to be to exchange Cost Sharing Reduction (CSR) subsidies for reinsurance and a more generous premium subsidy structure, which makes subsidies available to enrollees at all income levels and yields lower net premiums to almost all comers. Harsh as the loss of CSR for enrollees under 200% FPL would be, the repurposed dollars seem to yield a disproportionate dividend in premium reduction.

Not throwing away our Schatz: What kind of public option in the ACA marketplace?

Senator Brian Schatz's proposal to allow any American to buy into Medicaid is frustratingly vague: we don't know the plan design and how it would be integrated into the ACA marketplace, as David Anderson and Loren Adler point out in this Vox roundup of expert assessment.

Two disclosed details are salient, though -- and to me, point toward two essential features of an ACA redesign from the progressive side. The first is the provider payment rate: bumped up to Medicare. The second is a cap on premiums as a percentage of income -- 9.5% -- for any buyer. (Larry Levitt mentions that feature in the Vox roundup; it's apparently not yet part of any published plan outline.)

Those features bring me back to the compromise package floated by the Urban Institute's Linda Blumberg and John Holahan back in January (which in turn built on their 2015 ACA enrichment plan, with concessions to Republicans salted in). That plan included an 8.5% of income cap on premiums for any buyer -- and a cap on payment rates paid to providers (in concert with reinsurance):

If I had $194 billion...spending the federal funds that CSR cutoff would waste

The CBO report on the effects of the federal government ceasing reimbursement of insurers for the Cost Sharing Reduction subsidies they are required to provide to qualifying ACA marketplace enrollees includes two projections tantalizing to Democrats.

First, if not executed until 2018, not mishandled by states and not coupled with other forms of sabotage (a lot of ifs!), CSR defunding need not harm individual market enrollees and will in fact provide a windfall to many (by about a million as of 2020, sustained through 2026).*

Second, this means of boosting coverage is colossally inefficient, in fact outright profligate. CBO projects that ending the CSR reimbursements will cost the Treasury $194 billion over ten years, $37 billion in 2026 alone (and so imagine the 20-year cost).

That's a lot of money for Republicans to spend to spite Democrats. To review, the ACA instructs the Treasury to reimburse insurers for CSR and built the cost of reimbursement into the funding baseline, though it quaintly leaves it to Congress to appropriate the money. Doing so has no impact on the deficit; refusing swells it by said $194 billion.

This suggests to me a rather perverse deal: Republicans, pay the money budgeted, and use the $194 billion in "savings" for tax cuts. The "savings"should just about cover the ACA's surtax on investment income for the wealthy, as CBO pegged the 10-year cost of repealing that tax at $172 billion). Sure, that's deficit-funded, but as Dick Cheney told us, deficits don't matter when Republicans are in control.

Of course, those who want the ACA to work and who want to expand coverage can think of better uses for the (otherwise wasted) money. We now have $194 billion in sugarplums dancing in our heads. I canvassed a handful of healthcare scholars as to what they'd do with the money.  A few possibilities:

Can Democrats afford to stand pat on the ACA?

A while back, I anticipated that Republicans would demand a steep price for passing legislation that would guarantee federal funding for the ACA marketplace's Cost Sharing Reduction (CSR) subsidies and possibly for a reinsurance program. I asked what Democrats should be willing to give up to secure those obviously necessary measures -- the first simply an end to sabotage, the second an individual market essential that Republicans bestowed liberally in their ACA replacement plans.

David Anderson counters that "this model of leverage is wrong" and that Democrats should be willing to give up...nothing.  The rationale is not "if you break it you own it" (i.e., Republicans will be blamed for market collapse),  but rather that forcing insurers to fund (and price for) the CSR subsidies as of 2018 would hand Democrats "an incredible policy victory."

Compromise maybe a little? Urban Institute's Blumberg and Holahan on what's next for the ACA

In August 2015, Urban Institute healthcare scholars Linda Blumberg and John Holahan acknowledged that ACA marketplace subsidies were too skimpy to do all they were intended to and came up with a comprehensive proposal to enrich them.  In January 2016, staring down the barrel of Republican repeal vows, they remixed those improvements in a compromise package that included several concessions to conservative priorities. These included:

• Repeal the employer mandate (requiring employers with more than 50 employees to offer insurance or pay a penalty)
• Repeal and replace the individual mandate  (with a premium penalty for those who did not maintain continuous coverage)
• Examine the Essential Health Benefits and look for responsible ways to lighten them
• Allow states to drop the income threshold for Medicaid eligibility to 100% of the Federal Poverty Level (FPL). At present, the threshold is 138% FPL in states that have accepted the ACA Medicaid expansion. 

As I noted recently, these concessions were embedded with offsets: reinsurance to mitigate the premium hikes likely to be triggered by individual mandate replacement, and lower out-of-pocket costs to cushion the substitution for enrollees in the 100-138% FPL range of private insurance for Medicaid (richer subsidies across all income levels would also offset the ill effects of a weaker mandate substitute).

What price will Republicans extract for CSR funding and reinsurance?

If the current glimmers of bipartisanship in healthcare legislation take on any sustained shine, the primary agenda for Democrats is obvious: appropriate funding for Cost Sharing Reduction payments and for some kind of reinsurance program to replace the program that expired in 2017.

The first is simply a matter of ending sabotage: CSR is integral to the structure of the ACA marketplace and incorporated in its budget baseline. Republicans have simply exploited a drafting error to destabilize the individual market. As for reinsurance, Republicans made its necessity manifest by including generous "stability funding" in the main House and Senate "healthcare" bills -- in fact, overly generous funding designed to compensate for their various disfigurements of the market (e.g., repeal of the individual mandate and measures to reintroduce medical underwriting and non-comprehensive insurance).

To have any real hope of getting these measures passed in a Republican Congress, however, Democrats are going to have to face up to the question: What pound of flesh will they let Republicans extract as payment for these essential, common-sense fixes? It's a foregone conclusion from a progressive point of view that changes Republicans will demand will not improve the market. What concessions might actually win passage and do less harm than the fixes will do good?

Are New York's Essential Plan and Minnesota's MinnesotaCare threatened by CSR fund cutoff?

A question hath arisen on Twitter: if federal Cost Sharing Reduction (CSR) reimbursements to insurers are cut off, either by Trump administration fiat or court ruling, would New York and Minnesota's Basic Health Programs formed under the ACA lose the portion of their federal funding derived from CSR payments?

To review, the ACA gives states the option of establishing a Basic Health Program (BHP) for qualifying residents with incomes between 138% and 200% of the Federal Poverty Level -- the very population eligible for strong CSR in the ACA marketplace in a state with no BHP*.   A BHP is designed to have low premiums and high actuarial value -- though not necessarily higher than that provided by CSR. So far, Minnesota and New York are the only states to have formed BHPs.  New York's BHP, the Essential Plan, has minimal cost sharing and a maximum premium of $20 per month (for those in the 150-200% FPL range). MinnesotaCare premiums top out at $80 per month; the actuarial value is 94%, matching CSR for marketplace enrollees with incomes up to 150% FPL.

Section 1331 of the ACA provides for federal funding of BHPs according to this formula:

The amount determined under this paragraph for any fiscal year is the amount the Secretary determines is equal to 85 percent [amended to 95%] of the premium tax credits under section 36B of the Internal Revenue Code of 1986, and the cost-sharing reductions under section 1402, that would have been provided for the fiscal year to eligible individuals enrolled in standard health plans in the State if such eligible individuals were allowed to enroll in qualified health plans through an Exchange established under this subtitle.

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.