I want to look at one element of the CBO score. It is the offered actuarial value of plans. Under the House Bill, out of pocket maximums would be fixed but there would be no age banding. The CBO sees this having an interestingly low effect.
Beginning in 2020, the legislation would repeal those requirements, potentially allowing plans to have an actuarial value below 60 percent. However, plans would still be required to cover 10 categories of health benefits that are defined as “essential” under current law, and the total annual out-of-pocket costs for an enrollee would remain capped. In CBO and JCT’s estimation, complying with those two requirements would significantly limit the ability of insurers to design plans with an actuarial value much below 60 percent.
Mechanically, under the House bill without a follow-on phase 2 or phase 3 bill, insurers can probably design plans that have at least 55% actuarial value (AV) coverage as the minimum level of coverage. Bronze right now is 60% +/-2 points of AV.
It will be very hard for people to buy a non-Bronze plan because insurers won’t offer them except at exorbirant prices. Let’s work through my logic.
Insurers are currently required to offer at least one Silver and one Gold plan if they want to sell on Exchange. Those plans are age rated at 3:1 with subsidies absorbing almost all of the local price increase risk for the Silver plan. Under the AHCA, those requirements are not in place and the subsidy is not tied to local pricing. Young buyers who are healthy will either opt out or buy the lowest actuarial value coverage possible because it will cost them very little.
Insurers then have to look at the people who actually need coverage and cost money to cover. They’ll offer a Bronze plan to get the young people in. But if they see a 58 year old asking for a Silver or Gold plan, they know that this person is going to be hyper expensive to cover as they have just self-identified as being high risk and high expense. Insurers won’t offer actuarial value levels above the minimum requirements because they will lose money on those policies.
So we will quickly see a proliferation of $6,000 to $9,000 deductible plans and very little else. That means the 64 year old who is seeing a $10,000 a year premium increase will also see their deductibles increase by $4,000 to $7,000 a year.
In your last paragraph, you use a 64 year old having a $10,000 a year premium increase. What would be the total yearly premium?
And these assholes were intent on repealing the “death tax” (inheritance tax)…and here they’ve gone and made an actual DEATH tax.
“More choice” is working out about as well as “more people covered” in the GOP health care reform. Social security saves money too since people will have to delay retirement and work longer to pay for the I ncreased healthcare costs. Maybe wages and profits will skyrocket and out pace health care costs as Trump makes America great again?
The Minoans would agree.
I have nothing serious to contribute, it’s way too early, and I just watched a 2 hour British documentary on the Minoans.
I have to ask, that 64 year old is one year away from requirement to sign up for Medicare. Will his/her plan shift over to Medicare naturally, or does a new plan have to get purchased? Is there a shift between the non-Medicare version to the Medicare one, and will that affect the deductibles?
Question to the expert: Is it possible insurance companies are as remarkably quiet as they are because they have been promised something like the opening up of the bundle of essentials at stage 2 or 3 of the process?
Thanks for the info Mayhew. I will spread the word.
I saw a couple of reporter tweets saying that they heard through the grapevine that the WH is going to introduce as part of the plan decreasing the Medicaid income eligibility to down to 100% percent poverty level from 138%.
@SRW1: From my conversations, the insurance company policy folks are under their desk and either drinking or crying or both. AHIP, the national insurance lobbying group has come out against this pre-score. Most of the big insurers have come out against, Molina, one of the successful Exchange insurers said that they would need to raise rates by 30% to compensate for the market blowing up on them.
The important thing is that in good years, insurers will beat chlamydia in a popularity contest. Insurers don’t want to be a visible opposition as they know that they will get a lot of automatic resistance just because the insurers are advancing an argument. In this case they want to lay out technical opposition and let far more sympathetic people be the public face of opposition.
@Mai.naem.mobile: Not quite. The rumor is that it would allow states to expand only up to 100% FPL instead of making it an all or nothing approach to get to 138% FPL. The people who are between 100% FPL and 138% FPL would be covered on Exchange with full Cost Sharing Reduction. If they live in states that either have a 1115 waiver expansion OR whose state would only ever expand via a 1115 waiver with cost sharing provisions, they’re no worse off. The play is to cost shift off of state budgets and to either the Feds or beneficiaries.
On a scale of 1 (awareness)-10 (riots) this is somewhere between a 1 and a 2 to make sure that non-waivered states don’t drop their expansion to only 100% FPL. If this is to be used to get a limited Expansion in non-Expansion states, I’ll be happy with it.
@PaulW: They would have to sign up for Medicare in the same way that they would have to have signed up from 1965 to present
@SRW1: I think the insurers are relying on reinsurance with the expectation that this ain’t the last bite at the apple so a low profile is warranted.
Thanks for the reply. I imagine that the only participants in this business on the provider side more or equally nervous then are hospitals.
Assuming these expectations as given, what are the impacts to higher actuarial value policies?
mai naem mobile
@David Anderson: okay that’s good. Does that affect the CBO scoring?
@mai naem mobile: minuscule change — slightly higher net expenditure most likely as Exchange coverage is more expensive than Medicaid coverage.