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You are here: Home / Anderson On Health Insurance / Plus 20, minus 20 means nothing for midterms

Plus 20, minus 20 means nothing for midterms

by David Anderson|  July 7, 201710:41 am| 11 Comments

This post is in: Anderson On Health Insurance, Election 2018

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GOP Senators are worried about Trumpcare's premium rate shock right before the midterm elections. See, they do care.https://t.co/EkCx4MC5QZ

— Topher Spiro (@TopherSpiro) July 5, 2017

This article is highlighting a potential Republican political concern. The Congresisonal Budget Office (CBO) projects that if the Senate’s Better Care Reconciliation Act (BCRA) or the House’s American Health Care Act (AHCA) was to pass and get signed into law this afternoon, rates for the individual market would increase by 20% in 2018. This is because the CBO believes that the lack of a strong individual mandate will lead to many healthy people leaving the risk pool. Almost the same number and value of claims will be borne by a much smaller payment pool.

The Republican political fear is that rates are proposed in the late spring, negotiated over the summer, and then announced as final in early fall. This year, rates and plan participation are to be finalized by the end of September. And then open enrollment starts on November 1st. And given the subsidy structure, likely voters are highly likely to be facing 20% higher premiums in addition to normal trend increases. And those voters will be pissed off and take out their anger on Republican incumbents.

This is a reasonable theory of change. I think it is wrong because I think it misreads a key CBO assumption.

The CBO evaluates proposals against current law as a baseline. Current law and current practice includes payment of Cost Sharing Reduction (CSR) subsidies. CBO therefore assumes in their rate structure calculation that CSR will be paid and more importantly, will be assumed by the carriers to be paid. However the combination of the House vs. Price lawsuit plus strategic ambiguity by the Trump Administration has led to insurers to price as if CSR will not be paid. In Pennsylvania, this is a 20% bump.

This is a powerful political wedge. If the BCRA was to be passed, it funds 2018 and 2019 CSR through normal appropriations. If that was the case, almost every plan in the country would be 20% overpriced for 2018. That means insurers would be faced with a 20% premium reduction because they are no longer pricing in uncertainty over the payment of CSR. At the same time they would be faced with a 20% increase on the baseline because of a sicker population due to the lack of a mandate.

That leads to a net wash. 20% less due to CSR funding becoming certain while a 20% increase because of a sicker risk pool.

There will be premium increases just because of trend but this is not a political or policy bludgeon.

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Reader Interactions

11Comments

  1. 1.

    Clem

    July 7, 2017 at 10:53 am

    Was hoping you were going to talk about R+20 districts. Mine is R+23, oh joy. The opposition should make premium increases a bludgeon just like the GOP created bludgeons for the ACA. Any voters remaining who don’t already belong to a tribe won’t interpret the CBO or the economics beyond the pain they are feeling over being poor and becoming poorer. The GOP should own the dismal state of policy prices at this point and they should also own the affects of the sabotage they cleverly used to screw the country.

  2. 2.

    Major Major Major Major

    July 7, 2017 at 10:56 am

    This seems like the sort of thing to be strategically silent about for now… Fortunately, republicans don’t understand math and can’t read.

  3. 3.

    rikyrah

    July 7, 2017 at 11:08 am

    thanks for the explanation.

  4. 4.

    the antibob

    July 7, 2017 at 11:35 am

    +20-20+20=+20 yes? So the policy geniuses have guaranteed themselves a self-inflicted disaster whether they act or not.

  5. 5.

    Major Major Major Major

    July 7, 2017 at 11:45 am

    I still can’t believe they named their bill after a mutation that causes cancer.

  6. 6.

    Yarrow

    July 7, 2017 at 11:52 am

    There will be premium increases just because of trend but this is not a political or policy bludgeon.

    Doesn’t really matter why premiums increase. If they do–when they do–Republicans are going to get the bulk of the blame. Sure they’ll try to blame Democrats and Obamacare and go with “See! We told you we needed to fix it. The mean Democrats won’t let us.” But the problem is, they own all the elected branches of government. They can fix it and haven’t. They’ll be blamed.

  7. 7.

    Dmbeaster

    July 7, 2017 at 12:28 pm

    There will be premium increases just because of trend but this is not a political or policy bludgeon

    Uh, it has been used non-stop by the GOP to undermine Obamacare, even though the rate of increases slowed under Obamacare. The same tactic should be used as forcefully as possible to hang the replacement system around their neck.

    The one thing that Obamacare probably has permanently changed is the idea that the political parties can just keep government out of health care policy entirely, and let ’em eat cake. Someone now has to do something and be responsible for the consequences, and that is what is driving the GOP crazy. Ted Cruz is an advocate of repeal now, replace later (as if a replacement would ever happen), but that is not selling for now.

    They are stuck with having to come up with something and being responsible for their sh!t sandwich.

  8. 8.

    No Drought No More

    July 7, 2017 at 12:31 pm

    “The Republican political fear is that rates are proposed in the late spring, negotiated over the summer, and then announced as final in early fall”.

    The fear of republican party professionals is a far more primal one. Couple their health care/tax cut/grand robbery legislation with the forthcoming impeachment of Donald Trump- and quite likely the impeachment of VP Pence, as well- and it becomes eminently conceivable that the republican party brand will go the way of the Whigs. That’s what republican party pros are afraid of, for all their bluster and posturing. That’s where their priorities lay in July 2017- survival as a viable national political force.

    The fundamental dishonesty of the GOP is finally catching up with them, enabling Americans that have lived in darkness to see a great light. Those Americans are being forced to wise up, in other words; and, only being human, they will damn well resent having been played for fools when their eyes are finally wide open.

    Of course, some of the people will always get fooled all of the time. But that’s always been the case, and always will be. Still, I suspect that after the Mueller report is presented to the American people (and history), there will no longer be enough of them to sustain the republican party as a viable national power

    Lest we forget, the GOP also big lied the country in launching war in 20013, too. Now that Hillary is no longer a viable presidential candidate, maybe it will dawn on democratic party shot callers that it would be more than OK to mention that rude truth out loud. It would also be a profoundly patriotic confession of a cold hard fact that all America are aware of in any event.. Americans who know the score, love their country, and possess the sense to be insulted by that ongoing and bipartisan conspiracy of silence concerning the great and infamous betrayal of 2003 would, at the very least, respect the democratic party for stating the obvious.

  9. 9.

    sunny raines

    July 7, 2017 at 12:36 pm

    its A-OK, republican voters are too stupid to connect dots. mitch, ryan, and the crew know they can count on it.

  10. 10.

    prostratedragon

    July 7, 2017 at 12:55 pm

    @Major Major Major Major: I had other reasons for amazement: Buckra; also Bukra.

    Subtext will get you if you don’t watch out.

  11. 11.

    TenguPhule

    July 7, 2017 at 1:19 pm

    The Congresisonal Budget Office

    Perhaps you had a bit too much to drink, David.

    Or not enough.

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