The Senate revised draft of their tax bill paid for by Medicaid cuts is due to drop sometime this afternoon. So I want to talk about a possible future path where the bill fails. Doing nothing is a plausible option that will not make things significantly worse or more expensive. Sabotage and neglect have been priced into premiums for the individual market and Medicaid will be at risk due to regulatory rule making and active localized monkey wrenching but that is a plausible baseline in a future where the BCRA is defeated.
— ☪️ Charles Gaba ✡️ (@charles_gaba) July 13, 2017
I think Matt Fuller is reading this wrong.
CSR ceases to be a leverage point on 12/31/17. After that almost every insurer that is on the Exchange will have priced their products as if CSR was not to be paid. If CSR is paid, they’ll pocket large profits. If it is not paid, it is business as usual. The threat of yanking CSR funding has an even more limited life span than the end of the year:
More subtly, let’s imagine that CSR has been paid through November 30th. If they were not paid in December, the carriers would have to use their reserves to cover the expenses but insurers would not flee the market before the end of the policy year. They might be able to reprice their 2018 policies based on the lack of the regular, early notification of accounts payable that they get before the CSR money is actually transferred in mid-December. They would take a hit, but it would not be a show stopper.
Moving to payment through Halloween but no payment for November and December, most insurers would have sufficient reserves to eat the loss and re-adjust their prices for 2018 while their lawyers get warmed up. Moving back another month, thinly capitalized insurers will start being in trouble as they may be hitting a Premium Deficiency Reserve (PDR) event that threatens their Risk Based Capital (RBC). At that point, some state regulators would be forced to either shut down insurers or allow insurers to terminate the CSR policies immediately. Well capitalized insurers could survive longer and jack up their rates for 2018 with state support.
CSR threats are valid through the end of August and then weaken quickly by Thanksgiving.
More importantly, chaos and sabotage is old information. Many insurers have pulled out of the ACA individual markets because of the cost of uncertainty due to sabotage that has been ongoing since 1/20/17. But that is old news.
Only new and unexpected monkeywrenching would increase the level of chaos in the individual market.