Most state budgets are insensitive to where the Benchmark Silver premium is located. Politicians may prefer either a low overall premium if they are primarily concerned with the well being of non-subsidized buyers, or they may be more interested in a large spread between the Benchmark Silver and less expensive options if they are primarily concerned about subsidized buyers, but state budgets are Silver Benchmark agnostic.
There have been two states whose budgets are dependent on the pricing of the second least expensive Silver plan in the ACA market. New York and Minnesota operate Basic Health Plans (BHPs). BHP’s give states a block grant worth 95% of the combined Advanced Premium Tax Credits (APTC) and Cost Sharing Reduction (CSR) cash that people who earn between 138% ($16,500) and 200% ($24,040 for single individuals) of the Federal Poverty Level. The BHP grant is used to pay for coverage that is at least as good as ACA coverage at no more than the premiums of the ACA. The states do this by building a Medicaid like plan that pays doctors and hospitals significantly less, on average, than commercial plans.
If the benchmark premium decreases, the state BHP budget gets squeezed. If benchmark premiums increase without underlying changes in total claim type or volume, the state budget has a windfall.
This dynamic is similar to the dynamic that states which want aggressive Section 1332 waivers will be facing. Their funding is predicated on the net pass through of APTC and CSR subsidies. State insurance commissioners will have strong incentives to encourage or create situations where the second, Benchmark, Silver is as high as plausible and defensible. This may mean setting up managed competition rules like California or enforcing strict meaningful difference regulations or requiring any willing provider network contracts.
These games will look a lot like some of the games that are played to maximize the effective federal funding of Medicaid. States currently impose provider taxes and hospital assessments that up the effective federal net payments for the state Medicaid program. States that expanded Medicaid have also been aggressive in moving as many people from Legacy Medicaid with a baseline 50% to 75% federal payments to Expansion Medicaid with a long term federal payment of 90% of costs. The Arkansas proposal to scale back Medicaid expansion to 100% FPL is an attempt to get the Feds to pick up the entire cost of covering the people who make between 100% and 138% FPL instead of having the Feds only pick up 90% to 95% of the cost of their coverage.
The incentive to maximize the benchmark Silver plan will increase in Red States. It will increase in Blue States. It will increase in states that want to do anything different.
satby
I’ve been delaying signing up this year because the whole thing just depresses me, but the Etsy site partnered with an exchange navigator and it took me less than 15 minutes. With subsidies I will pay $76 a month for a silver basic HMO, all I really need because I seldom go to the doctor anyway*. Add in $17 more for basic dental and I am in better insurance shape than I have been in for a while. Whew!
* No health conditions, luckily, other than asthma that’s well controlled. I mainly wanted insurance in case I was hit by a bus.
David Anderson
@satby: Good, I am glad you got something decent!