Last August, I thought that the reality of Cost Sharing Reduction (CSR) termination would make the politics of the ACA wierd.
Republicans would be the ones who would want/need to explicitly appropriate CSR funding.
Democrats have no reason to trade CSR funding for policies that they don’t prefer. Inaction gives them an incredible policy victory. Conservatives are the ones who need to make concessions to fully fund CSR…
Liberals will have achieved an incredible policy victory in the states that force insurers to load the cost of CSR onto only Silver plans. In these states, the benchmark plans will be sufficient to buy 90% actuarial value coverage. That is better than Medicare. That is an incredible improvement over the ACA as plans will become more affordable to many more people as premiums and deductibles will decrease and the risk pool will get healthier as the value proposition gets better.
Susannah Luhti at Modern Healthcare reports on a bill in the House:
Rep. Ryan Costello (R-Pa.) of the Energy & Commerce Committee said committee leadership wants to mark up his market stabilization bill — introduced last month — so it can potentially ride with the omnibus spending package expected in February….
The Costello bill, co-sponsored as of Thursday by the fourth-highest House Republican, Rep. Cathy McMorris Rodgers of Washington, would fund CSRs for 2017, 2019 and 2020….
The reinsurance portion of the bill would appropriate $30 billion over three years for state high risk pools — another idea insurers are excited about.
The Costello bill would have the political effect of creating great headlines for Republicans two weeks before the mid-terms as final prices were announced for the 2019 Open Enrollment. Funding CSR and then throwing $10 billion in reinsurance at the individual market would lead to 20% or more premium drops even after accounting for normal medical trend and the added costs of the lack of an individual mandate.
On a policy level, lower premiums primarily benefit the federal government and non-subsidized buyers. Fully funding CSR means no more Silver-loading. Compared to current pricing patterns, no Silver Loading harms subsidized buyers, especially buyers who earn between 200% and 400% Federal Poverty Level. A lot of subsidized buyers will be whip-sawed in this scenario.
I think there is a stabilization and technical corrections bill that can move forward. It could contain significant reinsurance funding as well as tweaks to 1332 waiver guidelines and outreach funding. I do not think that there is an agreement zone for a bill that funds CSR going forward. On the narrowest grounds, I could see an agreement to fund CSR through 12/31/17 retroactively to avoid lawsuits but that is about it.
The politics of CSR are getting weird.
Cheryl Rofer
I am so glad you understand this stuff and share with us, David. Thank you.
NobodySpecial
It really speaks to how dumb they are as a party how little they understand how ACA works and how they assume that Democrats will reflexively take on a damaging piece of legislation for a policy outcome they don’t need.
JR
In other words, the policy is becoming entrenched.
WereBear
And that is the only way a LOT of people will understand it.
I always think of those shows about selling a home. The behavior there supports the notion that a shockingly large number of people don’t know how to exercise this part of their imagination. Because what do the “scene setters” do when they want to sell a house? Get rid of half the furniture and make everything beige.
Some people can’t imagine the house with their own furniture in it, or the room painted a different color. I’ve seen people complain about things that are going to be in the moving van once the house is bought, like bedspreads!
I think this is even more true of social policy. Until a person gets into a working social system and sees how important it is, that concept is going to be vague and not generate much in the way of emotional ties.
Steeplejack (phone)
@WereBear:
So true about the “shelter shows.” I am always surprised at the minutiae people focus on instead of the real, permanent qualities of the house. I feel like the Property Brothers have the patience of Job. I would
smackfire about half of their clients in the first ten minutes.And true about social policy. People are fearful of change and often can’t see how a different approach could possibly be better, so they cling to the status quo, even if it isn’t working very well.
Sab
It does seem like the current Republican health policy hurts Republican voters (white middle and upper middleclass , often successful small business owners or employees) as much as it hurts anyone.
I am in the individual market and my premiums skyrocketed this year. I know who to blame, but most of the people I work with blame the ACA, not Republican sabotage of the market. Weird.
Brachiator
@NobodySpecial:
Mnemosyne
@WereBear:
It is apparently a known thing with knitting patterns that some people cannot picture the sweater (or whatever) in a different color, so if they don’t like the color of the sample pictured, they won’t buy the pattern.
David Anderson
@NobodySpecial: Partially that, but take a look at the September Alexander-Murray hearings — most of the witnesses (Dem and GOP state insurance commissioners esp.) thought CSR funding was critical.
Ken
I was going to say it’s because the Republicans own healthcare now, but (per Sab’s comment) I’m not sure enough people think of it that way. I think I saw references to polls that show a largish majority would blame the Republicans and Trump if the system gets screwed up – anyone have them?
Bob Hertz
You are a great commentator but I think you missed a beat with this sentence:
“That is an incredible improvement over the ACA as plans will become more affordable to many more people as premiums and deductibles will decrease.”
(if it is in fact your sentence, I could not be sure.)
Anyways, the people who are above the subsidy cutoff were clearly hurt by the CSR snafu. These people are not sliced bread. I run an insurance agency, and we see more and more people in this group are uninsured.
WereBear
@Mnemosyne: I didn’t know that, but it speaks to the same lack of visual imagination.
Kelly
Silver loading worked well for me. Hoping it sticks around. :-)
I think the ACA should subsidise the above 400% to limit premiums to 10% of income. More universal more political support. The subsidy cliff becomes a ramp that ends at incomes are high enough that premiums are less than 10% of income.
Gonna be awhile before we have control again. My lesson from last 20~30 years is our windows for change are narrow and rare. Gotta be ready to move fast when they open.
David Anderson
@Bob Hertz: I agree with you >400% FPL SOL.
Jay S
@David Anderson: Insurance commissioners tend to be risk adverse, and were seeing a significant risk that insurers would not respond in the most optimal manner. Maintaining what was the status quo was seen as less risky.
While your economic analysis has proven correct, I am not sure the political one will play out the way you see it. First the politicians have to be made to understand the economics or at least made to believe the reality around them. Second, voters have to place the blame or credit on the right party. Since the results are counter intuitive, even a politician that passes the first test may not be convinced that voters will pass the second test.
JGabriel
David Anderson @ Top:
Yep, Republicans are really starting to approve of CSR’s now that they know re-implementing it will hurt a lot of poors, while lowering prices for those who don’t need the help as much.
Typical.