Some loudmouth over at the Health Affairs blog argues that we should expect states to more easily see their 1332 waivers approved this year as the pragmatic budget neutrality requirement for 2019 has been relaxed:
The current guidance has strict rules on budget neutrality. These criteria partially led to Iowa withdrawing its revised Iowa Stopgap Measure 1332 application. However, two developments—the repeal of the individual mandate and the replacement of eliminated cost-sharing reduction payments by higher advance premium tax credits (APTC)—both increase net federal costs under the ACA; they thus increase the amount of pass-through funds available to states implementing 1332 waivers.
What does this mean?
The lack of an individual mandate starting in 2019 means the Federal government will be clawing back less of the pass-through amount to cover the loss of individual mandate taxes. And the rise of the APTC payments to compensate for the lack of CSR payments means states have a lot of extra money to use to provide benefits that are at least as comprehensive and at least as affordable as mandated by law than they had for 2017. A lot more money is effectively sloshing through the system for states that want to design their own systems.
Stan Dorn
One other factor. The end of individual mandate enforcement means higher premiums, which translates into PTCs per capita, hence higher pass-through amounts. On the other hand, no mandate enforcement means fewer enrollees, hence fewer total PTC dollars, which potentially means fewer pass-through amounts. It may be important for states to include baseline policies that pump up enrollment, without or without a 1332 waiver.
David Anderson
@Stan Dorn: Bingo — start thinking about APTC pass throughs with the same logic that states use on FMAP maximization for Medicaid.
Gin & Tonic
Good thing you cross-post that here, since Disqus is the spawn of Satan himself. Plus, the commenters here are more intelligent and likely handsomer.
Betty Cracker
Will be interested in your thoughts on this:
David Anderson
@Betty Cracker: I don’t know enough to have an informed opinion on this.
My uninformed opinion: Have fun storming the castle.
Brachiator
The increase in the standard deduction beginning in 2018 may mean that more lower income households may not have a filing requirement and so will be exempt from requiring health insurance.
Of course, these people should still file a return if they want to get insurance through the Exchange and possibly qualify for the premium tax credit. But I think that the Administration will not advertise ACA or try to clarify issues.
stinger
David, so is the removal of the individual mandate NOT cutting off one of the three legs of the stool? The without-which-not (sine qua non)?
Amir Khalid
@David Anderson:
I confess I have some big doubts. There’s a lot about delivering healthcare that lies outside the combined skill sets of a bank, an investment company and an online retailer. You have to hope that they’re smart enough to recognise the need to learn first about what they’re trying to change. As for not seeking a profit, the investor companies must either commit to subsidising long-term losses, or watch Amazon Berkshire Chase Wellness (to pick a name at random) accumulate a pile of cash reserves that they will be sorely tempted to raid.
David Anderson
@stinger: This is going to be an amazing behavioral economics experiment. If we think that people have a taste for compliance, than a lot of people won’t enroll in health insurance and premiums will go up. If we think that people are relatively risk averse and will buy cheap post-subsidy insurance, there won’t be much fall-off.
Right now we don’t know for sure what happens when mandates are removed even as the population that is targeted by the mandate has been acculaturated to buy insurance.
I don’t know.
Steeplejack
@David Anderson:
LOL.
Another Scott
@Steeplejack: Yeah, that was my reaction, too. :-)
Finding the actual press release was a challenge for me, but there it is:
(Emphasis added.)
It sounds like they’re going to be doing a lot of data mining and using the results to try to (effectively) ration and triage health care expenditures and apply a cudgel to their insurance companies. And get their US employees information on costs and benefits. Kinda what the PPACA is trying to do – look at evidence and figure out what works best and not pay for expensive stuff that doesn’t work better than cheap stuff.
I suspect it will take years to actually start bending the cost curve differently, but who knows.
It’s kinda funny how the stock speculators immediately panicked about the news. Just another reminder of how much of the stock market is driven by “animal spirits” rather than fundamentals…
Cheers,
Scott.
Gin & Tonic
@Another Scott: You can bend the cost curve by being a cheapskate, too. I see that Bezos has proposed, in negotiations with the WaPo union, a 1% match to employees’ 401(k) plans. Such munificence! A saint among men, no?
Another Scott
@Gin & Tonic: True. Jeffy didn’t get to be the richest man on Earth (maybe except for Vlad) by passing out free money. But still, he does have a history of being a ruthless competitor in markets he enters and thus driving down costs to his customers (while at the same time causing lots of other damage in creating that benefit). We’ll see what happens.
Cheers,
Scott.