What the hell is Gov. Cuomo (D-NY) doing in New York besides cutting a very expensive campaign commercial? (relevant information is 23+ minutes in)
1 million people in New York have gained health insurance under the Affordable Care Act. President Trump is trying to wreak havoc on our health care system, but we’re not going to let that happen in the State of New York.https://t.co/e2fWacsgko
— Andrew Cuomo (@NYGovCuomo) July 30, 2018
Gov. Cuomo just announced that he has directed Supt. Vullo to reject any individual market rate increase that included an increase to compensate for the repeal of the individual mandate
— Michael Capaldo (@consultbenefits) July 30, 2018
New York’s insurance regulators asked their ACA insurers to submit two sets of rates. The first rate would be a rate increased based on Federal policy as of December 1, 2017. The second was the incremental bump that accounts for the repeal of the individual mandate. Remember, the Congressional Budget Office projects that the individual mandate repeal will add roughly 10 points to whatever would have been filed using the December 1, 2017 rules. Insurers filed two rates. These rates varied widely. Some insurers had no rate increase attributable to the individual mandate. Other insurers had 80% of their total request attributed to the individual mandate.
And now Gov. Cuomo (D-NY) is saying that the incremental rate bump due to the loss of the individual mandate won’t be accepted.
This is changing the rules mid-stream. Insurers can deal with bad policy if they have enough time to price in bad policy. They can’t deal with suprise bad policy.
I am assuming that the incremental bumps due to the individual mandate repeal are actuarial justified. Rates are supposed to be sufficient to cover all expected claims of the projected population with some cushion for adverse shock events. If an insurer is asking for 15% as an extra bump due to increased morbidity, there is room to argue that the right number is 9% and there is room to argue that the right number is 18%. 0% is probably not the right number.
If this is New York State policy, I expect some of the following reactions from QHP insurers:
- Refiling current rates to incorporate the individual mandate bump into the base rate with sleight of hand
- Screaming into the endless void of actuary’s tears
- Their lawyers talking to the state lawyers
- Withdrawals from the QHP market if the rates that some insurers need to cover the projected cost of a more morbid population won’t be approved
- The Governor saying that he extemporaneously misspoke
Yes, insurers are always evil bastards. On a good day, an insurer will be slightly less hated than chlamydia. Beating up insurers is a fun and politically popular thing to do. But rates have to be sufficient to cover claims or there will be no insurers willing to offer coverage over the long run.
UPDATE 1: IF there was a secret individual mandate bill that could be released in Albany tonight and passed tomorrow morning, this could not be destabilizing. I don’t think that bill exists.
UPDATE 2: Side note, the Basic Health Plan (NY ESSENTIAL PLAN) is the 138-200% FPL state run plan that is like Medicaid PLUS that New York uses instead of the QHP exchange. This could play havoc with its financing.
Additionally, the ability of some insurers to pull out may be limited as New York
may link links Medicaid contracts with QHP participation.