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You are here: Home / Anderson On Health Insurance / Basic Health Program and Market Concentration notes

Basic Health Program and Market Concentration notes

by David Anderson|  October 3, 201811:00 am| 1 Comment

This post is in: Anderson On Health Insurance

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I’ve been busy this week at Health Affairs. The big piece at the HA Blog is an overview of the new Basic Health Program rule that the Center for Medicare and Medicaid Services (CMS) issued in August. Dr. Lynn Blewett and I went over how the BHP funding stream is predicated on the counterfactual of a fully offered Qualified Health Plan (QHP) market and not the actual premiums in that market. That would have been an esoteric point from 2014-2017 but it is critical in 2018 and beyond as Cost Sharing Reduction (CSR) subsidies are not being paid:

In December 2017, CMS notified Minnesota and New York that it would no longer fund the cost-sharing reduction component of the BHP payment formula, citing the lack of congressional appropriations for cost-sharing reductions. CMS stopped payments for the first quarter of 2018. The states initially asked CMS to revise its calculation to reflect a higher “premium tax credit” portion of the BHP payment due to the effects of silver-loading….

The new payment methodology provides an 18.8 percent adjustment to the BHP payment for both Minnesota and New York. CMS cites Section 1331 to add a new plan adjustment factor based on the experience of other states with a special focus on enrollees with incomes below 200 percent of poverty. Section 1331 requires CMS to “take into consideration the experience of other states with respect to participation in an exchange and such [premium tax credits] and [cost-sharing reductions] provided to residents of the other states.” CMS uses this provision as its rationale for examining the effects of silver-loading in other states and imputing those to BHP payments in Minnesota and New York…

I also have a letter to the editor in the most recent issue of Health Affairs that comments on Dr. Jessica Van Parys recent article on monopoly pricing. I am concerned about using the time series of 2014-2018 as an analytical approach as 2018 was just too goddamn weird from a pricing and competitive region perspective. Insurers did not know what the rules were so they either ran like hell (and are re-entering in 2019 now that the new rule set is known) or raised rates very aggressively.

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1Comments

  1. 1.

    Kelly

    October 3, 2018 at 11:40 am

    Too goddamn weird fits almost everything these last few years…

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