All the storm and the fury, signifying nothing? 2018 Risk pool edition

The CMS risk adjustment report for 2018 came out late last week. There are a lot of specifics to dive into, but the most fascinating paragraph was on page five:

Risk scores remained similar between 2017 and 2018. In the 2018 benefit year, risk scores overall increased by approximately 0.4 percent in the individual non-catastrophic risk pool and decreased by approximately 0.2 percent in the small group risk pool when compared to the 2017 benefit year risk scores. All metal levels, as well as a majority of states, saw small increases in the state average risk score in the individual non-catastrophic risk pool from 2017 to 2018.

The risk scores barely moved despite/because of the incredible amount of policy changes. During the 2018 run-up to the open-enrollment period, we have the entire Repeal and Replace, we saw a massive shift of messaging away from support and into opposition, we saw a shorter open enrollment period. We also saw the termination of Cost Sharing Reduction (CSR) payments to insurers which led to a massive spike in available subsidies as insurers and states Silverloaded the benefits. Finally there was the Congressional debate and legislation that ended the individual mandate effective 1/1/19 that was occupying some of the news during this time period.

Lots of things were going on; some were uppers for enrollment and some were downers, but on net for morbidity purposes, they all cancelled out.

This is another indicator that the 2018 plan year was dramatically overpriced as insurers were pricing for far worse morbidity and higher risk scores. It is a softer indicator that the 2019 plan year is overpriced in some markets as insurers could not set their 2019 rates on full information so the 2019 rates were partially based on the assumption of very bad morbidity.