The Democratic Trifecta in the House, Senate and White House are gearing up for another major policy legislation writing session with another reconciliation bill that is likely to be more focused on infrastructure than health care. However, it is likely to have a decent size health coverage component. It is extremely likely that good chunks of the policy wishlist will be enacted via reconciliation which has particular rules. One of the rules is that reconciliation bills can not, per Congressional Budget Office (CBO) estimates, increase the deficit in the 2nd decade after it goes into effect. That means permanent policies need to be paid for.
Silverloading is a massive potential health policy pay-for.
Silverloading, for those who don’t follow my obsession, is the response of states and insurers to the decision by the Trump Administration to not directly reimburse insurers for Cost Sharing Reduction (CSR) subsidies that were highly targeted to low income families to reduce their out of pocket expenses for healthcare. These subsidies only applied to families earning under 250% Federal Poverty Level and who bought a silver plan. Silver plans are important as the premium of the second least expensive silver plan sets the affordability benchmark and thus the size of the premium subsidy available to a family.
Silverloading is the process where insurers that are still obligated to offer CSR benefits, to place the cost of those CSR benefits into only the premiums of silver plans. This means not-silver plans (gold and bronze primarily) became relatively cheaper to silver plans for subsidized buyers than they otherwise would have been. This has led to a massive proliferation in zero-premium plans and it acted to support enrollment in a policy environment that was designed to suppress enrollment.
Silverloading is expensive as hell. The CBO, in August 2017, estimated that universal silverloading would like cost the federal government an extra $194 billion dollars from 2018-2027. The CBO estimated silverloading would buy about a million more covered lives per year. This is an expensive way to get some more people coverage. Most of the benefits of silverloading accrued to people who otherwise would have still bought an ACA plan. There may be significant plan switching occurring (Rasmussen et al 2019) in response to a price shock, but most of the benefits go to people who would have bought insurance in the counter-factual of no policy change.
So what does this mean?
Silverloading is likely to be a major component of paying for permanent changes to the ACA subsidy and benefit tables. An explicit appropriation for CSR benefits will “save”, per CBO methodologies, hundreds of billions of dollars over the first decade and even more in the second decade. Those funds can be used to move the benchmark plan from silver to gold. Those funds can be used to top-up CSR subsidies for households earning both over and under 200% Federal Poverty Level. Those funds can be better used. And given CBO scoring methodologies, those extensions can be mostly paid for without significant pain from any stakeholder that may be willing to mobilize in self-interest.
Silverloading is likely to have a short expected life span going forward.
And yeah, I’m support using silverloading as a pay-for because silverloading is an ugly kludge that inefficiently but effectively reset the expectation of what affordability did primarily through the politics of inertia. If there is a better way to spend the same amount of public dollars to deliver more benefits of either or both of lower premiums and less cost-sharing, we should do that. I don’t care that silverloading will have been a major identifying feature of at least half a dozen papers, I don’t care that silverloading is how I got to troll the former president in the op-ed pages of the New York Times. If there is a better way that is legally more stable and far less dumb, we should go that route.