I spent a lot of time over the past couple of days being very confused. I had been reading Alexander-Murray and the Copper/Catastrophic section was confusing to me. Every other section I could find the example of the problem it was trying to address. However as the Copper-Catastrophic section was written, I saw vagueness that could accomplish the mission it is trying to address or certainty where it does very little.
I was wrong. Copper/Catastrophic plans for all ages is not a risk adjustment play. It is a possible slight actuarial value decrease that will fold Catastrophic plans into the same risk adjustment process. I have been told that by multiple sources who are in a position to know that Catastrophic is intended to be folded up into the same risk adjustment pool as the other Metal plans.
Why did I get this wrong?
I was trying to figure out why adding this provision mattered. There had been a lot of talk that identified a real problem; premiums are too high for non-subsidized individuals. I thought this Copper/Catastrophic plan was meant to address this problem. Every other section of the bill had very direct applications to known issues so I thought that this section would too. And the only way that Catastrophic can sustain a significant pricing advantage over Bronze plans is by keeping the split risk adjustment.
Catastrophic policies, from a benefit design point of view, are merely a funny looking Bronze plans. It has slightly lower actuarial value than the some Bronze plans but there is usually a significant pricing advantage for the same age/same company/same county Catastrophic plan compared to the Bronze plan. Most of that price spread is because the Catastrophic plan does not have risk adjustment outflows that fund Silver-Gold-Premium buying sick people built into the base premium. Bronze plans have to build risk adjustment outflows into the premium.
The rest of the bill directly addressed problems in ways that I think have a high probability of resolving the issue, so I thought that this section was doing the same thing.