I have long thought that the politics of appropriating Cost Sharing Reduction (CSR) payments created strong incentives for Democrats to not fund those payments without policy concessions elsewhere. Here is the bluntest description of the political argument:
If CSR is not funded, the premium increases that occurred in 2018 will be baked into the baseline premiums for 2019. Those premiums are likely to increase by 15% to 20% or more due to the combination of short term plans and the pragmatic elimination of the individual mandate. Final premiums are announced a few weeks before election day. The headlines of 20% premium increases are far more beneficial to Democratic political chances than headlines that premiums are flat or declined by 2%.
And now we are seeing rate requests from a couple of states with competitive House seats where the CSR costs are baked into the premiums:
BREAKING: PENNSYLVANIA: Preliminary 2019 #ACA rate hike request: Only 4.9% thanks to state efforts to counter #ACASabotage: https://t.co/fDW3qfqUlz
— Charles Gaba (@charles_gaba) June 5, 2018
and in Maine:
Maine preliminary renewal rates filed – 2 sets for each insurer (with and without reinsurance program pending CMS waiver)
2 marketplace insurers:
Community Health Options w 6.9% w/o 9.2%
Harvard Pilgrim w 4.6% w/o 9.5%Pleasant surprise! https://t.co/yjHguzASnI#mepolitics
— Mitchell Stein (@mhstein) June 5, 2018
If CSR was fully funded, both of those states would be seeing average rate decreases of 5% to 10%. Policy wise that is a good thing. For the folks who don’t get subsidies that is a good thing. And the political incentives would allow Republican incumbents to go up on the air and say the following:
‘After years of premium increases on you, President Trump and the Republican Party got a 10% decrease… what a deal, we can do healthcare…”
And yes, the reason why there was a huge premium spike in 2018 was due explicitly to Republican policy. In a universal where CSR is appropriated after termination, I know that, you know that and almost no voter knows that. It is too arcane to explain that sabotage happened and then appropriation happened and if we look at a two year rolling average of premiums we are back on trend.
My eyes glazed over on that.
Policy is working orthogonally to political incentives with CSR and that always led me to scratch my head.