Meth Laboratories of Democracy

Maryland is making a big push to increase health insurance coverage in the state.  There is a recently signed bill that dramatically lowers the friction to enroll.  Stan Dorn, one of the architects of the policy proposal, has more at Health Affairs:

 the Maryland Easy Enrollment Health Insurance Program (MEEHP)….represents the country’s first attempt to use income tax filing as an immediate on-ramp to health coverage. By simply checking a box on their state income tax return asking the exchange to determine their eligibility for free or low-cost insurance, an uninsured tax filer can have relevant information from their return sent automatically to Maryland’s health insurance exchange. The exchange then uses that data and other available records to determine the individual’s eligibility for Medicaid, CHIP, and PTCs….

People who qualify for Medicaid or CHIP are invited to choose a managed care organization by a specified date. If they neither choose a plan nor opt out of coverage, they are enrolled in a Medicaid plan by default….

Uninsured tax filers with incomes too high for Medicaid or CHIP have a brief special enrollment period (SEP) for enrolling into the individual market. The SEP is triggered by the filing of a return with the relevant box checked, so long as the return is filed before a date specified by the exchange (presumably April 15 or earlier). The exchange determines PTC eligibility as quickly as possible, encouraging uninsured consumers to obtain insurance and helping them select an appropriate plan.

The default assumption in Maryland is that people want to be covered and the state government as well as the Exchange board should facilitate that coverage using current data streams.  Eyeballing 2019 data on RWJF Hix Compare, most single 27 year olds earning under 180% FPL will be exposed to at least one zero premium Bronze plan.  Older buyers and larger families will see zero premium plans at higher income levels.  Some families will see zero premium silver and gold plans.

Facilitating on-exchange enrollment is a net positive for the state as it will increase the number of people covered and most likely decrease the average morbidity in the pool.  It is the easier step as it costs the state a slight increase in administrative costs but no program costs.  The federal government takes on the entire incremental cost of increasing on-Exchange enrollment if that enrollment is exclusively coming through zero premium plans.

More notably is the commitment by Maryland to expand their Medicaid rolls.  Medicaid has split financing; some state and some federal.  Depending on the type of eligibility an individual has, Maryland is paying anywhere from ten to fifty percent of the incremental costs.  We saw with the launch of the ACA exchanges that there was a significant “woodworker” effect as people who were always qualified for Medicaid actually enrolled in Medicaid as health insurance coverage had higher salience.  We should expect a similar, but smaller, woodworker effect as Maryland uses its administrative systems to maximize enrollment.

Maryland is adding lubrication to the health coverage system while many other states are throwing sand to increase the friction people must fight through to get and maintain coverage.

Reducing enrollment frictions in MarylandPost + Comments (7)

Idaho’s voters passed an unrestricted Medicaid Expansion last November as state law.

Idaho’s Republican led legislature passed a convoluted Medicaid Expansion this week.

Idaho’s Republican governor signed the convoluted bill on Tuesday.

There is a lot going on in the law that requires significant policy waivers from the federal government. Work requirements are de rigeur and will likely be challenged in court.

The interesting, to me, segment concerns optionality of Exchange versus Medicaid coverage for people who earn between 100-138% Federal Poverty Level.

Another piece of the bill would put people on private health insurance, through the Your Health Idaho exchange, by default. If someone wanted Medicaid coverage instead, they could opt in. The carve-out would apply only to people with incomes between 100% and 138% of poverty level — $12,490 to $17,236 for a single person.

It’s a lighter version of Utah’s “bridge” expansion — a federally approved plan to expand Medicaid in Utah only up to the poverty line, leaving people who are slightly above poverty out of Medicaid but allowing them to get private insurance on Utah’s exchange.

Supporters said Idaho’s carve-out would save Idaho money, since those people would be getting insurance paid for by federal tax credits.

This idea is not shocking. Idaho has been playing around with partial expansions and carve-outs to pull people with high medical costs out of the Exchange risk pool before. If this optionality is approved, it would lead to a complex set of choices for people who make between 100% and 138% FPL.

Within the context of previous Idaho initiatives, this optionality makes local sense given local assumptions.

Staying on Exchange means no work requirements, continuation of network and some predictable cost sharing and premiums. Looking at the RWJF HIX Compare data, Idaho has few low net of subsidy Silver plans as the Silver Gap is minimal in most rating areas. Premiums will be a little higher.

An individual who elects Medicaid would face potentially more restrictive networks and potentially face work requirements and eligibility requirements but would gain lower premiums and lower cost sharing.

I am not sure which way the risk will flow if this waiver is approved. I could see an argument that high cost individuals would move to Medicaid as they would be eligible for a work requirement exemption and see their premiums and cost sharing go down. I could see an argument that low cost individuals would move to Medicaid as they would see their premiums go down and since they don’t use medical services all that much, networks and cost sharing are almost irrelevant.

The actuaries have to be sweating bullets. And the academics have to be submitting data requests to Idaho Medicaid and the Idaho exchange board for de-identified, risk stratified microdata for the 2020 policy year already.

Idaho, Medicaid Expansion and optionalityPost + Comments (14)

The Center for Medicare and Medicaid Services (CMS) released a proposed rule on funding the Basic Health Plan (BHP) for 2020.  They propose a rule that will lead to about a 3% reduction in federal spending to be counter-acted by a dollar for dollar increase in state spending.  BHPs are a part of the Affordable Care Act where states could run a program for people who earn under 200% of the Federal Poverty Level instead of running the exchange.  The BHP is funded by a block grant that is equal to 95% of what the federal government would have spent on premium and cost sharing reduction subsidies for the people who enroll in the BHP.

The termination of CSRs led to CMS cutting the CSR component of funding.  Minnesota and New York sued and a settlement was found where CMS attributed Silver Loading incremental premium increases to the BHP payments.  Dr. Lynn Blewett of the University of Minnesota and I examined this rule last year in a Health Affairs blog:

The BHPs in New York and Minnesota will receive almost half a billion dollars more in funding than they were told to expect in December 2017….

We can assume that 2019 BHP payment rules will continue to incorporate some type of plan adjustment factor that relies on an estimate of the silver increment due to the continued obligation of insurers to provide cost-sharing reduction payments without direct federal reimbursement. …

The plan adjustment factor in the proposed rule is the same exact plan adjustment factor as it was in the settlement rule. However CMS introduced a new factor this year; Metal Tier Selection Factor (MTSF) which is a multiplier to the rest of the formula that reduces what CMS owes.

After the discontinuance of the CSR payments in October 2017, several changes occurred that increased the expected impact of enrollees’ plan choices on the amount of PTC paid. Silver-level QHP premiums for the 2018 benefit year increased substantially relative to other metal-tier plans in many states (on average, by about 20 percent). We believe this contributed to an increase in the percentage of enrollees with lower incomes choosing bronze-level plans, despite being eligible for CSRs in silver-level plans, because many were able to purchase plans and pay $0 in premium; according to CMS data, the percentage of persons with incomes between 0 percent and 200 percent of FPL eligible for CSRs (those who would be eligible for the BHP if the state operated a BHP) selecting bronze plans increased from about 11 percent in 2017 to about 13 percent in 2018. In addition, the likelihood that a person choosing a bronze-level plan would pay $0 premium increased (and the difference between the bronze-level QHP premium and the available PTC widened). Between 2017 and 2018, the ratio of the average silver plan premium to the average bronze plan premium increased from about 117 percent to 133 percent;

Okay, that is a whole lot going on. Basically,CMS is saying that due to Silverloading, the gap between the benchmark silver plans and the cheapest Bronze plans increased significantly. 20% more people in 2018 who earned under 200% FPL bought Bronze plans because they were likely to be low or no premium. If the Bronze plan is a zero premium plan, it is very likely that the buyer “wasted” some eligible premium tax credits. CMS is trying to claw that “wasted” premium tax credits back.

Comments are needed by the first week of May if you want to tell CMS what you think can be done to this formula.

BHP funding and wasted APTCPost + Comments

I contend that monopolistic insurers in the ACA market are able to shape their risk pool. They have multiple means to implement a strategy. They can use networks. They can use benefit design. They can use formularies.

Starfish made a good comment:

In Mississippi, you cannot play a lot of the games that can be played with a healthy pool in other places. Is a narrow network going to eliminate your town’s only hospital? Are people really driving to Children’s Hospital if they do not live near it or have a child with cancer or some other major issue that can only be addressed there?

Really good comment, and I want to highlight one strategy an insurer can use. They can play spread games. I will make the simplifying assumption that actuarial value correlates to premium level and we’re using a single unified actuarial value scale instead of metal specific scales. I am also assuming a single network and the same plan type for all plans (it could be an EPO, HMO or a PPO, does not matter). I am isolating on plan designs.

The first strategy is a low AV and low spread strategy.

Here the benchmark Silver Plan is near the bottom of the allowable actuarial value range for Silver plans. The cheapest Silver is barely below the benchmark while the insurer is only offering a single Bronze plan. Since we are looking at a monopolistic insurer, there is no competetive pressure that dictates these choices. These choices result in high out of pocket costs for everyone, and since subsidized premiums are predicated on premium spreads, the lowest actuarial value plans won’t be too much cheaper than the benchmark. The healthy and risk embracing won’t see too many good deals.

The other strategy stretches everything out.

Here, the benchmark Silver is near the top of the allowable range. The cheapest Silver is near the bottom of the allowable range. There is a big spread here which means the Silver Gap is large. More importantly, the carrier is offering two Bronze plans. One is still near the top of the Bronze range. The other is near the bottom of the Bronze range. This means that there is a huge actuarial value gap between the cheapest plan offered and the benchmark. Consequently, the healthiest and most risk taking folks will see very low to no dollar premiums if they qualify for subsidies.

It does not matter if the insurers are Silver Loading or Broad Loading their CSR response. It does not matter if they are offering an HMO or a PPO. It does not matter if they are in a high cost state or a low cost state. A single insurer state can strategically choose the premium spreads between the benchmark and least expensive Silver and non-Silver plans.

Wyoming has chosen a big spread strategy. Mississippi has chosen a small spread strategy. These are deliberate choices.

 

2019 Premium Spread from Benchmark to least expensive plan in each metal band 40 year single non-smoker

State	County	Metal Level	Maximum Benchmark Spread
MS	Neshoba	Bronze	($60.00)
MS	Neshoba	Silver	($59.00)
MS	Neshoba	Gold	$93.00
WY	Laramie	Expanded Bronze	($265.00)
WY	Laramie	Bronze	($236.00)
WY	Laramie	Gold	($136.00)
WY	Laramie	Silver	($6.00)

Single insurer plan offering choices and implicationsPost + Comments (6)