Two pieces of Exchange information came out yesterday.
First, one of the results of the Trump Executive Order from 1/20/17. The IRS will not reject tax returns that do not contain health insurance mandate compliance activity. Under the Clinton Administration the IRS would have started to have done that for this year for the first time.
In a Feb. 3 meeting with tax-preparation software companies, the IRS said it would not reject silent returns this filing season, according to Andrew Townsend, tax analyst for software maker TaxAct. The decision, which took effect Feb. 6, was not announced publicly and Townsend said he has not seen it in writing.
This is no change from current practice but it is a change from planned practice which would have tightened up mandate enforcement. It is a subtle administrative weakening of the risk pool from the counterfactual of no change.
More importantly. Humana pulled off the Exchanges for 2018 last night. Their footprint was fairly small in most states and I was not impressed by their strategy. I was surprised at how early the decision to withdraw was made.
“Based on its initial analysis of data associated with the company’s healthcare exchange membership following the 2017 open enrollment period, Humana is seeing further signs of an unbalanced risk pool,” the insurer said in a statement. “The company has decided that it cannot continue to offer this coverage for 2018.”
The company said it will continue to offer coverage in 11 states through the end of 2017.
In Tennessee, Humana was the sole carrier in a significant chunk of the eastern portion of the state. There they offered a single silver which meant the spread between the benchmark Silver and the least expensive Silver was nothing. This struck me as odd in the fall of 2016. It was their universal strategy. Every county where they participated in 2017, they only offered a single Silver plan. If they are either the sole carrier or the least expensive carrier in a county, their strategy actively chose a small and comparatively sick risk pool.
Yes, there is policy uncertainty and the sabotage of the last week of enrollment which decreased the proportion of young people signed up has made 2017 a much harder year for all on-Exchange insurers but a significant chunk of Humana’s problems were self-inflicted.
As a snarky side note, this is how competetive markets are supposed to work — the ineffective and inefficient leave.