An open letter to insurance commissioners regarding baseline maximization

To any Insurance Commissioner:

This is an open letter to insurance commissioners who believe it is their legal and moral duty to protect the citizens of their state in the face of increasing policy uncertainty.  I strongly urge that the following actuarial guidance be sent to all carriers that are considering submitting rates for the individual market for the 2018 rate year as this will provide significant protection for subsidized individuals in 2018 and potential long term insulation from several of the policy changes that are currently being debated in Washington.

“All carriers that wish to submit rates for qualified health plans for the 2018 shall use the assumption for all on-Exchange plans that the individual mandate will not be enforced.  An alternative secondary submission shall be prepared with the assumption that there is no material change in the enforcement of the individual mandate.”

Furthermore, states should seek to reduce the number of plans that are offered, approved and authorized for sale on Exchange, specifically on the Silver metal band.  Increasing the difference in price between the least expensive Silver plan on the Exchange and the second least expensive Silver plan will lead to far lower post-subsidy premiums and a healthier risk pool.  

These strategies will help protect residents and citizens of your state in 2018 within the current uncertain political and policy environment.  This protection emerges from two directions.  First it will give permission to carriers to realistically budget and plan for the next plan year which should increase the probability that carriers will offer plans in all markets even if there are significant rate increases needed to counteract any potential off-Exchange death spirals in the non-subsidized portion of the individual common risk pool.

Secondly, there are several bills that are being mooted about that seek to block grant future health insurance subsidies on a state by state basis where the baseline for the funding will be CBO projected subsidy spending under PPACA as it is currently written and implemented.  If the law is changed to reflect this, it is in the best interest of your state to have as high of a baseline as possible in order to guarantee the best coverage for as many of your citizens as possible.  If your department determines that the individual mandate enforcement is not certain and authorizes very large premium increases for on and off Exchange plans this summer, the baseline spending allocation will be significantly higher for your state than if you authorize very low rate increases which could lead to carriers withdrawing en masse which would be a human tragedy in 2018 with decades of repercussions.

Aggressively asking for actuarial sound scenarios will further your charge to protect your state’s insurance market and citizens.  






7 replies
  1. 1
    Kristine says:

    Increasing the difference in price between the least expensive Silver plan on the Exchange and the second least expensive Silver plan will lead to far lower post-subsidy.

    Is there a word missing at the end of the sentence?

  2. 2
    StringOnAStick says:

    Can I copy this and send it to my state insurance commissioner, credited to you? Also, I was at an event for the Colorado Consumer Health Initiative, can I forward it to them as well, obviously credited to you as well?

  3. 3
    WereBear says:

    You need a catchier title. :) Otherwise, well done!

  4. 4
    Kristine says:

    @WereBear: I think that counts as a catchy title for insurance folks. :-)

  5. 5

    @Kristine: Updated… and thank you

    @StringOnAStick: Yes, please use this in whatever manner you think will be helpful.

  6. 6

    @Kristine: “Hookers and Blow-“out” was the alternative title

  7. 7
    Villago Delenda Est says:

    Richard/David, great letter! I know this will be well received here in blue Oregon, but how about in bleeding Kansas? The idea that public officials should work in the interests of the public is an endangered one in some states. This pisses me off no end. What’s this? Attempting to reduce FUD? Not the modern business way! More FUD, more profit! Profit is everything, especially short term!

    We need more good people like you in positions of authority.

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