CSR and the limited time fuse on it

Politico reports that President Trump is itching to stop paying the Cost Sharing Reduction subsidies for on-Exchange policies bought by people with incomes between 100% to 250% Federal Poverty Line (FPL).  This is a threat with a limited time frame.

President Donald Trump has told advisers he wants to end payments of key Obamacare subsidies, a move that could send the health law’s insurance markets into a tailspin, according to several sources familiar with the conversations.

Many advisers oppose the move because they worry it will backfire politically if people lose their insurance or see huge premium spikes and blame the White House, the sources said. Trump has said that the bold move could force Congressional Democrats to the table to negotiate an Obamacare replacement.

This is a time limited threat.  It is obviously a time limited threat for insurers have been stating that they are usually filing with the assumption that CSR will be paid for 2018, they reserve the right to refile under a variety of assumptions and attribution methods if CSR goes for 2018.

More subtly, let’s imagine that CSR has been paid through November 30th.  If they were not paid in December, the carriers would have to use their reserves to cover the expenses but insurers would not flee the market before the end of the policy year.  They might be able to reprice their 2018 policies based on the lack of the regular, early notification of accounts payable that they get before the CSR money is actually transferred in mid-December.  They would take a hit, but it would not be a show stopper.

Moving to payment through Halloween but no payment for November and December, most insurers would have sufficient reserves to eat the loss and re-adjust their prices for 2018 while their lawyers get warmed up.  Moving back another month, thinly capitalized insurers will start being in trouble as they may be hitting a Premium Deficiency Reserve (PDR) event that threatens their Risk Based Capital (RBC).  At that point, some state regulators would be forced to either shut down insurers or allow insurers to terminate the CSR policies immediately.  Well capitalized insurers could survive longer and jack up their rates for 2018 with state support.

The CSR threat loses its ability to blow up the market by sometime in the fall.

18 replies
  1. 1
    NCSteve says:

    Assuming that Trump understands any of that and can be made to understand any of that is so far beyond ridiculous that it almost represents the kind of implicit Trump normalization that NPR has been doing since January. He doesn’t know, he refuses to understand, he won’t care. He thinks hurting millions of people who aren’t all weak and powerless will give him a Win, bigly and nothing will change that, other than convincing him people will rightfully blame him and hate him for it.

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  2. 2
    hovercraft says:

    I keep thinking they can’t be crueler, but somehow they keep managing to top themselves.

    Thanks for the update, come join the hatefest downstairs.

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  3. 3
    mainmata says:

    Trump really has no sense of what is realistic in politics. Threatening to blow up the health insurance system one way in order to induce Democrats to negotiate with the GOP on how to blow it up another way is just stupid; Democrats won’t do it. It would be political suicide. Besides, Kornyn’s decided that he just wants the GOP to redesign Trumpcare. Anyway, after the latest NYT breaking news, Trump needs to focus on his political life, at this point.

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  4. 4
    Jim, Foolish Literalist says:

    this might complicate any moves against CSRs also

    Noam Levey reports an example of this already happening. The thrust of Levey’s story is focused on the belief by insurers that uncertainty fostered by the Trump administration is killing health-care exchanges. Deep in the piece, Levey describes a Trump staffer threatening to withhold cost-sharing-reduction payments, called CSR, which are a vital part of making individual insurance profitable. “At one recent meeting, Seema Verma, whom Trump picked to oversee the federal Medicare and Medicaid programs, stunned insurance industry officials by suggesting a bargain: The administration would fund the CSRs if insurers supported the House Republican bill to repeal the Affordable Care Act,” reports Levey.

    one more thing to put on the January 2019 to-do list

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  5. 5
    TenguPhule says:

    Someone is going to get killed if the CSR gets blown up.

    Trump thinks this is fine as long as its not him.

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  6. 6
    hovercraft says:

    @NCSteve:
    He may not have understood what the implications were after someone whispered in his ear that this was they way to go, but in trying to discourage this route, they did explain to him that many people would lose their coverage and he doesn’t care because all he sees is getting his own way, those people are just leverage to him.

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  7. 7
    Miss Bianca says:

    @mainmata:

    Trump really has no sense of what is realistic in politics. Threatening to blow up the health insurance system one way in order to induce Democrats to negotiate with the GOP on how to blow it up another way is just stupid; Democrats won’t do it.

    It makes as much sense as expecting that telling the Russians how much pressure he was under from the investigations was somehow going to get him some kind of props from them.

    *This* guy is “a negotiator”? THIS guy? Jesus, my dogs could “negotiate” getting a bone away from a coyote better than this guy!

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  8. 8
    Brachiator says:

    @hovercraft:

    I keep thinking they can’t be crueler, but somehow they keep managing to top themselves.

    This is on Trump. This goes beyond the “typical Republican.”

    @mainmata:

    Trump really has no sense of what is realistic in politics. Threatening to blow up the health insurance system one way in order to induce Democrats to negotiate with the GOP on how to blow it up another way is just stupid

    I am not sure that this is any kind of Trumpian political calculation. He sent out a Twitter message about his power to kill Obamacare earlier, totally unconnected to any message to the Democrats. This reminded me a bit of his earlier warning message that the Freedom Caucus had made him look bad by scuttling a vote on health care earlier.

    Trump has this thing, a really ego thing, for wanting to get his way. He may have advisors urging him to go slow on this, but he may go ahead and do something stupid to blow up the Affordable Care Act before the Senate ways in.

    The other thing that is clear is that he doesn’t care at all about his promise to repeal Obamacare and replace it with something better. He is bored with health care now. He never paid any attention to details, and clearly doesn’t have the slightest clue about how to craft a health care plan. He is not even following any of the Republican fantasies about competition driven cross-state plans or much of anything significant. There is only his desire to have an ego stroking opportunity where he can pull out a shiny pen and sign something.

    But the other side of this is an irrational hatred of Obama and a burning desire to eradicate every iota of the Obama legacy (and that of earlier Democrats) and to replace everything with something tacky labeled “Trump.”

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  9. 9
    Redshift says:

    Yet another round of “drink this poison or I’ll shoot you” negotiating.

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  10. 10
    Julie says:

    OMFG, the guy is insane. Just this morning I read a letter from my insurance company to the state insurance commissioner basically saying that if the federal government ends their commitment to CSR payments, they will withdraw from our state’s market IMMEDIATELY. Meaning, I and a whole bunch of other people will be screwed. Unbelievable.

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  11. 11
    Betty Cracker says:

    Did anyone notice that Trump brought up Obamacare during the press conference with the Colombian president yesterday and once again said “Obamacare is dead” with creepy intensity, a proclamation he repeats at every opportunity? It’s personal to him.

    Trump doesn’t have the foggiest notion how any of this works, but he’s desperate to kill Obamacare, even though he says it’s already dead. He doesn’t care if the Freedom Caucus suicide bombs it and Republicans lose congress as collateral damage. He doesn’t care if the so-called moderates tinker on the edges and re-brand it, as long as he can call it a “win.”

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  12. 12
    Patricia Kayden says:

    Disgusting. Absolutely disgusting. Democrats don’t owe Trump a damn thing. The only negotiations about healthcare that Democrats should engage in with Trump are those to strengthen the ACA. That’s it.

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  13. 13
    Patricia Kayden says:

    @Betty Cracker: He hates President Obama because he knows that Obama’s spit has more dignity and worth than he’ll ever have so of course he’s itching to destroy President Obama’s signature achievement. Rethugs hate President Obama as much so we’ll see if they push the AHCA through Congress by the end of Summer. They could care less about the millions of Americans who will lose healthcare coverage by their actions. As long as the wealthy get a huge tax break, Rethugs will celebrate.

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  14. 14
    Another Scott says:

    @Miss Bianca: BBC:

    I asked Mr Trump’s British-educated counter-terrorism adviser Sebastian Gorka whether the celebrity real-estate mogul-turned-president had the right qualifications for such a task.

    “We have in the commander-in-chief, in the president, truly the master of the deal,” he said.

    “This is a man who spent 50 years negotiating – if there’s anyone who can bring stability and peace it is Donald Trump.”

    So on the one hand you have a deal over the price of a piece of real estate in New York. On the other, intractable disputes that go back thousands of years over the right of return of refugees, final status for Jerusalem, whether to negotiate with Hamas, and on.

    “I don’t think it’s not just a question of doing real estate deals,” said Mr Gorka. “This is a man who didn’t just do deals, he was monumentally successful in the hardest market in the world – Manhattan real estate. And at the end of the day, deals are about human beings.”

    Success is unquestionable with Donnie on the job!!11

    :-/

    They’re all delusional and think we are too.

    Cheers,
    Scott.

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  15. 15
    Miss Bianca says:

    @Another Scott:

    Black Knight: I AM INVINCIBLE!

    King Arthur: You’re a loony.

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  16. 16
    Jim, Foolish Literalist says:

    @Betty Cracker: once again said “Obamacare is dead” with creepy intensity, a proclamation he repeats at every opportunity? It’s personal to him.
    , as long as he can call it a “win.”

    probably a dead thread, but… yeah. He wants to be able to say he beat Obama. His fantasies of dominance and victory underlie everything.

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  17. 17

    Reportedly, he’s ready to do it Monday, see http://www.politico.com/story/.....ies-238616.

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  18. 18

    I have family who have recently had an income change that will take them out of Medicaid, and were about to report it. What would be their best course of action?

    ReplyReply

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