Just a few things in the swirl of chaos that I was aware of but did not have the time nor the inclination to write about as the news was breaking:
Let’s look at these four things below the fold as it is a wall of wonky text:
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.
“It made no sense,” said one official at the meeting…
Trump administration officials denied Verma suggested the administration would fund the CSRs.
I am curious about a few things on this alleged offer.
- Are there contemporaneous notes/memos/summaries of the meeting and alleged offer in the files of multiple insurers?
- Has the HHS Inspector General been made aware of this allegation?
- If this offer was made why did Verma think it was a good deal?
- That last point is purely a cynical point. The AHCA takes out ~$850 billion dollars from Medicaid over ten years. Over 70% of Medicaid is administered by private insurers. Medicaid managed care is profitable. Medicaid managed care is fairly predictable. A decent MCO should make 2% to 4% a year on this line of business. Exchange is much smaller than Medicaid managed care. Cost Sharing Reduction subsidies is an even smaller of the individual market revenue pool. So the deal is take a small pool of money for a still uncertain line of business in exchange for supporting very significant cuts to a steady, profitable business segment. Why is this a plausible deal?
2) AHCA still has not been transmitted to the Senate according to Bloomberg.
@MEPFuller it’s more about distribution of the savings. HELP and Finance EACH need $1B. stabilization funds are under HELP
— Zach Moller📊📉 (@econwonk) May 18, 2017
There are several issues going on with the AHCA that are reconciliation rule related. First it needs a Congressional Budget Office (CBO) score. That should come next week. The CBO score needs to show that the bill fulfills reconciliation instructions. Those instructions are that the bill must save at least $1 billion dollars over ten years from two Senate committees; Health, Education, Labor and Pensions (HELP) and Senate Finance. This is the $2 billion dollars that Matt Fuller references. Secondly, the CBO must show that there are savings in the years after the close of the budget window.
The big question is how will the CBO model the uptake of the MacArthur waivers. If they model that very few states use them, then the score will work. If the CBO models the waivers will be broadly used and this leads to a lot of people to use waivers to buy very skimpy plans then the budget cushion from the first version of the AHCA get eaten up very quickly. Jed Graham noticed this in March:
the GOP bill would mostly retain ObamaCare coverage rules, insurance would be unaffordable for lower-income and older adults with the new, smaller tax credits on offer, so some 30 million people wouldn’t claim the GOP tax credit averaging $3,000 in 2020 and rising with inflation. That would add up to more than $600 billion in unclaimed subsidies through 2026, or roughly the same $600 billion amount by which House Speaker Paul Ryan’s plan cuts taxes. Those unspent subsidies go a long way to explaining why CBO found that the American Health Care Act would reduce deficits by $323 billion over a decade.
Every additional person who is insured because the premiums for the healthy are cheaper makes the CBO score worse. If five million more people at an average subsidy of $3,000 per year buy insurance because of the MacArthur waiver, the ten year increased spending on age based subsidies basically wipes out the deficit reduction. At that point the House Republican options are to let the bill die, reduce subsidies or delay/decrease the tax cuts.
We don’t know how the CBO will score this bill nor how they will model the MacArthur amendment.
The other major reconciliation landmine that is being probed for now is the committee of jurisdiction problem. Chris Jacobs, a conservative procedural expert explains:
violations of the third (material outside the jurisdiction of committees charged with reporting reconciliation legislation) and sixth (changes to Title II of the Social Security Act) tests are fatal to the entire bill.
Given that the AHCA was put together on an ad-hoc basis, a very thorough review of the bill for committee of jurisdiction problems is probably ongoing.
If there is either a bad CBO score on one of three fiscal grounds (insufficient savings to HELP, insufficient savings to Finance, deficit increases in out years) or a reconciliation committee of jurisdiction problem identified, the bill dies in the Senate if the Senate has received it. The reconciliation instruction for the fiscal year would be burned. So by not submitted the bill for consideration in the Senate, the House is keeping its options open.
I have no ability to evaluate the probability of either a CBO or a reconciliation problem. My guess is the combined probabilities leading to new vote in the House is very low but non-zero.
3) Defending Joe Lieberman
This doesn't get much attention, but Joe Lieberman blocking public option is largely responsible for today's exchange plan premium hikes.
— Dylan Matthews (@dylanmatt) May 18, 2017
@dylanmatt Please explain. Public option would insulate against no carrier counties but not against CSR sabotage nor mandate non enforcement morbidity
— David Anderson (@bjdickmayhew) May 18, 2017
The version of the public option that was plausible was one which was not tied to Medicare rates. Instead it would need to negotiate with providers. If it was backed with significant federal funding to cover operational losses in the first few years, it would solve one significant problem. It would be a solution to the no insurer in a county problem. It would still be at risk due to morbidity concerns that we talked about yesterday, it would still be at risk due to CSR worries. It’s premiums would also be tracking the same general direction and level as the premium increase requests that we are already seeing.
4) Senator McCaskill’s DC Exchange bill for no insurer counties
McCaskill’s legislation would allow individuals in “bare counties”—counties with no insurers participating in the individual insurance marketplaces—access to the same insurance plans offered to members of Congress and Congressional staff….
This is great politics. It sounds like a viable solution. And if this was signed into law in December 2016 or January 2017 it might work. The Washington DC SHOP exchange is where Congress and their staffers can use their Federal Employee Health Plan employer contribution as a subsidy to buy a subsidized health care plan. Since Capitol Hill employs lots of people who live all over the country, the SHOP plans tend to have fairly broad (and expensive) national networks.
This is not a viable solution for 2018.
The insurers that are prepping their rates for SHOP at this time are basing their rates on insuring small business in Washington DC plus Congress and their staff. That is a predictable risk pool that they know. This proposal is a massive curve ball to their projections and their products. They might have to cover 50,000 lives in Tennessee; they won’t know that until after every insurer in Tennessee files and makes a firm commitment. They might have to cover 100,000 lives in Texas. They won’t know that until September. They might have to cover a single county in Alaska. They won’t know until September.
If I was an actuary working for an insurer that is on the DC SHOP exchange and I saw this proposal, I would immediately find a pint of Ben and Jerry’s, go to the corner, curl up in a ball and eat my fear away.
This sounds like a good idea. It is a simple, elegant and wrong solution to a real problem.