It seems that Senators Alexander (R-TN) and Murray (D-WA) have most of an agreement together on appropriating CSR funds and tweaking elements of the ACA.
One of the tweaks is expanding access to Catastrophic plans. Catastrophic plans can not currently receive premium subsidies. I had been scratching my head on this for a couple of days as Catastrophic plans are currently sold to people under 30 or have a hardship exemption. It has a similar to Bronze actuarial value. A standard Catastrophic plan has $7,150 deductible with 3 PCP visits covered before the deductible has to be paid.
This is a risk adjustment play to lower premiums.
Rebecca Stob, a health insurance actuary who wrestles with risk adjustment every day lays out the mechanical implications:
Rates use same index rate but there is an additional discount based on the "eligibility criteria" of Catastrophic plan
— rebeccastob (@rebeccastob) October 17, 2017
Right now in the ACA there are two distinct risk adjustment pools. The catastrophic pool shifts money between catastrophic insurers. The money is mostly covering healthy and young people. The other risk adjustment pool is the Metal pool. Bronze, Silver, Gold and Platinum buyers are all shifting money amongst the plans. Typically Bronze plans will send a significant proportion of total premiums into the risk adjustment pool while Gold and Platinum plans will be net recipients of risk adjustment funds.
IF the Catastrophic concession is to open up Catastrophic plans to all ages and includes APTC subsidies while not integrating Catastrophic into the common risk adjustment pool, we get a quasi-split risk pool. Very few people will buy Bronze plans as Catastrophic will be cheaper as the Catastrophic plans won’t be sending money to the Silver-Gold-Platinum plans while Bronze plans have to cover their own medical costs plus kick money into risk adjustment outflows. Few Bronze buyers means the Silver-Gold-Platinum plans all get more expensive as they will be receiving far less risk adjustment money coming from Bronze plans.
The Catastrophic pool will still be fairly healthy as the $7,150 deductible is scary to anyone with a chronic condition but premiums will be low as the pool just needs to cover their own costs without funding risk adjustment outflows to cover sick people in Silver-Gold-Platinum.
From a distributional point of view, this is good for healthy subsidized and non-subsidized buyers, no significant change for subsidized CSR buyers, slightly worse off for subsidized Gold and Platinum buyers as the relative price spreads will increase, and bad for non-subsidized metal buyers. It might be a net improvement for non-subsidized but very high cost buyers with severe medical conditions as they were always guaranteed to hit the Out of Pocket Max in any scheme but premiums might drop enough.
Update 1 If I had to vote on this legislation, based on the reporting of the past couple of hours, and with the proviso that I actually need to see the text, I would be a yes with at most modest grumbling.