Caitlin Owens at Axios was able to get the text of Alexander-Murray and we’ll go through it. Analytically, the most critical thing in the bill is that the Copper/Catastrophic expansion is a risk adjustment play. Before we dive into the details, I want to make a couple of general points.
First, I still think that the relative balance of leverage could have made CSR payments a non-issue. Insurers (except in North Dakota) had been able to price the costs into their premiums and this would have led to much lower net of subsidy premiums for a lot of buyers. Secondly, this is a bill for 2019 not 2018. Finally it is nice to read a bill that actually grapples with health financing and health insurance.
Let’s get into this:
Section 2: 1332 waiver applications don’t need state legislature approval as a federal requirement. Governors can submit their own waivers. If state legislatures want to constrain their governor, they can but not a requirement. 2-B I think allows Basic Health Plan (Section 1331) to play nicely with Section 1332 waivers in matters of financing. It fixes the Minnesota BHP problem with their reinsurance waiver.
Section C changes the affordability guard rail. The criteria is now “comparable affordability.” I will be really curious how HHS defines “comparable.” I think that this is aimed at the revised October 5th version of the Iowa waiver which included CSR subsidies for people under 200% FPL and could probably wiggle into a 73% AV comparable approval. 2-C-2 allows for a broader definition of budget neutrality as it allows for interaction effects.
2-D speeds up the approval process for waivers. All waivers shall be reviewed within 90 days. Waivers that address bare counties OR are copy and paste clones of other already approved waivers will be reviewed within 45 days. Regular waivers are in effect now for 6 years instead of 5 years. The waivers still can be yanked if it is being used to purchase cocaine and hookers. CMS is to build model waivers that states can grab for off the shelf application.
Section 3 CSR Payments CSR would be paid from the date of the signature on the law to 12/31/19. Insurers would eat October 2017 losses at the very least and would need to go to court.
3-B is the consumer benefit/anti-double dipping chunk. There is a plan in place to make sure that insurers won’t both get increased premiums AND CSR payments. There is a rebate schema. I am glad that I don’t work in an insurance finance department is my first thought.
Section 4 Copper Plans
This modifies Section 1302-E of the ACA. Section 1302-E addresses Catastrophic plans. Section 1302-D defines the Metal plans. There is an amendment to Section 1312 that I am not sure of what it does regarding risk adjustment. 1312 is the single risk pool requirement. Catastrophic plans are currently tied to the index rate but not the risk adjustment.
I thought yesterday that the Copper plans/expanded Catastrophic were a risk adjustment play. I am convinced that this is the case right now. I do not think it is Congress’s intent to create two flavors of Catastrophic, one tied to Metal risk adjustment and one that is not. As long as Catastrophic has a distinct risk-adjustment process, this section makes sense as a means to lower premiums. If Catastrophic is only part of the Metal risk adjustment process, Catastrophic becomes a funny looking Bronze plan with no pricing advantage.
Section 5 — Outreach
The Senate wants to know what is going on with outreach and it wants bi-weekly reports. The only downside is that Charles Gaba might be a bit less busy. States will be able to use the Healthcare.gov user fees to do outreach. This is a good start, the big issue is timing.
Section 6 Multi-state plans
New regulations for Section 1333 (Interstate Compacts) are to be issued within a year. This is a provision of the ACA that has been slow-walked for years. States would have to affirmatively opt-in to the interstate compacts so it will prevent a race to the bottom.
I really want confirmation or an argument against Catastrophic health plans as a risk adjustment play. That I think is the subtle big change in the bill. Otherwise, everything in here makes a good deal of sense. The Senate actively wants to see implementation and outreach continue. They want to make things work reasonably well. I still think that CSR did not have to be funded. I think 2018 is going to be a mess no matter what but in a no CSR funded universe, 2019 would be a universe with lower premiums and lower deductibles for more people. But that was a minority argument that seldom got much traction, so I lost it. I would vote for this bill if I was in the Senate.