Morning thoughts on Alexander-Murray

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 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.

Final Thoughts
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.

14 replies
  1. 1
    dr. bloor says:

    I imagine you saw this in the Washington Post last night. I wouldn’t be so sure that your hypothesis about no CSR in 2019 won’t be put to the test.

  2. 2
    Betty Cracker says:

    Politically, this seems like a loser for Republicans either way. If this passes, it’ll be on the strength of Democratic votes, and Bannon’s “army” of RINO-hunters will go after every Republican who voted for it as an “Obama-lover” (what a handy dog-whistle!). If it fails, even more market turmoil ensues.

  3. 3
    Anonymous At Work says:

    I actually like the Governor Waiver provision, as too many governors want to expand Medicare but can’t get their legislature of car dealers, pastors and corporate attorneys on sabbatical to approve of it. Arkansas has had a number of issues over the years with expanding, with waivers, only for the next and more radical legislators to pull the plug, or nearly.

  4. 4
    Rick Gundlach says:

    What I worry about now, is that in states that implemented what is known as “Silver Switcheroo” among ACA observers, Congress turns around and funds CSR AFTER people have selected new, non CSR supported, policies.

    Whatever Silver plan becomes the 2018 benchmark as “second lowest cost Silver” for the Advanced Premium Tax Credit is something is something that will have happened by the time this bill is passed by both houses and presumably signed by Trump. If this allows withdrawn Silver plans to be offered anew, does it change the benchmark? That will mess with ACA participants taxes seriously. Will the government claw back the difference? Will it allow a later selection of a different plan?

    Administratively, they are probably better off letting 2018 go without CSR, and putting the money in for 2019. But then, there is a record of 2018 to argue for or against the CSRs. And the CSR extension would just be for one year, not two, making the return of CSR seem that much more unusual.

  5. 5

    @Betty Cracker:
    There is a sea change going on in Congress, but I don’t know what it is, so it’s hard to guess the effect. I suspect two factors, but they’re both guesses. First, the primary threat is losing its power. By now, everybody knows who is in danger and who isn’t, and the crazies will primary them anyway so there’s no point in catering to them. Obviously, this only affects part of the caucus, but easily enough to restore basic sanity. Second, it’s personal. They hate McConnell, dislike Ryan, and absolutely ‘would spit in his face’ loathe Trump. They have no desire to march to the drummer leading them off a cliff anymore.

    This is all speculation, and the big problem is that I see no sign that world class asshole and bigot McConnell, and Randian zealot Ryan, want any part of sane government. They can and will keep blocking it. Meanwhile, the House has gone back to symbolic votes because they know the Senate won’t pass anything.

    Those are just speculations

  6. 6
    Anonymous At Work says:

    @Frankensteinbeck: Good point. Republicans are learning what Democrats, maybe, somewhat, have learned from the Aughts: Everyone’s a target and playing soft or nice will invite just as many and as vicious attacks as fighting back.

  7. 7

    @Rick Gundlach: If this was signed into law this afternoon, insurers might have enough time to refile rates. However if it was not signed into law by early November insurers would ride their CSR rates for the year as the risk pool composition would have been determined by people sorting themselves by those rates.

  8. 8
    Eric NNY says:

    Good run down. Thank you David.

  9. 9
    Betty Cracker says:

    Well, Trump tweeted a little while ago that the bill is a giveaway to insurance companies, so I guess that’s that. Christ on a crumpet.

  10. 10

    @Betty Cracker:
    Trump’s tweets are meaningless and he folds like his cheap suits. He might veto, but I’d put the odds against.

  11. 11
    rikyrah says:

    Thanks for the thoughts Mayhew.

  12. 12
    Victor Matheson says:

    “I would vote for this bill if I was in the Senate.”

    That’s pretty much the main thing I need to read, Mayhew.

  13. 13
    Rick Gundlach says:

    @David Anderson: This is actually what I’m hoping happens. Any adjustment to ACA happens after the 2018 season is in place, and therefore whatever changes or “restorations” occur do so in an environment that whatever is going on right NOW stays in place. Too many headaches!

  14. 14
    Beautifulplummage says:

    I don’t comment much but I read your posts and really appreciate your time spent on here. Thank you.

    The small company I work for is waiting to hear back on plans for 2018 & we have no idea what to expect in the way of premium increases.

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