Margot Sanger-Katz has an excellent rundown of all the ways that the Trump Administration is working to make the guarantee issued, community rated individual insurance markets of the ACA work less well or fail completely. She raises one point that I want to expand on:
The administration has left one more potential disruptive option on the table. Last year, when President Trump canceled a disputed set of payments to insurers, state insurance regulators allowed the health plans to shuffle around prices to absorb the loss. In a call with reporters Monday, Ms. Verma said her agency was considering barring that practice. Without the price adjustment, consumers in the Obamacare-compliant market will have a harder time finding an affordable plan.
This is in reference to Silver Loading.
CMS can make a rational argument that loading CSR costs onto only Silver should not happen for public policy grounds. Silver Loading costs the federal budget serious money through much higher benchmark premiums and also higher enrollment because Bronze and Gold plans become comparatively much cheaper for subsidized buyers.
Silver loaded states tended to do better than other states on enrollment for the 2018 open enrollment.
There would be two major questions. First, what would the alternative be? And secondly how does that alternative play on the Off-Exchange only market?
The alternative would most likely be a Broad Load scenario. Last year, six states applied a uniform percentage surcharge to all plans. This meant that against a counterfactual of regular and ongoing payment of CSR, Bronze plans were less expensive than they would have been for subsidized individuals and Gold plans would be more expensive. If states that are currently using Silver Load strategies are forced to go to a Broad Load strategy, Gold plans become very expensive for subsidized buyers and Bronze plans are less likely to be zero premium plans after subsidies are applied. We should expect an additional 2% to 3% drop in enrollment from on-Exchange buyers in Healthcare.gov states due to this change.
The next question is how would this work off-Exchange? States that Silver Loaded in 2018 made sure that off-Exchange buyers who purchased Bronze or Gold plans were not touched by the CSR pricing shenanigans. Some states used Silver Switch strategies where near-clones of on-Exchange Silver plans were offered Off-Exchange without CSR being built into the pricing. This held the entire off-Exchange market harmless.
I think CMS has a harder public policy interest argument against banning off-Exchange only plans from not incorporating CSR costs into the plans as there is not billions of federal subsidies at stake. Off-Exchange plans by definition are unsubsidized. So if this assumption is right, then the off-Exchange market bifurcates completely into plans that are offered on and off-Exchange with a Broad CSR load built into all premiums and then off-Exchange only plans that have a significant pricing advantage.