Yesterday, we briefly talked about Delaware receiving approval for a 1332 reinsurance waiver. This waiver will reduce non-subsidized premiums. It will make insurance for folks earning above 400% FPL more affordable. State regulators expect a 20% decline in premiums. Some of that decline is from the state funding and some of it is from reduced federal spending on premium subsidies for the 138-400 percent FPL population. Reinsurance, all else being equal, helps the unsubsidized and hurts the subsidized.
However, Delaware has an opportunity to both help the non-subsidized and subsidized. In 2019, the state is a monopoly market. The single insurer has three silver plans offered. The 2019 spread between the least expensive silver and the benchmark silver is $25 for a single, non-smoking 40 year old. The spread between the most expensive silver plan and the cheapest silver plan is $55. Next year, assuming a uniform 20% reduction in premium and no other changes, the relevant spreads are $20 and $44.
This is an opportunity.
|State||County||Metal Level||Issuer Name||Plan ID||2019 Premium||2019 Premium Spread||Projected 2020 Premium||Projected Premium Spread||Included for Max Spread||Projected Max Spread|
|DE||Kent||Bronze||Highmark BCBSD Inc.||76168DE0410018||$449.00||-$235||$359||-$188||Yes||-$212|
|DE||Kent||Expanded Bronze||Highmark BCBSD Inc.||76168DE0410010||$478.00||-$206||$382||-$165||Yes||-$189|
|DE||Kent||Silver||Highmark BCBSD Inc.||76168DE0420004||$659.00||-$25||$527||-$20||Yes||-$44|
|DE||Kent||Gold||Highmark BCBSD Inc.||76168DE0410012||$672.00||-$12||$538||-$10||Yes||-$34|
|DE||Kent||Silver||Highmark BCBSD Inc.||76168DE0410013||$684.00||$0||$547||$0||No|
|DE||Kent||Silver||Highmark BCBSD Inc.||76168DE0410020||$714.00||$30||$571||$24||Yes||$0|
|DE||Kent||Platinum||Highmark BCBSD Inc.||76168DE0410021||$780.00||$96||$624||$77||Yes||$53|
If all else is being held equal, Highmark and state regulators could continue to increase affordability for the unsubsidized population while also removing most of the increased net premiums paid by elements of the subsidized population. The way to do this would be for Highmark to not offerthe middle priced silver plan that is the current benchmark. Doing that would make the least expensive silver plan significantly cheaper for subsidized buyers and the sole gold plan slightly less expensive in 2020 for subsidized buyers than it was in 2019. Bronze buyers would still be worse off if the buyers earned between 200 to 400 percent FPL.
There are several states and sub-state markets where there is a monopoly insurer offering more than two silver plans where spreads can be increased to increase affordability for the subsidized. When these policies are combined with reinsurance, it is almost a no lose situation for all people who are looking to buy insurance on the exchanges.