Negative net premiums, MLR and plan choice

I am anticipating significant Medical Loss Rebate (MLR) checks to be written in each of the next three years. I anticipate that some people will be on net, getting paid to buy insurance on the ACA individual market. I am curious if this changes buying behavior.

MLR rebates are calculated on a three year rolling average of total claims plus allowed quality improvement expenses divided by net premiums minus certain taxes and fees. MLR rebates are calculated at during the summer following the end of the last claim year. Right now, 2018 claim rebates are being calculated. Rebates are paid to people who enroll in a plan offered by an insurer that owes during the last year of the calculation period. So that means people who are bought a 2018 plan from an insurer owing rebates that are paid out this month will get a surprise check for their 2018 plans. The rebates are in proportion to the policy holder’s share of premiums. This means that older people, larger families and buyers of more expensive plans will get bigger rebates than a single twenty four year old who bought the cheapest plan possible.

The 2016-2018 MLR period has one year where premiums were significantly below claims and running costs in 2016, a year where the insurers priced things about right in 2017 and a year where insurers significantly overpriced in 2018. Depending on the insurer, the underpricing in 2016 could reasonably cancel out the overpricing in 2018. The 2017-2019 MLR period has one year priced right and two years overpriced. This will produce larger MLR rebates in Fall 2020. The 2018-2020 MLR rebate period also has two overpriced years and one year that may be priced about right.

The 2018-2020 period is likely to produce significant MLR rebates. Those rebates will go to folks who buy 2020 plans. The rebate checks will be written in September 2021. The 2020 open enrollment period is this fall from November 1 to December 15.

An MLR rebate is not bound by the net premium an individual pays. Many individuals from 2018 to 2020 will be exposed to plans that have zero net premium after advanced premium tax credits are taken into effect. Some proportion of this universe will be living in counties where there is a either a zero net premium plan available OR a plan that only costs a couple of bucks per month after subsidy and before MLR rebates. Some number of folks will be in counties where there is a low or no premium plan being offered for their income/family size cell by an insurer that is likely to pay out large 2018-2020 rebates. Depending on the size of those rebates, buyers will be exposed to effectively negative premium plans. This is weird!

The negative premiums are not immediate. People would still have to transfer money from their bank account to the insurer in December 2019 for coverage in January 2020 and pay thoughout the year. But they would get a refund check greater than their total premiums in September 2021.

I wonder if this fleeting situation will influence buying behavior? I wonder if it influenced buying behavior at during the 2019 Open Enrollment Period? I think it requires someone who is far in the weeds or at least is engaged with a navigator or an agent who is down in the weeds. But in some counties for some people, the MLR regulations will interact with the subsidy formula that has been beefed up due to CSR termination to create situations where going without insurance will be more expensive than acquiring insurance.