The Democratic Trifecta in the House, Senate and White House are gearing up for another major policy legislation writing session with another reconciliation bill that is likely to be more focused on infrastructure than health care. However, it is likely to have a decent size health coverage component. It is extremely likely that good chunks of the policy wishlist will be enacted via reconciliation which has particular rules. One of the rules is that reconciliation bills can not, per Congressional Budget Office (CBO) estimates, increase the deficit in the 2nd decade after it goes into effect. That means permanent policies need to be paid for.
Silverloading is a massive potential health policy pay-for.
Silverloading, for those who don’t follow my obsession, is the response of states and insurers to the decision by the Trump Administration to not directly reimburse insurers for Cost Sharing Reduction (CSR) subsidies that were highly targeted to low income families to reduce their out of pocket expenses for healthcare. These subsidies only applied to families earning under 250% Federal Poverty Level and who bought a silver plan. Silver plans are important as the premium of the second least expensive silver plan sets the affordability benchmark and thus the size of the premium subsidy available to a family.
Silverloading is the process where insurers that are still obligated to offer CSR benefits, to place the cost of those CSR benefits into only the premiums of silver plans. This means not-silver plans (gold and bronze primarily) became relatively cheaper to silver plans for subsidized buyers than they otherwise would have been. This has led to a massive proliferation in zero-premium plans and it acted to support enrollment in a policy environment that was designed to suppress enrollment.
Silverloading is expensive as hell. The CBO, in August 2017, estimated that universal silverloading would like cost the federal government an extra $194 billion dollars from 2018-2027. The CBO estimated silverloading would buy about a million more covered lives per year. This is an expensive way to get some more people coverage. Most of the benefits of silverloading accrued to people who otherwise would have still bought an ACA plan. There may be significant plan switching occurring (Rasmussen et al 2019) in response to a price shock, but most of the benefits go to people who would have bought insurance in the counter-factual of no policy change.
So what does this mean?
Silverloading is likely to be a major component of paying for permanent changes to the ACA subsidy and benefit tables. An explicit appropriation for CSR benefits will “save”, per CBO methodologies, hundreds of billions of dollars over the first decade and even more in the second decade. Those funds can be used to move the benchmark plan from silver to gold. Those funds can be used to top-up CSR subsidies for households earning both over and under 200% Federal Poverty Level. Those funds can be better used. And given CBO scoring methodologies, those extensions can be mostly paid for without significant pain from any stakeholder that may be willing to mobilize in self-interest.
Silverloading is likely to have a short expected life span going forward.
And yeah, I’m support using silverloading as a pay-for because silverloading is an ugly kludge that inefficiently but effectively reset the expectation of what affordability did primarily through the politics of inertia. If there is a better way to spend the same amount of public dollars to deliver more benefits of either or both of lower premiums and less cost-sharing, we should do that. I don’t care that silverloading will have been a major identifying feature of at least half a dozen papers, I don’t care that silverloading is how I got to troll the former president in the op-ed pages of the New York Times. If there is a better way that is legally more stable and far less dumb, we should go that route.
Kent
I thought silver loading meant that the silver plans were the best choice for subsidized shoppers. Your post implies that the gold plans would be the better cheaper choice. We have employee-provided coverage through my wife so I’ve never dug deep into this but am trying to advise my brother as to which plan to get and he will be highly subsidized (just above the 250% limit).
It is hard for me to see all his choices myself without creating an account and logging into healthcare.gov with his info.
David Anderson
@Kent: All else being equal, silver plans with good CSR benefits are usually the better choice for people making under 200% FPL while not silver can frequently be a better choice for people and families making over 200% FPL. These choices will vary by year, geography and individual preferences.
Brachiator
Since there is no longer an individual mandate, what can be done to encourage younger and healthier people to get health insurance? Even a small cost might seem to be too much?
David Anderson
@Brachiator: That is tomorrow’s post —
Mostly going to be behavioral econ and administrative lubrication instead of cash changing hands…. that is my guess.
Brachiator
@David Anderson:
We have an individual mandate in California, but I am not sure how many people knew and signed up. And there are people who have an exemption because of their income, etc. Some of these people could still have a plan with subsidies.
There are a lot of urgent care facilities out here. I get the impression that some people will have health care for their kids, but not for themselves. They see health care not as ongoing, but only as needed. I also think that some people don’t see the value of having a primary care physician for themselves. So again, even if health insurance is available, they resort to an ER or Urgent Care on an “as needed” basis.
So, in a way, health insurance and health care usage diverge to some degree.
Again, I don’t have numbers here, but some of this is based on reviewing tax returns, where for CA you can see how often parents don’t have health care, but children do.
Cassandra (fka mostly a lurker)
I’m not sure I understand which direction you’re arguing for (pro or con cost-sharing silver plans). I currently have a well-subsidized cost-sharing silver plan, and have for several years (my plan isn’t great, because the network is terrible, and the ones with better networks cost much more. But I donhave full Rx coverage with no deductible). Gold plans are all way too expensive. Bronze plans are practically free in terms of premiums, but have such high deductibles and out-of-pocket limits, they’d only be useful as catastrophic insurance, and I’d end up paying way more for my Rxs each month than I do for the premium on my silver plan (I don’t understand how, even with a 0$ premium, they’d be of any use to anyone who can’t first shell out for the $6000 deductible and even higher out-of-pocket). Again, I can’t tell which side you’re taking, but I say cost-sharing silver plans for all. And the state insurance regulators should do more to ensure the networks are real networks (with appropriate board-certified specialists in all fields, instead of networks in name only, where only the worst doctors, willing to accept the cheapest compensation to sign on, join up). I still pay for my own out-of-network GP myself, b/c my plan has no one in its network I’d trust. And I’ve foregone seeing specialists I actually need, because my plan’s in-network ones aren’t board-certified. In the early years, I could afford a cost-sharing silver plan with a good network, but those plans are now out of reach. I did once get a special out-of-network agreement that they’d pay for something medically necessary that wasn’t offered by any of my plan’s in-network doctors. Then, when the bills came in, the plan refused to pay, and I spent a year talking and writing to the hospital, the insurance company, and the state’s insurance regulators before they were made to cough up by the state’s AG insurance regulator. I hope that’s not tmi, but when I think about how much time and effort I spent trying to get them to pay for something they’d agreed in advance to pay for, I’m still overcome with a wave of frustration.
fake irishman
It is simply astonishing how badly the Trump administration’s attempt to blow up the exchanges through killing CSR payments has boomeranged. Never has an administration dunked on itself so much.
Cassandra (fka mostly a lurker)
@Kent: you can preview the plans without creating an account. If the option for that isn’t on the main page, just google ‘preview ACA plans’ and you’ll find the url. Then you don’t have to create an account, just fill in a few basic Qs (corresponding to your brother’s info) and all the available plans, with estimated subsidy, will be available to view.
David Anderson
@Cassandra (fka mostly a lurker): I’m all for CSR-enriched silver plans. I’m just talking about different ways of paying for these plans behind the scenes have very different consequences and the current system is a massive mess that spends a lot of money that could cover more people at the same or better coverage if we did things differently.
Bob Hertz
I could be wrong on this, but didn’t silver loading make plans more expensive for persons in the ACA whose income was more than about 275% of poverty?
If so, what kind of reform is that? Harming people who are barely middle class, but helping the poor and thinking we have done something positive?
It reminds me of the people who were interviewed by Arlie Hochschild in Appalachia about health insurance. They were mad at Obama and jealous of the people who were on Medicaid and faced no deductibles or copays. Comments?