The billion dollar counterfactual

New York and Minnesota both run Section 1331 Basic Health Plans for people who make between 138% and 200% Federal Poverty Level (FPL) ($16588-24,040 for a single individual). This is an option from the ACA. The states filed a waiver that passes through 95% of the combined Advanced Premium Tax Credit (APTC) and Cost Sharing Reduction (CSR) that individuals would otherwise be entitled to. These states use this money to basically create an enhanced Medicaid program for this cohort. It provides lower premiums and lower deductibles than Exchange plans because these plans pay doctors and hospitals less.

New York and Minnesota approved rates for 2018 ACA plans on the basis of the actual risk pool. This means their ACA markets have a very small component of people who qualified for Silver plans with CSR. The weak Silver CSR bumps Silver plans from 70% nominal value to 73% actuarial value. Silver loading in these two states added an extra point or two to the rates. Similar states without BHPs added twenty or more points to their rates to cover the cost of CSR in the index rates.

The Trump Administration stopped paying CSR in October. The Trump Administration contends that the BHP payments should be reduced to the proportion of the BHP funding that could be directly attributed to APTC. This is leading to a billion dollar short fall in 2018 for the New York Essential Plan and a $100 million dollar or more gap for Minnesota.

And then the one thing that I am sure about the ACA occurred: There will be lots of lawyers. New York and Minnesota sued.

New York and Minnesota tried to file revised, Silver loaded rates as if their entire population was on the Exchange instead of in the BHP. They believe that the BHP calculation is based on the counterfactual of what would happen if the entire population was on Exchange. And from here, they estimate that if CSR had to be built into the rates, they would Silver Load and see a 20%-25% increase which would bring them even on net.

The Center for Medicare and Medicaid Services (CMS) did not respond to this argument. Instead they are acting as if BHP funding is based on the actual and thus there is a billion dollar hole in the New York budget. From 2014-2017, the counterfactual and the factual are very close to each other and not worth fighting about.

I think BHP funding is based on the counterfactual. Here is the 2018 regulation for BHP funding:

Section 1331(d)(3)(A)(ii) of the
Affordable Care Act specifies that the payment determination shall take into account all relevant factors necessary to determine the value of the premium tax credits and CSRs that would have been provided to eligible individuals, including the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a qualified health plan through an Exchange, and whether any reconciliation of PTC and CSR would have occurred if the enrollee had been so enrolled. This payment methodology takes each of these factors into account. [my dual emphasis]

“Would have been provided” implies a counterfactual. We are supposed to imagine the New York and Minnesota markets as if there was no BHP. From here,a projection of premiums is made. And from that premium projection, the number of people who earn between 138% and 200% FPL is calculated. That number is then discounted by 5% to act as the maximum pass-through to the state for their BHP.

“individuals” is the second key word. Everyone agrees that the individual is entitled to CSR benefits. The federal government has argued in court that Silver loading is an acceptable practice if insurers are not to be reimbursed for CSR benefits to individuals.

New York and Minnesota are arguing that they were not treated fairly by CMS compared to all other states that Silver Loaded. CMS is paying on the factual instead of the counterfactual for no good reason despite their own regulations saying that the BHP payment is a counterfactual payment.

There will be a lot of lawyers involved, but I think the counterfactual will eventually win.



Scratch A Repub, Find A Creep – MO Edition

Since our Misery contigent frequently shows up for the Early Morning Open Thread, figured I’d give y’all a place to vent…


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Maryland’s mandate plan

Maryland has a really interesting plan to use a state based individual mandate and a kissing cousin of auto-enrollment to maintain their individual insurance markets. They call is the Downpayment Plan.

The plan starts in 2020. An individual mandate will be assessed. Individuals paying the mandate will be notified if they qualify for advanced premium tax credits (APTC). If the combination of APTC and individual mandate penalty makes the monthly net of subsidy premium be equal to zero, the person is auto-enrolled in a plan. If the cost of the least expensive premium is more than the APTC and individual mandate, the individual mandate collection is held in escrow for a year to help pay for insurance in the next open enrollment. If there is no active selection in that second open enrollment period, the held in escrow individual mandate payment is transferred to a state insurance stabilization fund where it is presumably used for reinsurance or subsidies for individuals who don’t qualify for federal APTC.

My first reaction to this is that it is nifty and creative. It also highlights the extreme option value of a state running their own exchange. I don’t know if Healthcare.gov could mechanically do what Maryland wants to do.

Secondly, the program will wildly vary across age and county. In Baltimore City, a 41 year old earning $30,000 a year qualifies for a $0 net of advanced premium tax credit and individual mandate Bronze plan. However in Alleghany County (Western Maryland) a 21 year old earning $30,000 qualifies for a Gold plan under this same scheme. The difference is due to regional Silver levels and Gold loading plan offerings. Baltimore has a pair of fairly inexpensive and tightly clustered Silver plans offered by Kaiser. Alleghany County has a cheap Silver HMO offered by CareFirst and then an ungodly expensive Silver PPO also offered by CareFirst that acts as the benchmark.

In this system, inherently lower premiums for the Silver benchmark is not necessarily a good thing. Very active plan management by the state in order to maximize the Silver on-Exchange benchmark while also minimizing on-Exchange Bronze premiums and off-Exchange Silver premiums would optimally be needed. A hyper narrow network provider that offers multiple low premium Silver plans dramatically reduces the number of people who can qualify for a zero-premium after APTC and individual mandate plans.

Overall, this is interesting and it can be replicated in other states that run their own marketplaces and are willing to actively manage plan offerings.



Idaho’s ambitious waivers

Idaho is odd. It is a Republican tri-fecta state. It runs its own state based Exchange for the ACA. It has not expanded Medicaid. It has a pair of fascinating waivers that they want to submit to the Center for Medicare and Medicaid Services.

The first waiver is a Section 1115 Medicaid Waiver. They are not asking for an ACA Medicaid Expansion. Instead, they are asking for the authority to create a high-risk pool in Legacy Medicaid for about 1,500 people who have certain severe, high-cost conditions including hemophilia, cystic fibrosis, and certain cancers. These folks would see lower cost sharing and lower premiums. Idaho would pay their normal state match. Cost of care would go down as Idaho pays their Medicaid providers roughly 95% of Medicare rates and Medicare tends to pay providers significantly less than commercial rates.

The objective is to pull a small number of chronically ill and very expensive people out of the ACA individual market risk pools. With those people out of the risk pool, average claims costs go down by 19% which makes insurance a whole lot cheaper for non-subsidized buyers. This makes the non-subsidized market better off as a lot of people who are reasonably healthy and currently deterred from buying because the plans are too expensive will see cheaper plans. This would lead to more people covered and an even healthier risk pool.

If this was the only waiver, it would be a good waiver. However, Idaho is more ambitious. They are also planning a 1332 waiver that will allow people under 100% Federal Poverty Level (FPL) (<$12,060 for an individual) to claim that their income is actually 100% FPL and thus qualify for Advanced Premium Tax Credits and CSR Silver plans. This is a back-door Medicaid-esque expansion along the Arkansas Model but with the Federal government and the individual paying all of the cost without the state needing to commit new money to the coverage expansion.

Idaho wants to use the savings from pulling out the patients with high cost chronic diseases to fund the state pass-through amount for this 1332 waiver. It is an elegant solution if one starts with an assumption that Medicaid Expansion is politically non-viable in Idaho. It will lead to roughly half the currently uncovered population who are in the Medicaid gap to receive coverage. I am concerned that this cohort will be sicker and more expensive than the people who don’t buy this coverage but earn under 100% FPL. I am not sure how this would play with the risk pool improvement from more non-subsidized buyers entering the market. The signs are in opposition to each other but I don’t know magnitude.

I have mechanical worries about these waivers. I don’t think that the initial financial estimates are fully accounting for how CMS scores waivers. We know from Iowa that CMS will count the loss of individual mandate penalties against a state’s budget neutrality calculation. I don’t know if CMS will allow the sequencing that Idaho needs for budget neutrality. I think that this type of waiver is innovative and creative. It solves several problems but the mechanics are tough under the 2015 Section 1332 guidance. Here is a where an Alexander-Murray waiver modification could make a lot of sense.

I am intrigued by what Idaho is trying to do. I am just not sure that they will be allowed to do what they want to do or at least receive as much money as they think they should receive to do what they want to do.



Local and State: How’s It Going?

Toward the tail-end of one of our open threads yesterday, there was some discussion about how the Democratic Party is performing at the local and state level. I suspect many of us care deeply about this and are involved in our districts. But we don’t discuss it a lot here because this is a sprawling, global, almost-top-10K blog, and these issues are hyper-local.

But it’s worth discussing because the party has lost a shit-ton of ground at the local and state level over the years. There are many reasons for that, including a concerted effort by Republicans to destroy unions, which used to form a pillar of institutional support for Democrats, and a hyper-national focus among party members. We have to address it, and I know many of us are involved in that struggle.

So let’s talk about it: How’s it going in your local meth laboratory of democracy? Is your county-level party effective? How about the state level? Is the DNC helpful, or are they AWOL? What’s your understanding of their role? How do you see governor and state legislature campaigns shaking out? How are you directing contributions, if any? What non-party political organizations do you support?

I’ll start us off by answering these questions for my area. Our county party has done a terrific job; we’ve steadily made progress electing Democrats and ousting Republicans. After the election, the party had to find larger meeting spaces because so many more people became involved. There have been challenges harnessing all that new energy, but I am hopeful.

At the state level, I’m worried, but that’s nothing new. We’ve fielded such crappy candidates for governor that an obvious crook like Rick Scott was able to win not once but twice, albeit with less than 50% of the vote both times. And it looks like we might be getting ready to screw the pooch again, unless the state’s most famous ambulance chaser decides to throw his hat in the ring as a celebrity candidate for the Democrats. We could do worse, to be honest, but it frustrates me that we can’t do so much better.

I believe the outlook at the state legislative level is better. We recently won a special election in a district that Republicans thought was safe and where the Democrat was heavily outspent. County parties did phone banking across the state to help make that happen, and disgust with Trump is thought to have been a key factor too.

As for the DNC, I confess I don’t really know how much to expect of them at the state and local level. Maybe someone who understands how that’s supposed to work can enlighten me. I was an early supporter of Tom Perez for party chair, but the jury is out on his performance so far, IMO. Since I focus on ground-level stuff, I have no real sense what’s going on there except what I read in the media, which is geared toward peddling “Dems in Disarray!” narratives.

In addition to my local party, I’m involved in political organizations that support women’s rights, LGBTQ equality and immigrants’ rights, and I donate paltry sums to those causes. I also contribute to and volunteer for organizations that protect enfranchisement. (Reading this over, I realize it sounds like I do a lot, but that’s not really true — I probably spend more time watching cooking shows and sports than I do on all of these activities combined. I should be doing more.)

Anyhoo, before turning it over to you, a plea: Let’s not rehash the 2016 primary in this thread. I realize lingering hard feelings among factions within the party might be relevant to your response, and if so, please feel free to describe that. But gratuitous bashing will just derail the thread, so can we not? Thanks!



Tuesday Morning Open Thread: Not the Onion, edition 3,567

As if Texas needed any more grief right now!…

… Sen. Lindsey O. Graham (R-S.C.), who has been involved in previous bipartisan immigration reform efforts, said he would support Trump’s plan to end DACA after a six-month delay. In a statement, Graham said the program amounted to “presidential overreach” by President Barack Obama, who created it by executive action in 2012…

House Minority Leader Nancy Pelosi (D-Calif.) said Trump is poised to “break the hearts and offend the morals of all who believe in justice and human dignity.” She called on Republicans to pursue legislation to protect dreamers “from the senseless cruelty of deportation and shield families from separation and heartbreak.”

Trump’s decision to include a six-month delay could be a bid to shift some of the political pressure and consequences over the dreamers onto congressional Republicans. House Speaker Paul D. Ryan (Wis.), Sen. Orrin G. Hatch (Utah) and several other GOP leaders have urged Trump not to end the program and to let Congress pursue its own course of action.

The president and his senior advisers continued to deliberate Monday afternoon, and aides cautioned that Trump could still change his mind ahead of the announcement. Important details such as whether the administration would continue to accept DACA applications and issue renewals for two-year work permits during the six-month delay remained unresolved…

Meanwhile, leading Democrats have said privately that they think Trump has been boxed in politically. His inability to secure funding for the border wall is wearing down support among his base, these Democrats said, while his hard-line immigration rhetoric is hurting him with moderates.

When rumors about Trump’s expected actions on DACA first surfaced nearly two weeks ago, Senate Minority Leader Charles E. Schumer (D-N.Y.) tweeted that dreamers “are not a bargaining chip for the border wall” funding or to pay for an “inhumane deportation force.” …

Apart from bracing for fresh horrors, what’s on the agenda as we start an abbreviated work week?



More From Arizona…

Update: I swear that when I started writing this DougJ’s post was not in the queue.  Anyway…we’re all grownups here (Schpeake Fer Yerself!–ed) so I’m guessing we can read one piece and then another.  Or not. Enjoy!

__________________

Joe Arpaio is now on his way to being an old lag, and if that conclusion is decades late, it still behoves us to get our schadenfreude on:

The longest-serving lawman of the state’s most populous county, where he became a national figure known for immigration raids and sweeps aimed at rounding up illegal migrants, was found guilty Monday of contempt of court. He faces up to six months in jail.

Arpaio’s crime, you’ll probably recall, was to keep on doing what he’d been doing after a federal judge told him to stop:

Arpaio had conducted the sweeps under the federal 287 G Program, which enables some local law-enforcement offices to act as quasi-immigration agents. In 2009, the federal government rescinded this power, but Arpaio refused to stop. In 2012, Arizona U.S. District Court Judge Murray Snow, ordered an injunction against Arpaio’s office aimed at ending the sweeps, but still, Arpaio refused.

I fortunately don’t have any personal experience here, but I have it on good authority that judges really, really don’t like it when you ignore them.

Arpaio tried two lines of defense:

During the criminal trial, which consisted of a five-day trial in June and July, Arpaio’s attorney’s argued that Snow’s order was unclear and that though the sheriff had made mistakes, they weren’t willful violations of the order. He also argued that Arpaio delegated much of of the enforcement responsibilities to his subordinates, and that he should not be held responsible for their actions.

Again, I don’t think telling a judge that they f**ked up in their legal writing is a terribly persuasive strategy, and as for the “my employees suck, I don’t” argument, I’m reminded once again that the Party of Personal Responsibility™ is a f**king crock.  Hence, the man’s a convict.

It is, alas, apparently unlikely that white supremacist poster child Arpaio will actually go to jail for his crime.

But whatever his sentence, this outcome makes me smile.

 

Here’s Loki, the Trickster God, in the glass I’ll raise when the clock hits 0-whiskey-00 this evening.

Image:  Egon Schiele, The Door is Open, 1912.