Update on the WV Teacher Strike

Over the weekend, there was some movement in the Senate, along with some hysterical shenanigans. Basically, WV Senate Republicans are as incompetent as national Republicans, and after an amendment came out of the Finance committee for a 4% raise, lower than the 5% the governor and teachers agreed to, and lower than the 5% the House voted 98-1 for (comically, the one no vote was Saira Blair, the young Republican college student and daughter of Senator Craig Blair, and she claims she pushed the wrong button).

Quick interlude- Craig Blair is one of those “special” Republicans, who this weekend infuriated basically everyone by reacting to this CNN story about WV teachers packing lunches for their students who go hungry without school lunch programs before going on strike by stating something to the effect of “If they can afford to feed their kids, how desperate are they for a raise.” Yeah, he’s one of THEM.

At any rate, the Senate voted on a 4% raise, which was dead in the water in the House of Delegates, and immediately after the vote Senate leadership went through a bunch of procedures to have the vote removed. Apparently the clown caucus had filed the wrong amendment, and they had all voted for a 5% increase, not the 4% they intended. Normally parliamentary procedures would dictate a 2/3 vote to remove that previous vote, but being Republicans they said to hell with it and just did party line votes and then advanced the 4% bill instead. Democracy, fuck yeah.

So where we are now is there is a legislative conference committee set to meet at 4pm to resolved the differences. The committee includes 3 members from the House of Delegates (2R, 1D) and 3 members (2R, 1D). Notably, the House delegation has all been told to stand strong and presumably will lobby for the 5% they voted for (part sticking to their initial bill, part being told by membership what to do, and part dick-measuring contest between the House and Senate. The Senate Democrat will presumably go for the 5% increase.

This would lead one to presume that the 5% increase would carry the day. They would meet, majority would vote 4-2 for the 5%, and then the bill would be advanced to the Governor. You would be wrong. The majority members of the Senate are going to be Sen. Ryan Ferns, the Senate Majority Leader, and Mitch Carmichael, the President of the Senate, the aforementioned senator Blair and they too are special kinds of Republicans. What they may do is simply refuse to sign the conference committee report. So even though the vote would be 4-2, simply refusing to sign it would basically kill it. They’re the special kind of assholes who would do something like that, and the Senate Republicans done it before, just not with this much attention focused on them.

It wouldn’t surprise me if they do this to try and drag this strike out and have AG Morrisey cook up some sort of legal action against the teachers or to try and swing popular opinion against the teachers. The problem for them is everyone knows a teacher and likes them. The same can not be said for the Senate, Justice, or AG Morrisey.

In other news, the Senate Republicans refuse to meet with Governor Justice, who is now officially hated by Republicans as much as by Democrats, and the PEIA commission is set to meet on the 13th and has 24 members, 23 of whom need to be appointed.

In other words, there probably isn’t going to be school this week. The teachers and service personnel have their blood up and are sick of the bullshit.

*** update ***

The House Democrats send this notice:

“It has been brought to our attention that Senator Blair scheduled a Finance Committee meeting for 3:00 today. In his speech on the floor earlier today, Senator Blair stated that the Finance Committee will take up the budget bill and they will not adjourn until they are finished, even if it takes them until MIDNIGHT! Senator Blair is on the conference committee for HB 4145, the pay raise bill, and the conference committee scheduled for 4:00 today cannot meet until Senator Blair and Senator Ferns adjourn from the 3:00 Senate Finance meeting. This is political gamesmanship at its worst. They clearly have no intention of holding the conference committee for the pay raise bill today.”

A few things on the West Virginia strike

Farzad Mostashari went into the weeds to look at the price drivers in the state employee health plan that is the basis of the current teacher strike.  He sees two big things that stood out to him.

It seems like the PEIA is doing a good job of keeping a many people as possible out of the hospital. Managed care entities including HMOs, ACOs, SSP, ASO and several other three letter acronyms will usually try to divert people out of hospitals and to some other location that can’t bill with a hospital code. Yet it is still a matter of prices. The hospitals are doing a lot less and still getting paid more. What is going on here?

I want to thank Farzad for chasing the data as this is meaningful and illuminating as to what the strike actually boils down to.

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…

Read more

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.