START OF 2018 OPEN ENROLLMENT PERIOD

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Hooray! GOP winning HvB won't destroy the ACA, it'll just be a colossal waste of time!*

Last week there was much hand-wringing among many (including myself) about the potential fallout if the House Republicans do end up eventually winning House v. Burwell.

Today, Nicholas Bagley, who's been my guide throughout the weird convolutions of this case (the impact would actually more complicated than that of last year's King v. Burwell if the GOP had won that case) clarifies a few points and helps walk folks (including myself) back from the edge:

The HHS and Urban studies rest on the assumption that insurers will eat the costs of eliminating the cost-sharing reductions. As I’ve explained before, though, that’s not a realistic assumption.

The Affordable Care Act obligates the federal government to reimburse health plans for cutting their low-income customers a break on their out-of-pocket payments. Whether or not there’s an appropriation for the cost-sharing reductions, that statutory obligation is enforceable in court—specifically, in the Court of Federal Claims.

Health plans that get stiffed can therefore sue the federal government for the cost-sharing reductions. Winning those cases should be easy: the plans will just have to show that they’re owed money under the ACA. And here’s the kicker: Congress has permanently appropriated the money to pay court judgments, even if it hasn’t appropriated money for the cost-sharing reductions.

The right question isn’t whether health plans will get paid. It’s when.

Bagley links to his own analysis from last August...which is the same piece which I had quoted, specifically this part:

So the question isn’t whether the government will pay the cost-sharing reductions. It’s when. If the government is right, Treasury can make pay health plans on a “periodic and timely” basis. If the House is right, health plans have to file thousands upon thousands of duplicative lawsuits to get the money.

That’d be bonkers, of course. Forcing health plans to pursue expensive and time-consuming litigation to recover what they’re owed doesn’t help anyone. The plans will just pass on the costs of the litigation, delay, and uncertainty to their customers.

It appears that I misunderstood the last sentence above. I thought he meant that the carriers would take a pass on all those thousands of lawsuits due to the massive legal fees, red tape and processing bullshit involved in doing so, and would instead just say "screw it", eat the costs of the lost CSR reimbursements and pass that along to their customers. That's also what last week's Urban Institute analysis assumed.

Today, Bagley explains that this isn't what he meant at all--he was talking purely about passing the legal costs to file those lawsuits on to the enrollees.

In other words, let's say that a carrier has 100,000 enrollees, and is owed $100 million in CSR reimbursements each year. Passing along those costs would jack up rates by about $1,000/enrollee per year. This is what I (and the Urban Institute) were figuring might happen.

However, let's say that it would cost $10 million in legal fees and related expenses for the carrier to actually go ahead and file those suits. Bagley is saying that yeah, they'll go ahead and do so, which would clog up the legal system even more ('cus that's just what we need, amirite?) and pass those expenses along to their enrollees (perhaps $100 per enrollee per year). knowing damned well that they're pretty much certain to win the case in the end. The federal government would still have to pay out that $100 million...it would just come from a different government bank account.

The end result would be exactly the same as if the GOP hadn't filed the lawsuit in the first place...except that millions of people would have to pay an extra C-note apiece, every year in order to pay all the lawyers needed to clog up the court schedule for several months at a time. Plus, of course, it would continue to cause Fear, Uncertainty and Doubt among the insurance carriers and their actuaries...and everyone knows that actuaries just love uncertainty...

Fortunately, Bagley concludes that he suspects that cooler heads will prevail in the end:

To account for the delay and uncertainty, health plans would have to raise premiums—but they won’t have to raise them by as much as these early studies suggest. I don’t think it’ll come to that: the D.C. Circuit and the Supreme Court are unlikely to rule that the House has standing to bring this political dispute into court. But even if the House somehow manages to eke out a victory, the ACA isn’t in danger of collapsing.

If any of this sounds familiar, it should. This is exactly how Marco Rubio's "Risk Corridor Massacre" is already playing out (although that has actually had more severe consequences, in the form of helping wipe out a dozen Co-Ops in the process, which was one of the main goals in the first place):

So, to review, the end result of Marco Rubio's shenanigans are:

  • up to 800,000 people nationally lost their insurance coverage, on very short notice, and were forced to scramble to find alternate coverage
  • the new coverage these people ended up with is generally more expensive, and in many cases has worse networks
  • the federal government has to therefore pay out more in premium subsidies to cover the increased costs as benchmark plans were increased
  • over a dozen insurance carriers went out of business, meaning hundreds of people lost their jobs
  • the loss of over a dozen carriers means less competition in those markets, therefore less competition, therefore higher premiums, therefore even more cost to the federal government in subsidies to make up the difference
  • since all of the carriers which went out of business were little guys, this also means the big kahunas suck up even more market share
  • the original $2.5 billion which Rubio was supposedly trying to "save" taxpayers ends up being paid out anyway; and
  • it's possible that, in addition to all of this, assuming the government decides to just concede the point (which, by all rights, they should), it's conceivable that Marco Rubio's "genius" stunt from December 2014 could also very well end up costing taxpayers $2.5 billion MORE than it would have to just let the government make the payments they were supposed to in the first place.

...all so that Marco Rubio could earn a couple of political brownie points to help him win the GOP nomination for President...which he appears to be failing at anyway.

Never has a sarcastic golf clap been more appropriate.

(And sure enough, a class-action lawsuit has indeed already been filed by one of the defunct Co-Ops over the missing risk corridor payments).

UPDATE 5/18/16: Annnnnd here comes a second risk corridor lawsuit... (h/t to Richard Mayhew)

*(headline inspired by one of the greatest Saturday Night Live Skits ever...higher-quality version here)