END OF 2018 OPEN ENROLLMENT PERIOD (42 states)

Time: D H M S

UPDATE: CBO to score CSR (also: No updates this week*)

Tomorrow afternoon, CBO expects to release a report, which is being prepared with the staff of the Joint Committee on Taxation, about the effects of terminating payments for cost-sharing reductions. The analysis will include effects on the federal budget, health insurance coverage, market stability, and premiums.

Unfortunately, I'm not going to be in a position to write anything up about the CBO report, as I'm going on a long-overdue mini-vacation to visit Mackinac Island for a few days. I'm sure I'll be chiming in via Twitter when possible, but my wife will kill me if I try to write a full blog post, so that'll be about it.

Therefore, here's my thoughts about what the CBO is likely to conclude:

The effect on the budget will depend heavily on how many carriers decide to (or are allowed to) go the "Silver Switcharoo" route with their revised/final rate filings:

  • If every carrier in every state were to go "Full Silver Switcharoo" (ie, load CSR payments into on-exchange silver plans only) and the total subsidized exchange enrollment were to be similar to what it was this year (roughly 9 million people), the pulling the plug on CSR reimbursements should result in the federal government having to shell out around $2.4 billion more in APTC assistance next year than it otherwise would. The CBO usually does these things as 10-year projections, but I really don't know how much that would translate into beyond 2018...I'd imagine it would go up a bit each year due to inflation, so perhaps an extra $27 billion by 2026?
  • Alternately, if every carrier were to load CSR payments into all Silver plans (both on and off exchange), which seems to be the most common route carriers are choosing/being allowed to choose, the additional APTC assistance would be somewhat less; I'm guessing it'd be around $1.8 billion more next year (perhaps $20 billion more by 2026).
  • Finally, if every carrier were to simply spread the cost across all metal levels, I estimate the additional APTC assistance would be something like $1.1 billion in 2018, or $12 billion more by 2026.

In terms of health insurance coverage, again, much depends on which route the carriers take. Remember, this is supposed to be measuring how many people have coverage compared to how many would if CSR payments ARE made only, which means that other factors like the shortened open enrollment period, other types of enrollment sabotage, general instability of the market and actual, "normal" rate increases shouldn't be taken into account here.

That being the case, I'd say the impact should be something like the following:

  • Full Silver Switcharoo: If every state goes this route, it may actually increase net enrollment, since, theoretically, none of the actual enrollees would have to pay the CSR cost, while those earning 251-400% FPL would receive a nice windfall in additional APTC assistance, which should actually encourage enrollment among that population.
  • Spread across all Silver: I'm guessing this would result in a net loss...those earning 251-400% would receive a smaller APTC bonus which would encourage enrollment, but those over 400% on Silver plans (perhaps 4 million people) would be hit hard.
  • Spread across all metal levels: This would result in a substantial net loss...those 251-400% would receive a nominal APTC bonus, but all 7 million or so unsubsidized enrollees of any metal level would be hit.

The effect on market stability is already playing out before our eyes: Humana, Aetna and Wellmark have already dropped out of the individual market; Anthem is already scaling back dramatically and so on. I'm not sure how the CBO can really project that one since so much of the damage is already happening as I type this...but it certainly wouldn't be good.

As for premiums, I've already made my call: Nationally, carriers are requesting roughly a 29-30% weighted average rate increase assuming CSR payments aren't made, versus perhaps 15% if they are. From my analysis, almost exactly half of the rate hikes (spread across all metal levels) are being caused specifically by the CSR issue. Again, if the CBO report projects beyond 2018, I really have no idea how they'll handle that.

Anyway, it'll be interesting to see what the CBO comes up within on all four of the above fronts.

Otherwise, I hope everyone has a good week. I'm sure nothing of consequence will happen for the next few days. Nothing at all...

*(needless to say, if there's some truly stunning ACA-related news this week, I might sneak in and write up a quick blog post about it after all...but no, Trump pulling the plug on CSRs wouldn't qualify for that simply because I've already written so much about this possibility anyway).

UPDATE: OK, we just checked into the hotel and I'm already violating my promise, but I'll keep it very short: The CBO projection is out, and sure enough, it projects exactly what I and many others figured: 20% rate hikes on Silver plans next year specifically tied to pulling the plug on CSR reimbursements and 25% hikes after that before settling in at "normal" rates. They also agree that a bunch more carriers would flee the individual market as a result...before then realizing that by simply jacking up their Silver rates, the market would eventually stabilize anyway, so they'd likely return a few years later.

Where I was way off, however, was in my projection of just how much more this scenario would cost the federal government in terms of additional APTC assistance. I assumed it'd be around $20 billion more between now and 2026. The CBO projected a net increase of a whopping $194 billion during that time period. There's actually a rather obvious reason for this: My $20 billion assumption assumes no net additional subsidized enrollees...but whereas I assumed there would only be a net increase in subsidized enrollees under the #SilverSwitcharoo scenario, the CBO is pretty confident that after dropping by about 1 million enrollees next year, exchange enrollment would increase by anywhere from 2-4 million each year beyond what it otherwise would, mostly due to small employers choosing not to provide ESI coverage and instead kicking their employees over to heavily subsidized exchange policies.

The CBO report averages around 2.3 million additional exchange enrollees per year. Assuming 85% of these are subsidized, that'd be around 2 million more receiving APTC each month. In 2017, this is already averaging around $371/month, so that'd be another $9 billion per year even at 2017 levels WITH CSR funding. That'd be $81 billion between 2018 - 2026 even without taking inflation or the CSR load itself into account for those 2 million people.

Once you add inflation and the extra CSR funding into the mix, you can easily see how that'd swell to another $170 billion or so over the next 9 years. Add that to the $12 - $27 billion I estimated without those 2 million additional people and voila, you're up to around $190 billion more in APTC being spent by the federal government.