It's also important to keep in mind that due to how the ACA's subsidy formula is structured (combined with Silver Loading and Silver Switching), a lower benchmark premium will actually result in higher net premiums for many subsidized enrollees (although it's still good news for those who are unsubsidized). Here's why:
Let's say the unsubsidized premiums for a given enrollee in 2019 is $400 for Bronze, $600 for the benchmark Silver and $700 for Gold.
Let's say that enrollee earns exactly $32K/year (256% FPL), meaning they only have to pay 8.54% of their income for the benchmark plan.
That means they qualify for ($7,200 - $2,733) = $4,467 in subsidies ($372/month).
This would leave them paying $228/month for the benchmark Silver...but they can apply that towards a Bronze plan if they wish so they'd only pay $28/month, or a Gold plan so they only pay $328/month.
OK, I know, I know, I'm obsessing over this and I promise to stop soon.
Yesterday I noted that due to a surreal, Rube Goldberg-esque series of events dating back to a different lawsuit filed back in 2014 by then-Speaker of the House John Boehner (!), it's looking very likely that the federal government will have to shell out at least $1.6 billion in Cost Sharing Reduction (CSR) reimbursement payments to over 100 health insurance carriers even though those carriers have already made up most of their losses elsewhere in the form of increased premium rates.
Had CSR reimbursement payments continued to be paid over the next decade, the CBO projected that it would have cost the federal government $118 billion between 2018 - 2026, or around $13 billion per year on average.
Cutting off CSR reimbursement payments saves the federal government that $118 billion over 9 years. HOWEVER...
The CSR Lawsuit Saga has been a continuous rollercoaster ride since 2014 at this point, with the original lawsuit (brought by John friggin' Boehner) seeing twists including one of the plaintiffs becoming one of the named defendents, and the named defendent changing at least three times as the Trump Administration went through several HHS Secretaries over the course of a few months.
The extremely short version, again: Donald Trump attempted to sabotage the ACA exchanges by pulling the plug on Cost Sharing Reduction reimbursement payments...but in doing so, unintentionally ended up:
NOT hurting the very people he was trying to hurt (low-income enrollees);
HURTING the very people he supposedly wasn't trying to hurt (middle-income enrollees), and as an added bonus...
INCREASING federal spending by a projected $20 billion dollars per year in increased premium subsidies
Nearly 100 insurance carriers who were stiffed by Trump out of a couple billion dollars owed to them for 2017 sued the federal government, and the judges in the cases ruled in their favor, ordering the feds to pay up. This much was completely expected and not at all out of the ordinary.
The general thinking at the time was that the judges would simply rule in the carriers favor and order the Trump Administration to pay the carriers the money owed to them from the last three months of 2017 (over $2 billion nationally, although the amounts at stake for each individual carrier suing is generally kmore along the lines of seven figures each). If this had been what happened there likely wouldn't have been much more to the story.
Instead, all three judges ruled--on behalf of dozens of carriers, since at least one of the cases is a class action suit--that the government owes them CSR payments for not only Q4 2017, but all twelve months of 2018 as well, assuming the carriers wanted to demand those payments.
I visited DC last month for the Families USA healthcare conference. While I was there, I managed to arrange to meet with staffers for four U.S. Senators and two House members (in fact, the House members themselves stopped by to talk for awhile as well. None of the Senators did, but they were a bit busy dealing with Donald Trump's idiotic temper tantrum government shutdown at the time).
In my meetings, we discussed a variety of healthcare policy-related issues, but the two most important ones I focused on were:
Note: Huge props to Amy Lotven for breaking this story!
WARNING: Before you read any of the following, first read this entire post, which explains the latest insane twist in the never-ending Cost Sharing Reduction legal saga. Yeah, I know, I know...just do it. I'll wait.
OK, now that you're all caught up, there's yet another aspect to this craziness which has arisen.
Towards the end of the first post, I noted that:
I'm not sure of the details on how those MLR rebates are allocated, but I know in 2018, nearly 6 million people received an average rebate of $119 apiece. Most of that came from the large and small group markets, but around 1 million people on the ACA individual market received $137 apiece (around $133 million total). That's right: It's theoretically possible that the carriers could have to dole out up to 75 times as much in MLR rebates for 2018 as they did last year.
First of all, it turns out that the amount of money potentially at stake is even higher than that:
Note: Huge props to Amy Lotven for breaking this story.
I've written about the CSR Saga so many times that I'm getting tired of explaining the backstory. However, once again, here's the short version:
Once again, the very short version is this:
The contract insurance carriers sign when they offer policies on the ACA exchanges is to cover a chunk of low-income enrollee deductibles, co-pays and other out-of-pocket costs which would normally be the enrollees' responsibility. These are called Cost Sharing Reductions (CSR).
The carriers then submit their CSR invoices to the federal government, which is supposed to reimburse the insurance carriers every month.
Donald Trump cut off contrctually-required CSR reimbursement payments to insurance carriers in October 2017...and hasn't made any payments since.
(I'm not going to rehash how Trump was able to cut off those payments with a Thanos-like snap of his fingers; suffice to say it's connected to a lawsuit filed so long ago that John friggin' Boehner was still Speaker of the House at the time).
Last year there was much hand-wringing by myself and other healthcare wonks about whether or not the Trump Administration would attempt to kill off Silver Loading (and its even-wonkier cousin, Silver Switching). HHS Secretary Alex Azar and CMS Administrator Seema Verma kept sending out mixed and confusing signals about their intentions.
Eventually, Azar decided that while he doesn't like the practice, there wasn't enough time to change the rules before the 2019 Open Enrollment Period was set to begin, so he decided to take a pass for the time being.
Well, in yesterday's NBPP release, the HHS Dept. addressed the issue of CSR reimbursement funding directly...but they also made it clear that they're letting Silver Loading slide for another year:
In the midst of the ongoing #TrumpShutdown, where hundreds of thousands of federal employees are either off the job altogether or having to work without being paid and hundreds of federal contractors are being stiffed for the work they've done in good faith, I just wanted to remind folks that Donald Trump also screwed over several hundred insurance carriers in October 2017 when he cut off contractually-owed Cost Sharing Reduction reimbursement payments to insurance carriers nationwide.
As regular readers know, every spring/summer I spend countless hours poring over the annual insurance carrier rate filings, plugging in increases (and occasionally decreases) in ACA-compliant premium changes for every carrier in every state. I actually do this twice for most states (and occasionally even three times), as the process moves from preliminary/requested rate changes to "semifinal" rates to "final/approved" rates throughout the fall.
For 2018 and again for 2019, I've taken this one step further; instead of simply running the overall weighted average premium changes in each state, I've also attempted to break out what portion of the change is caused by various factors...in particular, what portion is caused by legislative or regulatory changes by Congressional Republicans and/or the Trump Administration.
UPDATE 10/30/18: Thanks to some additional reviews/checking by Dave Anderson, Louise Norris, Andrew Sprung and myself, I've been able to update the spreadsheet further; the blog post has also been updated correspondingly.
*(OK, that's hyperbole...unsubsidized enrollees are still left holding the bag for thousands of dollars in unnecessary premium payments for at least another year or so, and there's still no guarantee of the final ruling...see below...)
Almost exactly a year ago, Donald Trump, after 9 months of bluster about doing so so, finally pulled the trigger on his threat to cut off Cost Sharing Reduction reimbursement payments to insurance carriers for the deductibles, co-pays and other out-of-pocket expenses which they agree to cover every month for around 7 million low-income ACA exchange policy enrollees.
Trumps stated goal in doing so was, of course, to "blow up" the ACA, to cause it to "implode" (which is actually the opposite of blowing something up, but that's a different discussion) and ultimately fail in the process.
As I noted last month when I first analyzed the requested 2019 rates for North Dakota insurers, ND was somewhat unique last year in that it was one of only two states (the other was Vermont) which didn't tack on any extra premium increases for 2018 to account for the lost Cost Sharing Reduction reimbursement revenue after Donald Trump cut off those payments last October.
This led to one of North Dakota's three carriers, Medica, dropping off the ACA exchange altogether, though they still ended up enrolling a few hundred people directly via the off-exchange market.