CSRs

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.

Once again, the very short version is this:

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.

Last year, while Congressional Republicans were doing everything possible to officially repeal the Affordable Care Act via legislative means, Donald Trump spent months repeatedly threatening to cause the ACA individual market exchanges to either "explode" or "implode" (depending on the day) by, among other things, cutting off Cost Sharing Reduction reimbursement payments to insurance carriers.

*(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.

Today at 11am CST (I think that's Noon EST?), HHS Secretary and Donald Trump's Used Car Salesman Alex Azar will give a Big Speech to the Nashville Health Care Council in Tennessee:

Tomorrow, HHS Secretary Azar will join Governor Haslam in Nashville, Tennessee to deliver remarks at an event hosted by the Nashville Health Care Council.

Secretary Azar will share news regarding the Affordable Care Act marketplace and reflect on lessons for healthcare reform.

In advance of tomorrow, here are a few excerpts of Secretary Azar’s remarks (as prepared for delivery):

“The previous administration’s major healthcare achievement, the Affordable Care Act, was an attempt to use more government regulation and intervention to improve American healthcare.

“As we all know, the results were disastrous, with skyrocketing costs and disappearing choices.

“But today, I am here to share with you some good news.

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.

I received a tip about this early this morning...which, unfortunately, I was unable to scoop anyone with due to being bogged down/caught up with the #TexasFoldEm drama.

As a result, it looks like Shelby Livingston of Modern Healthcare was first to post about it:

Montana insurer wins lawsuit against feds over unpaid cost-sharing reduction payments

Several health insurers have sued the U.S. government over its failure to make cost-sharing reduction payments that help lower healthcare costs for certain consumers. One just scored the first victory. The U.S. Court of Federal Claims ruled in favor of Montana Health Co-op, which sued the federal government for $5.3 million in unpaid cost-sharing reduction payments, finding that the government violated its obligation under the Affordable Care Act when it stopped paying the CSRs in October 2017."

The rest of the article is behind a paywall, but the gist of it is as follows:

When I first analyzed Vermont's 2019 ACA policy rate filings back in May, the state's two ACA carriers, Blue Cross Blue Shield and MVP Healthcare, were requesting average premium increases of 7.5% and 10.9% respectively.

Vermont's situation is unusual compared to most other states for a couple of reasons. First of all, VT is one of only two states (Massachusetts is the other one) which has merged their Individual and Small Group market risk pools into one to help stabilize both markets. This is something I wish every state would do, frankly, although it's probably a lot easier to do in deep blue states (and Vermont having such a small population probably made it easier as well).

Utah has four carriers offering ACA-compliant individual market plans. Two of them (BridgeSpan and Regence BCBS) only offered their policies off-exchange this year; I'm not sure what the status is for either one in 2019. I can only find hard enrollment data for one of the four (Regence), so I'm estimating the other three based on a combination of last year's numbers and the total estimated individual market size in Utah from 2017. Because of this, consider the Utah estimates to be even rougher than some other states.

Having said that, there's one interesting extra sabotage factor to consider for the University of Utah rate filing: They note that they've added an extra 10.3% to their 2019 rates specifically tied to last year's Cost Sharing Reduction (CSR) cut-off. I presume they chose not to bake the CSR load into their rates this year, but I don't think Utah went the "mixed load" route so who knows?

In any event, as far as I can tell, this means around a 14-point #ACASabotage factor, between CSR load, mandate repeal and #ShortAssPlans.

North Dakota was one of only two states (the other one was Vermont) which didn't allow their insurance carriers to add any additional premium load into their 2018 rates to account for Donald Trump's cut-off of Cost Sharing Reduction (CSR) reimbursement payments.

In direct response to this, Medica Health Plans dropped out of the ND on-exchange individual market this year to avoid taking the CSR hit. They hung around the off-exchange market, however, and therefore still have about 600 enrollees in the state.

As a result of this, my estimated impact of ACA sabotage efforts by the Trump Administration and Congressional Republicans has to include the factors from both 2017 and 2018: Cost-Sharing Reduction cut-off (9%) as well as Mandate Repeal and Short-Term Plan expansion (13.8%).

March 20, 2018:

Azar Says He Is Not Aware Of Discussions On Blocking ‘Silver-Loading’ in 2019

HHS Secretary Alex Azar said that he has not been involved in discussions about blocking ‘silver-loading’ plans in 2019 and is not aware of any agency discussions about ending the practice at the moment.

...In recent weeks, some stakeholders have speculated that the Trump administration could block silver-loading in 2019. Several pro-ACA experts say that even though the administration may have authority to stop silver-loading, it would be a self-destructive move, especially leading up to the November midterm elections.

CMS Administrator Seema Verma told reporters on Thursday (March 22) that she was “very concerned” about certain aspects of ‘silver loading’ plans, namely that it raises costs for unsubsidized consumers and the federal government. Verma did not commit to allowing or blocking the process for the 2019 plan year.

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