Silver Loading

2018 MIDTERM ELECTION

Time: D H M S

Last year I wrote a LOT about Silver Loading and Silver Switching for 2018...basically, the way which ACA individual market enrollees can save hundreds or even thousands of dollars on their 2018 insurance policies by taking advantage--perfectly legally and ethically--of the unusual pricing of different metal level policies this year.

The short version is this: Due to the way the ACA's tax credit formula works, Donald Trump's attempt at sabotaging the ACA exchanges by cutting off Cost Sharing Reduction (CSR) reimbursement payments to insurance carriers actually (partly) backfired on him, resulting in an unusual situation in which several million subsidized enrollees ended up benefitting from the pricing fallout, while millions of unsubsidized enrollees ended up being hurt by it...but other unsubsidized enrollees ended up being able to avoid being hurt by switching to a special off-exchange Silver plan (thus, the "Silver Switch").

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.

As I've explained many times before, Trump thought that his cutting off CSR payments would cause the insurance carriers to flee the markets altogether. He also thought his actions would simply cause low-income ACA enrollees to lose the financial assistance they were receiving to cover deductibles and other out-of-pocket expenses altogether, which is a reasonable assumption if you don't understand how CSRs actually works (which I guarantee you Trump doesn't).

There were several stories over the past few days about a new, just-released report from the General Accounting Office (GAO) which examined how well/poorly the Trump Administration handled the 2018 Open Enrollment Period last year.

Many of the findings were things which I had been either predicting or documenting all year:

  • Enrollment through Healthcare.gov Was 5 Percent Lower in 2018 than 2017
  • Stakeholders Reported That Plan Affordability Likely Played a Major Role in Enrollment
  • HHS Reduced Consumer Outreach for 2018 and Used Problematic Data to Allocate Navigator Funding
  • HHS Did Not Set Numeric Enrollment Targets for 2018, and Instead Focused on Enhancing Certain Aspects of Consumers’ Experiences

We identified a list of factors that may have affected 2018 healthcare.gov enrollment based on a review of Department of Health and Human Services information, interviews with health policy experts, and review of recent publications by these experts related to 2018 exchange enrollment.

Factors related to the open enrollment period:

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.

For nearly a year, healthcare wonks like myself, David Anderson, Andrew Sprung and Louise Norris have been heavily getting the word out to promote not just the "Silver Loading" CSR-load workaround, but an even more clever variant which I've coined "the Silver Switcharoo" which takes the concept of Silver Loading and goes one step further.

It gets a bit complicated, but here's my explainer of how the Silver Switcharoo works for ACA individual market policies.

The bottom line is that in theory/on paper, just about everyone either comes out ahead or at least is no worse off if they use silver switching:

A couple of months ago, I sounded a (semi-muted) alarm about the future of Silver Loading and Silver Switching of Cost Sharing Reduction costs when CMS Administrator Seema Verma not only failed to state flat-out that she wouldn't attempt to stop these workarounds, but started giving indications that she was actively considering doing just that.

If this were to happen, then it would be devastating to millions of people while helping almost no one, as my colleagues Dave Anderson, Andrew Sprung, Louise Norris and I explained in Health Affairs a few weeks back.

Well, it appears that this particular bullet will be dodged for at least one year, anyway:

HHS won’t ban silver-loading this year, Azar admits after being pressed. No time to write broad-loading regs for 2019 plan year.

I had actually already written about Vermont doing this back in March, but seeing how it was one of only 2 states (+DC) which didn't allow Cost Sharing Reduction (CSR) costs to be loaded onto premiums at all this year, I figured I should mention it here as well. Once again:

  • 20 states went the full #SilverSwitcharoo route (the best option, since it maximizes tax credits for those eligible for them while minimizing the number of unsubsidized enrollees who get hit with the extra CSR load);
  • 16 states went with partial #SilverLoading (the second best option: Subsidized enrollees get bonus assistance, though not as much as in Switch states; more unsubsidized enrollees take the hit, but they aren't hit quite as hard);
  • 6 states went with "Broad Loading", the worst option because everyone gets hit with at least part of the CSR load except for subsidized Silver enrollees;
  • 6 states took a "Mixed" strategy...which is to say, no particular strategy whatsover. The state insurance dept. left it up to each carrier to decide how to handle the CSR issue, and ended up with a hodge podge of the other three
  • 3 states (well, 2 states + DC, anyway) didn't allow CSR costs to be loaded at all. Their carriers have to eat the loss, which makes little sense, but what're ya gonna do?

99% of what I write is posted either exclusively here at ACASignups.net or, at most, is cross-posted over at Daily Kos. Once in blue moon I've written a freelance piece for healthinsurance.org, and I even wrote one piece for Cracked.com last year. Today I'm proud to announce that an article which I co-wrote with three other healthcare wonks (David Anderson, Louise Norris and Andrew Sprung) has been published by HealthAffairs:

Implications Of CMS Mandating A Broad Load Of CSR Costs

In October 2017, the Trump administration eliminated federal funding to reimburse insurers for cost-sharing reduction (CSR) subsidies, which they are obligated to provide to qualifying enrollees in the Affordable Care Act (ACA) Marketplace. President Donald Trump had threatened to eliminate CSR funding throughout 2017, so insurers and insurance regulators in many states had anticipated the move by adding the cost of CSRs to premiums for 2018.

Louise Norris is an awesome source for all sorts of healthcare policy/insurance data, but she's especially on top of developments in her home state of Colorado, where she and her husband Jay run a small brokerage outlet.

Today Jay and Louise have a couple of interesting tidbits out of The Centennial State (yeah, I had to look up their nickname myself).

First, according to Jay (via the Connect for Health Colorado exchange itself), as of May 7, 2018, C4HCO had exactly 142,474 people enrolled in effectuated ACA exchange policies statewide. This is noteworthy mainly because 161,764 people selected Qualified Health Plan (QHP) policies during the 2018 Open Enrollment Period.

That's (sort of) an 88% retention rate through early May. I say "sort of" because this presumably includes some amount of churn (if 100 people drop coverage and 100 off-season enrollees sign up, that'd be a net change of zero). Even so, it's actually slightly better compared to prior years, when the national effectuation number had usually dropped to around 87% by the end of March.

Well, Keith Hall, Director of the Congressional Budget Office, just confirmed pretty much everything that we've been saying for a year or more now:

The Affordable Care Act (ACA), in section 1402, requires insurers who participate in the marketplaces established under that act to offer CSRs to eligible people who purchase silver plans through the marketplaces. CBO views that requirement as establishing an entitlement for thoseeligible.

To qualify for CSRs, people must purchase a plan through a marketplace and generally have income between 100 percent and 250 percent of the federal poverty guidelines (also known as the federal poverty level, or FPL). The size of the subsidy varies with income.

CSRs reduce deductibles and other out-of-pocket expenses like copayments. For example, in 2017, by CBOs estimates, the average deductible for a single policyholder (for medical and drug expenses combined) with a silver plan varied according to income in the followingway:

A few weeks ago I posted an entry title, "Will Trump's HHS Dept. do the stupidest thing possible? Reply Hazy; Try Again Later."

The "stupidest thing possible" being referred to was whether or not CMS Administrator Seema Verma is planning on putting the kibosh on Silver Loading and the Silver Switcharoo starting in 2019:

The head of the Centers for Medicare and Medicaid Services would not say Thursday if the Trump administration is considering setting limits on how insurers that sell Obamacare plans structure subsidies for their customers.

"I'm not going to comment on the agency's deliberations," CMS Administrator Seema Verma said when asked by the Washington Examiner about rumors that had circulated about the issue. When pressed about whether any conversations had occurred, Verma said, "I'm just going to leave it at that."

NOTE: I've modified the headline to clarify that it's CSR reimbursements which are dead, not the actual CSR subsidies. Those eligible for CSR assistance will still receive it from the insurance carriers..it's just that the carriers aren't/won't be reimbursed for doing so. In response, they've jacked up the premium rates on others to cover their losses.

And in the end...neither Alexander-Collins, Alexander-Murray, Collins-Nelson or any other "ACA stabilization bill" was included in the final version of the "must-pass" omnibus bill last night.

As I understand it, this means that unless a standalone bill of some sort passes, there will be no significant legislative changes to the ACA exchange/individual market status for the 2019 Open Enrollment Period at the federal level...and that's extremely unlikely to happen this year.

A few days ago I warned Congressional Democrats that while I agree that appropriating CSR reimbursement payments at this point would be a net negative move thanks to the clever Silver Load/Silver Switcharoo workaround developed last year, there's one possible cloud surrounding that silver lining, so to speak: What if the Trump Administration were to attempt to put the kibosh on Silver Loading altogether?

I don't know the legality of such a move, mind you, but It has been thrown around the rumor mill of late, so I figured I should remind them to keep that possibility in mind.

Well, today I received some reassurance...

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

I just did a light analysis of how many people would be helped or hurt by CSR funding in 2019 in Rhode Island, and concluded that at least 28% of exchange enrollees would see their premiums increase if CSR funding was restored, while only perhaps 2-3% would see their premiums drop.

It turns out that over the weekend, my colleague Xpostfactoid did a much deeper analysis of the same situation in Maryland:

So there you have the enrollment results of full-bore on-exchange silver-loading of CSR costs in one state. In all, 49,993 on-exchange enrollees with incomes up to 400% FPL chose plans other than silver. About 48,000 of them were subsidized. That's 31.2% of all enrollees, within striking distance of Aron-Dine's upper bound of 36% for all marketplace enrollees.