How much is TWO years of GOP Sabotage Tax costing in YOUR state?

Tue, 07/24/2018 - 9:56am

Last year I estimated that the combined effect of various Republican efforts to sabotage the ACA caused average unsubsidized monthly premiums to increase by an additional $80/month on average nationally, or around $960 more for the full year per enrollee than they otherwise would have had to pay this year. The exact amount varied widely by state, region, metal level and actual policy, of course.

The 2017 sabotage efforts mainly included the cut-off of Cost Sharing Reduction (CSR) reimbursement payments, but also included a mish-mash of other efforts such as the Open Enrollment Period being cut in half, HealthCare.Gov's marketing budget being cut by 90%, HC.gov's outreach/navigator budget being cut 40%, confusion about whether or not the Individual Mandate would be enforced and, of course, the general confusion about whether or not the ACA itself would be repealed given the half-dozen efforts by Congressional Republicans to do so throughout the year.

This year, the Big Sabotage Factor is the Individual Mandate being officially repealed at the federal level. It's important to note that there's a big difference between not being sure whether or not it'll be enforced (most carriers assumed it would, some assumed it wouldn't, some added a point or two just in case) and knowing that there won't be any financial penalty for failing to enroll in ACA-compliant coverage the following year, which is the case for 2019.

In addition, there's the one-two punch of Donald Trump's executive order stripping away Obama Administration restrictions on non-ACA compliant Short-Term, Limited Duration plans and Association Health Plans (both of which I've summarized as simply #ShortAssPlans).

Finally, there's the recent decision by the Centers for Medicare & Medicaid (CMS) to "freeze" Risk Adjustment fund transfers for an unknown period of time. So far I only know of one carrier (BCBS of Tennessee) to bake in additional premium increases specifically in response to the RA freeze, but there may be more to come.

So far. of the half the states which have actually released their preliminary 2019 rate filings, I'm estimating a national average "sabotage-induced" increase of roughly $52/month or $625 for the full year in 2019. Again, that's an additional $625 on top of whatever other premium increases or decreases there may be for other reasons (increases in medical trend, the carrier tax "holiday", improvement or worsening in the risk pool, state-based reinsurance programs and so on).

In some states, the average 2019 premium is projected to drop even with sabotage efforts factored in. For instance, Minnesota rates are projected to drop around 8% next year thanks in large part to their successful reinsurance program...but they would drop even more if not for the mandate being repealed, #ShortAssPlans flooding the market and so forth. In most states, 2019 premiums are going up at least a few points...but they would be dropping if not for the sabotage factors.

Finally, in many states the carriers overestimated the problem somewhat last year and are therefore making up for it this year by either lowering their rates or only raising them a nominal amount. Ironically, it's the ACA's 80/20 Medical Loss Ratio (MLR) rule itself which is primarily responsible for this development, since it limits carriers to a 20% gross margin on premiums.

All of the above makes it a bit tricky to explain to people.

Furthermore, each years sabotage efforts compound the impact from the prior year. If your premium went up an extra $50/month this year ($600 total) and goes up another $20 next year, that's not just $240 more in 2019, that's $840 more.

I've therefore attempted to visually display the two-year impact of ACA sabotage for each state to make it easier to understand just how much more unsubsidized individual market enrollees are paying above and beyond the "normal" reasons (inflation/etc). The results are rather striking.

Here's Oregon, the first state to release their final, official 2019 premium changes...

In 2017, Oregon premiums averaged $464/month. In 2018 they increased by around $61/month on average to $525/month per enrollee. Of that $61/mo, I estimated that roughly $16/mo was due specifically to sabotage factors.

In 2019, average premiums in Oregon are expected to average around $563/mo, a $38/mo increase. As far as I can tell, about $32 of this is sabotage-generated.

Combined, that's $192 extra this year and another $384 next, for a 2-year total "Sabotage Tax" of $576 per enrollee.

...and here's Pennsylvania, which just released their "semi-approved" 2019 rates: