Saturday, July 08, 2017
"President Trump and other Republicans have said repeatedly that one reason they have to repeal and replace the Affordable Care Act is that the law is failing: Healthy people are abandoning the insurance marketplaces set up by the law, driving up costs and leading yet more people to drop insurance — a so-called “death spiral.” Many health insurance experts, however, have argued that those fears are overblown, and they recently got support from an unlikely source: the Trump administration itself.
The Centers for Medicare and Medicaid Services, which is part of the Department of Health and Human Services, last week released a report about a wonky aspect of the Affordable Care Act related to insurance payments. Tucked away in the report, however, was evidence that the health insurance marketplaces set up by Obamacare were relatively stable in 2016. Contrary to the “death-spiral” narrative, the CMS report found that the mix of healthy and sick people buying insurance on the Obamacare marketplaces in 2016 was surprisingly similar to those who enrolled in 2015.
Explaining what CMS found requires a dip in the sea of the actuarial terminology, so take a deep breath, we’ll be back up for air shortly. The report looked, in part, at so-called risk-adjustment payments, which are part of the ACA’s system for encouraging insurers to enroll high-cost patients. This system is meant to prevent insurers from cherry-picking the healthiest people on the market by collecting money from plans with healthier enrollees to distribute to plans that have people with higher health care costs. (Another type of payment discussed in the report, known as reinsurance, serves a similar purpose through a different mechanism: The government effectively covers part of the cost of patients with very expensive health needs.)
To determine the mix of healthy and sick enrollees for risk-adjustment payments, the federal government assigns risk scores to people based on their age, sex and health diagnosis and then averages the scores for a plan. What CMS found was that those averages were relatively stable in 2016. That’s a good sign for the marketplaces, because stabilizing the mix of healthy and sick people buying on the marketplaces goes a long way toward stabilizing prices. Despite expectations that in the face of rising premiums, healthier enrollees would be less inclined to enroll last year, that doesn’t appear to have been the case.
That doesn’t mean the marketplaces are working for everyone. There are millions of people who don’t qualify for subsidies, face high prices in the private market and likely haven’t enrolled in insurance as a result. That’s a problem that needs solving, but it’s a different problem than the marketplaces being in a death spiral.
More health care: CHIP on the block?
While Congress has been debating plans to partially repeal and replace the Affordable Care Act, a lot of other legislation has been put on hold. Some of the delays have concerned things the Republicans in charge want to deal with, such as tax reform. But progress has also stalled on some things that Congress has to deal with. In the latter category is whether to renew funding for a program that provides health insurance to nearly 9 million children in the United States.
The Children’s Health Insurance Program, or CHIP, was created in 1997 as a way to get health insurance to children whose families earned too much to qualify for Medicaid but whose incomes were small enough that it would be difficult to purchase insurance outright. Around 8.9 million children1 were insured through CHIP at some point in 2016, according to government estimates. The program is administered by the states but partly funded by the federal government. That federal funding is set to expire on Sept. 30, but Congress has so far put off dealing with it.
The last time the program’s funding came up for consideration in 2015, it was renewed for an additional two years under the same terms that the federal government had previously had with states. But this time around, CHIP renewal is hitting some snags: A Senate hearing that was supposed to begin the renewal process in May was canceled. Policy wonks, both conservative and liberal, have warned that Republicans could use the program as leverage to win Democratic votes on policies they would otherwise oppose — possibly including some health care changes if the Senate bill to repeal and replace the ACA is unsuccessful. It wouldn’t be the first time politicians had wrestled over the program.
State Medicaid directors, who also run CHIP in most states, were expressing concern about the slow renewal even before the May hearing was canceled. They wrote a letter to Congress in March asking that it commit to the funds; today, nearly all of the state legislatures have already adjourned for the year, meaning that states have few options to pay for the program if Congress doesn’t renew the funding or reduces how much the federal government contributes. None of this is to suggest that Republicans are likely to kill off the program: CHIP has had bipartisan support since its inception. They could, however, reduce the share of the bill paid for by the federal government, as Trump’s budget has proposed, forcing states to make tough choices about how many children are enrolled in the program in the process. One thing that’s certain is that lots of things are on hold while Republicans try to follow through on their promise to repeal and replace the ACA."
The Trump Administration’s Own Data Says Obamacare Isn’t Imploding | FiveThirtyEight