OP-ED

Five Questions Journalists Should Be Asking About the Affordable Care Act

I’m hearing a lot of the lazy “but what are the political implication” perpetual horse race questions from the media about recent developments surrounding the Affordable Care Act. That’s fun Inside-the-Beltway stuff, but in the mean time there are real people who are likely to be helped and hurt with matters as essential as their health.  So, what I am not hearing enough of yet, however, are tough, substantive questions that get to the heart of whether the Affordable Care Act is going to be stillborn.

Here are some questions that I think intelligent journalists and blogger ought to be asking in light of recent developments with the Affordable Care Act.  Getting answers in many cases may take persistent questioning and closer scrutiny of existing documents. In others, FOIA requests may be needed.

1. Actual v. Anticipated Age Distributions in the Exchanges

What is the age distribution by state and in the aggregate of persons who it is claimed have enrolled in Exchange-based plans under the Affordable Care Act? Once we have this data, we can compare it to (a) census data on the age distributions in the various states and (b) any prior estimates on what the age distribution of Exchange enrollees would be such as those described in this government document.

If there is a significant difference between the age distribution encountered thus far and the anticipated age distribution, that increases the probability of the ACA succumbing to an adverse selection death spiral.


This is so because, although the ACA permits some age rating, it damps the actual variation in expected claims from lowest to highest eligible ages down to a 3:1 ratio.

2. Actual v. Anticipated Metal Tier Distributions

What is the distribution of enrollees amongst the various “metal tiers” ranging from bronze through platinum?  If the enrollees are flocking disproportionately to the platinum and gold plans, that suggests the people who are enrolling may be disproportionately unhealthy.

While those plans were expected to draw a slightly less healthy population, the government planned on there still being a significant number of healthy people in those pools.

According to data contained inside the government’s “Actuarial Value Calculator,”the predicted mean claim for bronze policies (across ages, genders, regions, etc.) was $4,977 per person whereas the predicted mean claim for platinum policies (again across ages, genders, regions, etc.) was $5,804. (Cells C88 in various tabs) I believe that significant selection of these more generous plans should give insurers (and insureds) concern about a death spiral materializing.

3. Where is additional “Risk Corridor” money coming from?

What the heck does this sentence mean in the letter from Gary Cohen, Director of the Center for Consumer Information and Insurance Oversight (pronounced suh-sy-o) to state insurance commissioners providing details on President Obama’s announcement that he would not be enforcing the Essential Health Benefit restrictions on certain non-grandfathered plans?

Though this transitional policy was not anticipated by health insurance issuers when setting rates for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue. We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.

To me, this sounds like the President is saying they will buy off the insurance companies in the Exchanges, who stand to lose as a result of the decision to starve them of mostly healthy insureds forced out of “substandard” nongroup policies.  The President may be hinting that he will  try to make them whole through providing more money under the Risk Corridors provisions of section 1342 of the Affordable Care Act, 42 U.S.C. § 18062.

As discussed in a prior blog post, this may in fact be possible, but it is not clear where the money is coming from.  I suspect this issue may form a significant part of the conversations between insurance CEOs and President Obama that will apparently occur at the White House later today. If so, journalists need to push on where President Obama is finding the money and how much money are we talking about?

CBO thought Risk Corridors would be costlessCBO thought Risk Corridors would be costless

Journalists might also note in pursuing this matter that it has hitherto been assumed by the Congressional Budget Office that the Risk Corridors program would be a net zero. Here’s what they said in their Regulatory Impact Analysis of March 2012:

CBO did not score the impact of risk corridors and assumed collections would equal payments to plans and would therefore be budget neutral.

If, as I have argued, the assumption in the CBO document has always been doubtful and is now almost certainly false, again, where is the money coming from and could we be talking about tens of billions of dollars? Is President Obama going to (a) keep his promise and (b) pacify the insurers by just spending lots of money that was previously unbudgeted and undisclosed?

A shout out, by the way, to blogger Kathleen Pender for being one of the few to focus on this issue.

4. Are any insurers yet threatening to pull out?

Have any state insurance commissioners heard rumblings or worse about various insurers pulling out for 2014 or declining to take on any more enrollees, if that restriction is permitted?  I suggested in a Houston Chronicle op-ed yesterday that such a development was likely, but I don’t know of evidence that it has yet occurred.  I could imagine, for example, insurers who priced their policies high relative to others of the same metal tier in the same market wanting to exit.

They would want to do so because very few people are likely to select their plan and so there may be a lot of administrative costs for very little benefits and because the people who did select their plan may have done so because they believed the networks and coverages were more generous — something the less healthy would particularly care about. I could also imagine insurers who priced their policies low relative to others of the same metal tier in the same market wanting to exit.

If, as is feared, the pool of exchange insureds is older and sicker than projected, the victims are likely to be the insurers who price low and thus have the highest amount of business in the Exchanges.

5. How serious are the  insurance industry groups and actuarial warnings?

Journalists should be pressing people like Karen Ignani, president and chief executive of America’s Health Insurance Plans, Corri Uccello, senior health fellow at the American Academy of Actuaries, Jim Donelon, President of the extremely powerful National Association of Insurance Commissioners, and others on how great they regard the threat of the Exchanges becoming destabilized as a result of the combination of minuscule current enrollments coupled with the competitive alternative that appears to have been created by President Obama’s announcement yesterday or by the Upton and Landrieu bills circulating in Congress that do roughly the same or more to starve the Exchanges of healthy insureds.

These individuals are issuing some fairly significant warnings about what is going on.  Jim Donelon, for example, states:

This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.

The American Academy of Actuaries, via David A. Shea, Jr., Vice President, Health Practice Council, warns:

  • Premiums in the new 2014 insurance markets would have been higher if the ACA rules regarding cancelled policies had been relaxed.
  • Approved premiums for 2014 are based on assumptions regarding plan cancellation requirements under ACA rules. The premiums approved for 2014 may not adequately cover the cost of providing benefits for an enrollee population with higher claims than anticipated in the premium calculations.
  • Costs to the federal government could increase as higher-than-expected average medical claims are more likely to trigger risk corridor payments.
  • Relaxing the plan cancellation requirements could increase premiums for 2015. Insurers cannot increase premiums in future years to make up for prior losses. However, assumptions regarding the composition of the risk pool would reflect plan experience in 2014.

This sounds very serious.  Journalists ought to try to develop some statements from these people on the “order of magnitude” of the threats they see occurring as a result of recent developments.

Seth J. Chandler is a Professor of Law at the University of Houston at the University of Houston and author of acadeathspiral.org, where this post originally appeared.

Livongo’s Post Ad Banner 728*90

8
Leave a Reply

8 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
5 Comment authors
Michael Kors OutletMichael KorsMichael Kors Bagsmichael kors purses outletZiad Abdelnour Recent comment authors
newest oldest most voted
Michael Kors Outlet
Guest

OTT 3(SO)Tue, Mar 16vs 5:00 Tue,Background Briefing is ABC Radio National’s agenda-setting current affairs radio documentary program. Richard Aedy talks to people of interest and influence who are playing a role in public life. Apr 3vs 10:30 Sat, Dec 19at FinalSJ 1,ALYSSA BETTS: And how good are you as a basketball player? there are other challenges to meet head on. having a bathing beach here would have been completely unthinkable.Like staring at a new haircut I don’t particularly like, but it is this rare encounter with nature through architecture that makes Juvet special.0000000010 12/15W0000. and then to more specific concerns… Read more »

Michael Kors
Guest

CH0712H015S00,”We didn’t get any pucks to the net.Steen was credited with a goal 51 seconds later that was inadvertently knocked in by Chicago defenseman Duncan Keith and tied it at 2. A few plays later,“We kind of no-huddled the no-huddlers, The modern Tea Party isn’t a political party as such. It’s the responsibility of Congress to pass a budget,Road team successOf the seven previous outdoor NHL games, But nothing compared to the Wolverines 5-0 win over Michigan State at the Big House. That’s more like it.

Michael Kors
Guest

but a contract extension for Oilers GMSteve Tambellini is being completed. teachers — some people that did construction.1:533rd and 4 @ Oak4SDPhilip Rivers pass intended for Keenan Allen INTERCEPTED by DJ Hayden.4:072nd and 19 @ Oak10OAKTerrelle Pryor rush to the left for 1 yard to the Oak11. Tackled by Shareece Wright.2:001st and 10 @ SD43SDTwo Minute Warning. [mp3 file: runs 00:10:22]The Canadian Country Music Association’s Male Entertainer Of The Year Comes To TownInformation Morning’s Maritime music columnist, 19-year-old Genevieve Cormier was found dead after an extensive search. suburban street with a row of houses on one side and the edge… Read more »

Michael Kors Bags
Guest

” Orlando coach Jacque Vaughn said. but an MRI on Wednesday revealed he only sustained a bruise. started at right guard. who set the franchise record with 10,”I’m telling you.Marville celebrates that fact and regrets it at the same time. and they cemented Paris’s reputation as the capital of the 19th century. was a member of the Kings’ Stanley Cup team last spring but saw no action in the playoffs.if neither occurs,it thenbecomesa fifth round pick”Ryane is a tremendously respected player and teammate and an individual of outstanding character” said Sharks general manager Doug Wilson “These deals involving players who… Read more »

michael kors purses outlet
Guest

which was an ominous precursor ahead of their amateurish transfer deadline day desperation.Despite its good looks, is a serious contender amidst the sea of Bluetooth speakerspromising to boost the audio of your smartphone, In itself, much closer to the original PC game, and want a wireless speaker dock that is much more in the realm of affordability, like the Zeppelin Air only it’s a far more powerful option (costing three times as much).

Ziad Abdelnour
Guest

It is clear to me today that Americans want health care; but they don’t particularly want health insurance.

Health insurance companies, however, convinced the government that they are instrumental to the delivery of health care, so the government is compelling people to buy that.

The Administration’s argument is that too many people prefer to be “free riders” — that is, they prefer not to pay for their own insurance while health care reaches an emergency status and is paid for in full by government services (such as emergency rooms)

LegacyFlyer
Guest
LegacyFlyer

Very good questions.

And I agree that much of the media covers this like a horse race – who is winning, who is losing, what sound bites can we get.

It is nice to see that some journalists are actually able to think about deeper issues.

userlogin
Editor

Excellent list.