Here’s where the fix came in. Many states — more than 40 — allowed insurers to compensate for the loss of C.S.R.s by raising the rates of their silver plans. Because the value of the premium tax credits rises and falls with the price of a silver plan, consumers who qualify will not pay more than a set amount of their income. Instead, the federal government picks up the tab of the rising costs.
In other words, insurers are allowed to claim subsidies, but through a different, more lucrative channel. It will also, not coincidentally, cost the government more than if it had simply paid the subsidies in the first place, because of the cost of covering higher premium rates for consumers who, by law, receive subsidies.
Credit Michael Reynolds/European Pressphoto Agency
These consumers are no worse off whether they purchase silver plans or any other “metal” plan, which might include lower-deductible gold plans that also feature lower out-of-pocket expenses.
Pennsylvania is a good example of this new dynamic. In that state, final 2018 premiums for silver plans increased faster than all others. As a result, a 21-year-old earning $31,000 in Lebanon County can buy a gold plan for less per month than a single Saturday night movie ticket. Last year, that same individual would have had to spend $180 for a silver plan with a much higher deductible.
The Congressional Budget Office expects all states to quickly adopt these strategies that protect their local health insurance markets.
But these are limited strategies: They will make it more complicated to shop for a plan. And they do not immediately help people who do not receive premium tax credits on the exchange.
Here’s where the Alexander-Murray bill could help these individuals, by making the process for approving state waivers to customize their insurance markets faster, simpler and more straightforward. .
States can already apply for waivers from Affordable Care Act regulations. Alaska and Minnesota have received waivers for reinsurance, which helps pay very costly claims without increasing premiums for everyone else. Alaska’s waiver led to a 16 percent to 22 percent drop in premiums that nonsubsidized individuals pay for their insurance. Minnesota’s program dropped some rates by 13 percent, while the largest increases were under 3 percent.
The Alexander-Murray bill would allow states to use off-the-shelf “me too” waivers with fast approval. It would also require the development of standard reinsurance waivers, which would allow states to use these waivers to lower premiums for nonsubsidized buyers.
The bill also allows for wider sales of catastrophic plans, which have very high deductibles but are usually the lowest monthly premium plans that satisfy the individual mandate. Right now only people who are under 30 or who have a hardship exemption can purchase a catastrophic plan. The bipartisan proposal in the Senate would allow anyone to buy a catastrophic plan, which could lead to lower premiums for nonsubsidized buyers.
By pulling the plug on C.S.R. subsidies, President Trump can claim that he will provide a better deal on health insurance for more Americans. He and his fellow Republicans should declare victory, with or without a version of the Alexander-Murray bill — and check health care reform off their legislative list.