Thread by @MattAFiedler

The indexing provisions of the new payment notice are technical, but important. They would reduce the premium tax credit for all who receive it. Would also increase allowable out-of-pocket maximum (incl. in group coverage) and increase the employer mandate penalty. More below.

Starting with premium tax credit, a refresher: people eligible for the PTC pay a sliding-scale percentage of their income toward the second-lowest-cost silver plan. Fed gov’t pays the rest.

Statute directs that these income percentages change over time based on how much “premium growth” exceeds “income growth.” HHS is proposing to change how it (and Treasury) measure “premium growth.”

Specifically, HHS wants to use private premiums per enrollee rather than employer-sponsored premiums per enrollee for “premium growth.”

Result: The indexing factor for 2020 would rise ~2.5%, so tax credit recipients will pay a larger share of income toward coverage.

In dollar terms, single person at 300% of FPL would lose $92/year in PTC; family of four at 300% of FPL would lose $189/year in PTC. Smaller effects at lower income levels and larger effects at higher income levels.

In the aggregate, CMS Actuary estimates proposed change would result in $900m less in tax credit payments and 100,000 fewer Marketplace enrollees in 2020.

The same index also controls required out-of-pocket maximum in group and nongroup coverage. Single person out-of-pocket maximums could go up to $8,200 for 2020, rather than $8,000. Family out-of-pocket maximums could go up to $16,400, rather than $16,000.

Change in index also increases employer mandate collections ~$100m in OACT estimates. In long-run, some modest impacts on the (currently suspended) health insurer tax as well.