Thread by @bjdickmayhew

1/n #ACA Premiums and landscape files are out so here are the first thoughts:

Headline: Gross Premiums down 4% YoY

@dylanlscott @leonardkl @sangerkatz @sarahkliff @bobjherman @caitlinnowens @rachanadixit

2/N Lots of things are happening.

The biggest one is that 2018 was so massively overpriced that 2020 (these rates) are still reflecting that problem. 2 different pricing scenarios get us to the same point with different stories

3/N 2018 was a huge policy shock for pricing with massive uncertainty on #CSR leading to insurers either running from the market entirely, retrenching or jacking up rates

As soon as CSR Terminated (October 2017), #Silverloading differentially increased silver premiums by a lot

4/N Given price linked subsidies and low competition, the pay-off matrix was for remaining insurers to go super high. If they went wrong by pricing too high, only downside is MLR rebates fiercehealthcare.com/payer/insurers…

5/N If insurers went wrong and massively underpriced 2018 premiums, it was a potential lose the company to liquidation oopsie. So everyone who had the chance to go high went high in 2018.

This is bad for unsubsidized and potentially very good for some subsidized populations

6/N 2019 rates were developed with 2017 experience and Q1 2018 experience. Insurers knew they probably overpriced by a bit but did not have full insight into the size of the overprice when rates were developed and approved.

6.5/N Insurers were also not sure how much the lack of the indvidual mandate mattered for 2019 pricing. Not a risk the company size decision but meaningful downside to be wrong. Thumb on scale to price high.

@sacksdaniel et al find small effects

https://twitter.com/sacksdaniel/status/1174023304686030848?s=20

7/N 2020 rates were developed with full 2018 experience and some 2019 knowledge. By the time rates were filed in Spring 2019 and updated summer 2019, everyone knew 2018 was incredibly overpriced. Many insurers had an experience oopsie update

BCBS-MI for a LOB had 10% shift

8/N The other major brag point is that more insurers are entering the market. Quite a few insurers ran like hell in for 2018. Some of the headline is the removal of voluntary policy uncertainty/shocks

9/N As a side note competition matters, but more importantly matters to whom? Competition is highly likely to be good for non-subsidized buyers, likely to be muddled or negative for subsidized buyers. See @cdrake219 @abrah042
onlinelibrary.wiley.com/doi/full/10.11…

&
onlinelibrary.wiley.com/doi/10.1111/14…

10/N IMO, the 2 big drivers of lower premiums are recovery from 2018 chaos

But there are lots of other things happening that @CMSGov and states deserve credit for that can lower gross premiums

11/N The biggest thing is that #1332 waivers are being approved and being approved quickly.

At least 13 states have a 1332 waiver that pumps in some external to premium revenue to help pay claims. There are several flavors of reinsurance but they work

kff.org/health-reform/…

12/N #MedicaidExpansion matters
@AditiPSen and Thomas Deleire have fascinating work that shows Medicaid Expansion population (100-138% FPL) is more expensive than rest of QHP risk pool so pulling them out lowers premiums
healthaffairs.org/do/10.1377/hbl…

13/N #SilverLoading matters.... more people are being exposed to zero premium plans (mainly Bronze, some Silver/Gold) which improves the risk pool.

healthaffairs.org/doi/10.1377/hl…

Cheap plans means healthy people stay in. Healthy people in lowers average premiums.

14/N A few big pieces of uncertainty remain
a) Texas v. Azar but IMO insurers are confident #SCOTUS will take case no matter what so not 2020 risk
b) HRA for employers --- how to deploy and who plays for 2020 (I'm hearing both interest & plumbing challenges for fast deploy)

15/15 Wrapping up with big points:

a) 2018 is working its way through the system
b) Lots of state-federal cooperation on 1332
c) Medicaid expansion lowers premiums
d) More competition is better for some but not all