Thread by @charles_gaba

📣 This morning the Trump Admin issued a press release crowing about #ACA premiums dropping 4% thanks to their supposedly brilliant management.

I need to clear up a few things about this. 1/

First of all, it’s important to note that the 4% drop refers specifically to *benchmark Silver plans* only, and only includes 39 states. It also only includes exchange-based enrollment. These factors limit it to < 40% of total #ACA-compliant individual market enrollment. 2/

When you include *all* metal levels for *all* states both on & off-exchange, the weighted avg is ⬆️ 0.1% instead of ⬇️ 4.0%.

Obviously that’s still far better than double-digit increases, but it’s important to be as comprehensive & accurate as possible.

acasignups.net/rate-changes/2…

Second: Here’s the *overall* weighted average increases for #ACA policies over the years:

2008: ~9.9%
2009: ~10.8%
2010: ~11.7%
2011: ~7.8%
2012: ~7.1%
2013: ~7.9%
2014: ~15%*
2015: ~13%*
2016: ~13%
2017: ~25%
2018: ~27%
2019: ~3%
2020: ~0.1%

*(2014 & 2015 are fuzzy) 3/

When ACA compliance became mandatory in 2014, the averages moved into double digits as carriers dealt with the flood of people with PRE-EXISTING CONDITIONS who entered the market, who had previously BEEN THROWN UNDER THE BUS by major medical policy carriers. 4/

What happened in 2017? Among other changes, the 3-year federal reinsurance program sunsetted, so carriers jacked up rates to account for what they thought would be huge cost increases. Remember, they’re using the PRIOR year’s data when setting rates for the UPCOMING year. 5/

What about 2018? Among other changes, Trump cut off CSR funding, causing carriers to have to scramble to re-submit pricing to make up for the billions of dollars they were about to lose in CSR reimbursements.

Result? 2017 & 2018 rates shot up ~25% and ~27% respectively. 6/

For 2019, carriers tacked on another ~8% to account for the elimination of the individual mandate…but it turns out they had done better than expected in 2017 (& overestimated the CSR cut-off impact), so they WOULD have REDUCED rates by ~5% w/out the mandate being zeroed out. 7/

In addition, several states started implementing their own state-level reinsurance programs in 2018, 2019 & 2020...which IS ALLOWED FOR UNDER THE ACA ITSELF. This, combined with the ACA's MEDICAL LOSS RATIO RULE limiting carriers to a 20% gross margin... 8/

...means that for the most part they pretty much HAVE to lower their premiums (or at least limit their increases to less than inflation) in 2020 as well to avoid breaking that 20% gross margin threshold, which is calculated on a 3-year rolling average. 9/

So, what actually led to the low-single digit increases in 2019 & 2020?
1. Correction of overestimates from 2017 & 2018
2. State-level reinsurance waivers *allowed for under the ACA*
3. The Medical Loss Ratio rule *put in place by the ACA*
10/

Notice that the Trump Administration has little to do with any of these three things. I do give them credit for APPROVING the dozen or so reinsurance waivers, but those were drafted, legislated on, signed & lobbied for by the state governments, not the Trump Admin. 11/

(If you're wondering why reinsurance waivers weren't put into place before 2017, that's a coincidence: ACA 1332 waivers couldn't start until 2017...the same point that the federal ACA reinsurance program sunsetted anyway. Trump just happened to take office at the same time.) 12/

OK, so does the Trump Admin deserve credit for ANY of the positive pricing news in 2019 & 2020? Here's where it gets really wonky. See, Trump cut off CSR payments in a deliberate attempt to destroy the ACA exchange market. That's not my take; he specifically said as much. 13/

Trump deserves BLAME for about 60% of the rate hikes in 2018 due to his CSR cut-off.

At the same time, when he did this, @urbaninstitute (I believe) & @CoveredCA came up w/a clever pricing strategy which was then adopted by other states & carriers called #SilverLoading. 14/

I wrote up an explainer here. The bottom line is that #SilverLoading & #SilverSwitching was a way of making lemons into lemonade. It resulted in higher #ACA subsidies for those who qualify...which mean lower net premiums for most enrollees. 15/

acasignups.net/18/05/23/four-…

At the same time, #SilverLoading also meant *even higher* premiums for UNSUBSIDIZED enrollees in many states...but only if they stuck with Silver plans. #SilverSwitching was an even wonkier strategy which let them avoid that extra "CSR hit". 16/

In any event, #SilverLoading & #SilverSwitching helped *minimize* the damage caused by Trump's CSR cut-off, marketing/outreach budget slashing, #ShortAssPlans expansion and so on by helping retain enrollees & keeping the risk pool from spiraling out of control. 17/

So, does Trump deserve "credit" for that? Not really. It was the carriers, exchanges & state regulators who implemented #SilverLoading to COUNTER Trump's attempted sabotage. 18/

In fact, the Trump Administration actually strongly considered attempting to STOP #SilverLoading & #SilverSwitching for 2019 and beyond. They eventually gave up on this effort, but they hardly deserve a round of applause for grudgingly agreeing to let it continue. 19/

Put another way: If I try to shoot you, but miss & the bullet hits an ATM which spits out a $20, do I deserve "credit" for your sudden wealth? Of course not. I was still attempting to kill you.

Trump being too incompetent to even *sabotage* properly is hardly worth praise. /END

P.S. Earlier I said that Trump's CMS press release only referred to <40% of the market. It could actually be as little as 22% of the total market assuming only 60% of Silver enrollees chose the benchmark plan specifically.