Thread by @charles_gaba

@HoarseWisperer If you’re interested, I’ll tell you the story of how Trump was so incompetent at sabotaging the ACA he accidentally improved it (sort of).

@HoarseWisperer Sorry, it’ll have to wait until tomorrow. I’ll start at this point, though, so check back here...

@HoarseWisperer Here’s a teaser: There was a court ruling about it today, though it didn’t get much attention.

@HoarseWisperer 📣 OK, kids: Pull up a chair and I'll tell you the tale of how one of Donald Trump's attempts to kill the #ACA only ended up making it stronger (sort of).

Our tale begins way back in 2014, when then-Speaker John Boehner (remember him?) decided to sue the Obama Administration. 1/

@HoarseWisperer Here's a long, wonky piece I wrote about the case back in 2017. This tells the first half of the story, which I'll try to summarize in this thread: 2/
acasignups.net/17/10/06/brief…

@HoarseWisperer Among the various provisions of the #ACA, there are two types of financial subsidies for low-to-moderate income folks who enroll in ACA individual market policies via HealthCareGov or the state-based exchanges. Advance Premium Tax Credits (APTC) cut down on monthly *premiums*. 3/

@HoarseWisperer The 2nd type is called Cost Sharing Reduction (CSR), which cut down on *deductibles* and other out of pocket expenses like co-pays.

Both types of subsidies work on a sliding scale up to a certain income cut-off point: APTC ranges from 100-400% of the federal poverty level... 4/

@HoarseWisperer ...which is roughly $13K - $50K if you're single, or $25K - $104K for a family of four.

CSR assistance ranges from 100 - 250% FPL, which is $13K - $32K if you're single or $26K - $65K for a family of four.

So, in 2014, John Boehner & the House Republicans sued Obama. 5/

@HoarseWisperer The lawsuit had several claims, one of which was that the CSR payments being made were unconstitutional because they hadn't been specifically appropriated by Congress in the text of the ACA itself. 6/

@HoarseWisperer Now, the ACA does have several other references to the CSR program, but it doesn't *explicitly* authorize appropriation of this *particular* money for this *particular* purpose. Basically, a drafting error forgot to include the following paragraph: 7/

@HoarseWisperer U of M law professor and ACA expert @nicholas_bagley explained at the time that the case itself may have had merit...but that the House didn't have standing to bring it:
theincidentaleconomist.com/wordpress/oh-b… 8/

@HoarseWisperer @nicholas_bagley Regardless, the judge in the case ruled in favor of the House GOP in May 2016...but then put a stay on her own ruling pending the appeal by the Obama Administration.

At the same time, she also came right out and admitted that...

@HoarseWisperer @nicholas_bagley At the time, the House GOP was thrilled at the win, because they assumed (as did nearly everyone else) that Hillary Clinton would be elected President and that if the appeal failed, she would take the blame when CSR payments were cut off.

However, that's not what happened. 10/

@HoarseWisperer @nicholas_bagley Instead, Donald Trump won. So first they tried kicking the can down the road, figuring that they were gonna repeal the entire ACA on "day one" anyway... 11/

@HoarseWisperer @nicholas_bagley When THAT didn't happen, they kicked the can down the road AGAIN... 12/

@HoarseWisperer @nicholas_bagley ...and then a THIRD time (and eventually a fourth), while they scrambled to figure out how to spin their "win": 13/

@HoarseWisperer @nicholas_bagley At the same time, however, Donald Trump, who was dead set on destroying "Obamacare" any way he could, was ranting and raving on Twitter about how he was going to "blow up" the ACA by "cutting off" the subsidies.

You see, the judge had already ruled for the House. 14/

@HoarseWisperer @nicholas_bagley The only reason CSR payments were still continuing at this point is because of *stay* put on her own ruling pending the *appeal* of it by the Obama Administration...and that appeal was now controlled by Donald Trump's Justice Dept. 15/

@HoarseWisperer @nicholas_bagley Month after month, Trump publicly threatened to cut off CSR payments. Insurance carriers, enrollees and wonks would nervously wait to see if the payments were made, then wipe their brow with relief when they did.

Until October 2017: acasignups.net/17/10/19/sword…

@HoarseWisperer @nicholas_bagley In October, Trump officially cut off CSR payments after his DoJ dropped the appeal, triggering Judge Collyer's earlier ruling.

Trump was very excited about having damaged the ACA and hurting millions of low-income enrollees.

Or so he thought. 17/

@HoarseWisperer @nicholas_bagley CSR payments don't go to the ENROLLEE. They go to the INSURANCE CARRIER...and more importantly, they go to the carrier AFTER the CARRIER has already made the payment to the healthcare provider.

In other words, CSR payments REIMBURSE the insurance carriers AFTER the fact. 18/

@HoarseWisperer @nicholas_bagley The insurance carriers are contractually obligated to make the CSR payments in question themselves, w/the understanding they'd be *reimbursed* the following month for their expenses. Every month they submitted their CSR expense report to the HHS Dept which reimbursed them. 19/

@HoarseWisperer @nicholas_bagley The thing is, the carriers were stuck covering the CSR expenses *whether they got reimbursed or not*. This meant that they had to pay out nearly $2 billion for October, November & December 2017 while getting stiffed by the Trump Administration. 20/

@HoarseWisperer @nicholas_bagley The real danger of Trump cutting off CSR payments was that the carriers might refuse to renew their contracts for 2018. This was understandable from their POV--why would you sign a contract guaranteeing that you'd lose billions of dollars? 21/

Now, a few carriers did just that. Here in Michigan, for instance, Health Alliance Plan dropped out of the ACA exchange for 2018 specifically citing Trump's threat to cut off CSR reimbursements as one of the main reasons why: 22/

acasignups.net/17/09/15/michi…

There was also Great Drama over at Molina Healthcare, where the CEO issued an ultimatum to the Trump Administration over the CSR issue... 23/ acasignups.net/17/04/28/updat…

...only to be promptly FIRED a week later from the very company which bears his name and which was founded by his father: 24/ acasignups.net/17/05/03/updat…

SIDENOTE: Guess who's on the Molina Healthcare Board of Directors?

https://twitter.com/charlesornstein/status/859755983572271106

25/

ANYWAY, getting back to the CSR saga: Some carriers did drop out, but most of them stuck around, much to Trump's frustration...because they came up with a workaround: Simply figure out how much CSR they'd be owed ithe following year and raise premiums to cover the losses! 26/

(BREAK...gotta get dressed; back soon...)

Where was I? Oh yeah...Trump had just stiffed private contractors out of billions of dollars they were contractually owed. So, a day that ends in "y" basically.

Let's back up: Trump started threatening to cut off CSR payments around March 2017. 27./
politico.com/story/2017/03/…

March is when insurance carriers begin crunching the numbers to figure out pricing for the FOLLOWING year...but final contracts aren't actually SIGNED until late September.

With Trump threatening to cut off CSR month after month, some carriers saw the writing on the wall. 28/

Many carriers submitted REVISED rate change requests in July or August which baked in an extra 14% or so to account for their CSR reimbursements being cut off. Others tacked on a point or two just in cases the individual mandate penalty was eliminated. 29/
acasignups.net/2018-rate-hikes

OK, so far all of this makes it sound like Trump failed at destroying the ACA and only succeeded in causing everyone's premiums to go up ~15% or so, right? How on earth does that make the ACA "better"?

Well, that's where #SilverLoading and #SilverSwitching comes in. 30/

First, some credit given:

#SilverLoading was first described by Linda Blumberg & Matt Buettgens of the @urbaninstitute.

@CoveredCA was the first ACA exchange to formally push it.

Other carriers/insurance commissioners/state exchanges picked up the ball & ran with it. 31/

@urbaninstitute @CoveredCA I'm pretty sure @bjdickmayhew coined the *phrase* #SilverLoading, while I was the one who coined the phrase "#SilverSwitcharoo", which I've been regretting ever since.

@joshschultzdc was actually the one who first explained how #SilverLoading might work in practice to me. 32/

Here's the basics of #SilverLoading:

--ACA plans come in 4 metal tiers: Bronze, Silver, Gold, Platinum. Bronze = lowest premium, highest deductible. Platinum = highest premium, lowest deductible.

--APTC subsidies are based on a particular SILVER plan called the "benchmark". 33/

The way the APTC formula works is that if the benchmark Silver plan premium increases, the amount of the financial subsidy you're eligible for also increases to match (roughly), so that you never pay more than a certain percent of your income in premiums, which makes sense. 34/

HOWEVER--and this is critical--you don't HAVE to use that subsidy for the benchmark Silver. You can use it for ANY plan on the exchange of any metal tier.

Let's say the official premium is:
Bronze: $450/mo
Silver: $600/mo
Gold: $750/mo
Platinum: $900/mo 35/

Let's say that based on your income, you don't have to pay more than $200/mo for the benchmark Silver, so you get $400/mo in APTC. You can use that to buy the *Bronze* plan for $50/mo or a *Gold* plan for $350/mo instead if you prefer.

(I'll leave out Platinum from here on) 36/

Now, let's say the carrier raises premiums 10% across the board to account for their CSR losses. The new prices are:

Bronze: $495
Silver: $660
Gold: $825

In this case, your APTC went up from $400/mo to $460/mo. If you buy a Bronze plan you'll now only pay $35/mo. 37/

In this case, a Bronze plan just became a bit more of a value, but the Gold plan is *less* of a value since you'd have to pay $365.

HOWEVER, what happens if a carrier decides to "Silver Load"? 38/

That is, what if, instead of raising *every* plan by 10%, they raise Silver premiums by, say, 25% to cover the CSR losses but don't raise Bronze or Gold plans at all?

Here's the new pricing:
Bronze: $450
Silver: $750
Gold: $750

Whoa! Silver now costs the same as Gold! 39/

All of a sudden, the Gold plan (with a much lower deductible) becomes a much better value by comparison...but that's just the start.

The $400/mo APTC is now $550/mo...which means you can now get a Bronze plan FREE (no, you don't get $100 *paid*...the minimum premium is $0). 40/

Suddenly, IF YOU'RE SUBSIDIZED, you can get a dirt-cheap (or even free) Bronze plan *or* you can get a high-value Gold plan at a much better price.

This is called #SilverLoading, and it meant LOWER premiums for millions of ACA enrollees starting in 2018. 41/

HOWEVER, what about those who AREN'T subsidized? If you don't receive any APTC at all, you just saw YOUR premiums jump by 25% for that Silver plan.

That's where the #SilverSwitcharoo comes in, which is a more complicated version of #SilverLoading. I won't go into that here. 42/

Here's a wonky primer on #SilverSwitcharoo if you're really interested. Some states use it, others use "regular" #SilverLoading. It's complicated and awkward and a lot of people don't "get it" (in fact, some *carriers* don't fully understand it): 43/
acasignups.net/18/05/23/four-…

Anyway, thanks to the @urbaninstitute, @CoveredCA, @bjdickmayhew & other healthcare wonks for helping spread the word, the insurance industry was able to not only mostly cancel out Trump's attempt at sabotage, they were actually able to *reduce* premiums for millions. 44/

@urbaninstitute @CoveredCA @bjdickmayhew Now, there are those who claim that all of this was actually an 11th Dimensional Chess Genius Move by Trump which he always meant to do. Nonsense.

Among other things, the Trump Administration was actually on the verge of BANNING #SilverLoading. 45/

acasignups.net/18/04/12/dammi…

@urbaninstitute @CoveredCA @bjdickmayhew More to the point, they had NOTHING TO DO with the #SilverLoading concept. It was put together by everyone ELSE to COUNTER his ham-handed attempt to "blow up" the exchanges. 46/

@urbaninstitute @CoveredCA @bjdickmayhew Giving "credit" to Trump for this is like if I try to shoot you while you're standing in front of an ATM, but I'm a bad shot, hit the ATM and it starts spitting out $20 bills.

I don't get "credit" for making you rich, and I'm still guilty of attempted murder. 47/

@urbaninstitute @CoveredCA @bjdickmayhew (back soon for Part 3 of the CSR Saga...)

@urbaninstitute @CoveredCA @bjdickmayhew MEANWHILE, the insurance carriers were collectively still owed nearly $2 BILLION in CSR payments for the last 3 months of 2017 (remember, 2017 rates had been set a year earlier, prior to Trump cutting off the payments). 48/

As you might imagine, they filed a bunch of lawsuits.

As @nicholas_bagley noted at the time, this was a pretty open & shut case: The carriers had signed the *2017* contracts *including* CSR reimbursements regardless of what future years may bring. They were owed that money whether Congress had formally "appropriated" it or not. 49/

@nicholas_bagley The cases ground their way through federal court for a year or so, and unsurprisingly, the judges have ruled in their favor of the carriers being owed their 2017 $ pretty much across the board.

HOWEVER, there was yet another surprise: 50/

acasignups.net/19/02/18/major…

@nicholas_bagley As @amylotven of @InHealthPolicy first reported back in February 2019, the courts ruled that the Trump Admin. owed the carriers NOT ONLY the ~$2B they owed for Q4 2017... but ALSO STILL OWED CSR REIMBURSEMENT PAYMENTS FOR *2018* AS WELL.

https://twitter.com/amylotven/status/1096588449199513600?ref_src=twsrc%5Etfw

@nicholas_bagley @amylotven @InHealthPolicy This part of the ruling may seem illogical--doesn't it let the carriers get away with double dipping?--but it actually makes sense if you read their reasoning: 52/

@nicholas_bagley @amylotven @InHealthPolicy I came up w/this metaphor: 53/

As Bagley put it at the time... 54/

https://twitter.com/nicholas_bagley/status/1096608566843269120?ref_src=twsrc%5Etfw

OK, so the insurance carriers get billions of dollars in double-dipping CSR payments until the end of time, right? Well, *maybe*...except that, thanks to the ACA's Medical Loss Ratio rule, they'd have to pay most (if not all) of that back out again: 55/
acasignups.net/19/10/25/welp-…

You see, the ACA's MLR rule says that insurance carriers are limited to no more than a 20% *gross* margin on the individual market. Any excess revenue (based on a 3-year rolling average) beyond that has to be paid out to *policyholders* in the form of rebate checks. 56/

(back in a bit...)

OK, back again for the final stretch of the CSR Saga...

So, the ACA's MLR rule makes carriers pay back anything over 20% of gross margins based on a 3-yr rolling average (w/some formula tweaks). Here's my explainer if you're interested in the deets: 57/ acasignups.net/19/08/29/impor…

Since the #ACA was signed, insurance carriers have paid out hundreds of millions of dollars in MLR rebate checks to policyholders. On the individual (ACA exchange) market, it averaged around $185 million per year from 2012 - 2018. Last year it skyrocketed to $770 million. 58/

THIS year, MLR rebate payments are projected to be larger yet...nearly $2.0 BILLION to around 4.7 million individual market enrollees alone...which happens to be almost exactly what I projected a year ago: 59/

acasignups.net/20/04/18/hey-r…

OK, so the insurance carriers are now flush with cash to the point that they're ALREADY having to pay back as much as $2 billion in excess revenue per year. So what would happen if they end up being flooded with ANOTHER ~$10B/year??

acasignups.net/19/10/25/welp-…

Now, I *did* make sure to include some serious caveats... /61

...all of which FINALLY brings me up to yesterday's breaking news from @clinkeyoung: 62/

https://twitter.com/clinkeyoung/status/1294372541881081856

@clinkeyoung As Young explains, in the end the court ruled that yes, the insurance carriers ARE entitled to not only the Q4 CSR payments (which I think ended up being more like $1.6 billion), AND that YES, they are indeed still eligible to recover CSR payments for 2018/beyond... 63/

@clinkeyoung HOWEVER--and this is the big pin which bursts my fun "MASSIVE MLR REBATE OMG!!" speculation--the court ALSO ruled that "their damages must be reduced to reflect the benefits they got from #SilverLoading."

Awwww, mannnnn.... 64/

@clinkeyoung This appears to mean that the insurance carriers can EITHER ignore the ruling for 2018/beyond *OR* they can pay their actuaries, accountants & lawyers a shit-ton of overtime to try and calculate whether they're better off demanding the payments or not: 65/

https://twitter.com/clinkeyoung/status/1294372543713947649

@clinkeyoung Bottom line: There may be a few exceptions, but the odds are most carriers are better off not going through the trouble. They'll still get that $1.6B from Q4 2017, though, which may still mean a one-time MLR rebate bonus depending how it's recorded. 66/

https://twitter.com/clinkeyoung/status/1294372544561250308

@clinkeyoung Of course, NONE OF THIS even TOUCHES on the OTHER massive #ACA class action lawsuits filed by insurance carriers over RISK CORRIDOR payments...but that's a whole other thread for another day... /END
acasignups.net/20/02/18/reven…

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