,
22 tweets,
3 min read
Read on Twitter
1/N Tweetstorm on insurer decisions to fund CSR through premiums or explicit appropriation per #MurrayAlexander
2/n Florida allowed insurers to build CSR into their premium rates but also required that if CSR was funded/paid insurers to pay back CSR
3/n Otherwise if CSR was to be funded, insurers would get increased premium revenue AND CSR funds. They would get 2x for same services
4/n I think this is the "double dipping" that Schumer is alluding to and wants to prevent. Makes sense, pay only once per service received
5/n Time to think through insurer incentives if they face a choice of funding CSR through premiums or through normal CSR channels.
6/n Let's start simple. Single insurer in the entire state and CSR costs loaded only onto Silver right now. No #riskAdjustment worries
7/n IF funding through premiums, insurer gets to take 20% off incremental premium for operating margin AND makes Bronze and Gold plans
8/n comparatively cheaper. The risk pool is going to be big and healthy as very low cost Bronze and affordable subsidized Gold plans brings
9/n lots of healthy people who were flipping coin between paying mandate penalty or getting coverage. Cheap coverage = lots of ppl covered
10/n Might have off-Ex problems but non-subsidized buyers of Silver shift to non-subsidized Bronze or Gold or Off-ex only Silvers
11/n If funded through CSR channel, Off-Ex Silver cheaper but insurer can't get 20% operating margin on CSR and pricing is now B-S-G-P
12/n so on-Exchange risk pool is smaller/sicker as relative price of Bronze and Gold plans increase.
13/n State monopoly insurers would strongly prefer to fund CSR through the premium channel.
14/n States with multiple local monopoly insurers have risk adjustment challenges but same logic applies; strong tilt to premium not CSR $$
15/n Now let's look at competitive regions: 2 insurers with similar pricing ; If Insurer A goes Premium channel and B goes CSR path
16/n Price path is Bronze (A/B) close, Silver (B), Gold (A), Silver (A), Gold (B)
B gets most of healthy Silver <200 FPL enrollees while A
B gets most of healthy Silver <200 FPL enrollees while A
17/n has dominating Silver plan for people over 200% FPL. Both Bronzes are dirt cheap. Big healthy risk pools (unless B has 2 Silvers)
18/n If both A and B Silver load for premiums to pay CSR, then normal competition but for big/healthy risk pools
19/n Hetergenous pricing makes this more complicated as a low cost Medicaid like insurer might still beat Commercial ESI carriers even with
20/n Medicaid carrier Silver Loading and Commercial ESI getting paid through CSR channel. See this in New Mexico
balloon-juice.com/2017/09/30/gol…
balloon-juice.com/2017/09/30/gol…
21/n Relative pricing in competitive regions matters but I think incentives freq. align for Silver Loading instead of normal CSR payments
22/22 Even if #MurrayAlexander signed into law this PM, I think most insurers would try not to change rates unless forced to do so.
