Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence by Hanming Fang, Ami Ko :: SSRN

October 19, 2018

In the health insurance marketplaces established by the Affordable Care Act (ACA), each state is divided into a set number of geographic “rating areas.” The ACA mandates that an insurer price its health insurance plan uniformly in all counties within the same rating area, conditional on insurees’ age and smoking status. However, the ACA does not require that an insurer sell its plan in all counties in a rating area. Using the federal marketplace data, we quantify the prevalence of a phenomenon, which we refer to as partial rating area offering, where insurers enter some but not all of the counties in a rating area. To understand why insurers selectively enter a subset of the counties in a rating area, we develop a simple model of insurer competition. The model implies that if common county characteristics, such as the county’s risk distribution, market size and provider availability, are the primary drivers for the partial rating area offering phenomenon, then there would be a positive correlation among insurers’ entry decisions. In contrast, if the partial rating area offering phenomenon is driven by market segmentation, then there would be a negative correlation. We develop a novel nonparametric correlation test and apply it to the federal marketplace data. We find strong evidence for a positive correlation of insurers’ entry decisions, suggesting that common cost factors are the main driver for the partial rating area offering phenomenon. To the extent that it is a concern that many counties now have few insurers, our result suggests that it is important to offer insurers subsidies that are tied to county characteristics.

via Partial Rating Area Offering in the ACA Marketplaces: Facts, Theory and Evidence by Hanming Fang, Ami Ko :: SSRN


The New Health Care Federalism on the Ground

June 5, 2018

This essay, part of a symposium investigating methods of empirically evaluating health policy, focuses on American health care federalism, the relationship between the federal and state governments in the realm of health care policy and regulation. We describe the results of a five year study of the implementation of the Patient Protection and Affordable Care Act (ACA) from 2012-2017. Our study focused on two key pillars of the ACA, which happen to be its most state-centered — expansion of Medicaid and the implementation of health insurance exchanges — and sheds light on federalism in the modern era of nationally-enacted health laws that preserve key roles for state leadership. The full study is detailed in the Stanford Law Review; here, we offer a more accessible snapshot and highlight a key aspect of the research: interviews of approximately twenty high ranking former state and federal officials at the forefront of ACA implementation.

The interviews corroborate the study data and substantiate our conclusions about the defining characteristics of the ACA’s implementation from a federalism perspective. Specifically, we found that the ACA’s implementation process has been 1) dynamic; 2) pragmatic; 3) negotiated; and 4) and marked by intrastate politics. We observed waves of engagement and estrangement between states and the federal government, and state decisions to participate in the ACA’s programs have not been binary, in/out choices. Vertical and horizontal negotiation and copying have been near constants.

The findings also reveal theoretical and empirical challenges for quantitatively evaluating health care federalism. Does it exist? Is it successful? We found the traditional federalism attributes pop up in inconsistent ways under the ACA and emerge from virtually every structural arrangement of the law. We tried, for instance, to measure how “cooperative” the states were, only to find that concept meaningless. Some states attempted implementation but failed; other states rebelled by refusing to run their own programs at all. The federal government stepped in for both. Were such states equally “cooperative” or “autonomous”? The same challenges occurred for all of the classic federalism metrics. For example, we saw local experimentation emerge from every kind of governance structure under the ACA, including nationalist ones.

Our work leads us to a key question: Why choose federalism-oriented health reform models in the first place? In ACA implementation, it sometimes appeared that federalist arrangements did not aim to improve health outcomes but rather reflected “federalism for federalism’s sake”—federalism to advance political or constitutional values, such as reserving power to the states in the interest of sovereignty and balance of power — regardless of the effect on health care coverage, cost, quality, or other measures of health policy success. At other times, it seems federalism was intended as a means to an end — e.g., that state-led health policy is assumed to produce better health outcomes. In the end, we were able to conclude more assuredly that the ACA’s many structural arrangements served state power than that any particular one of those arrangements was more federalist or that any particular one produced better health policy. Clearly, we cannot evaluate federalism — whether it exists, whether it is working, whether it is worth defending — without knowing what it is for in the first place.

via The New Health Care Federalism on the Ground by Abbe R. Gluck, Nicole Huberfeld :: SSRN


Federal Efforts to Stabilize ACA Individual Markets through State Innovation

May 29, 2018

Prior to full implementation of the Affordable Care Act (ACA) in 2014, states had taken the leading role in regulating individual health insurance markets. The ACA’s regime of subsidies, penalties, and federal regulations made individual coverage more accessible to those with moderate incomes and those with preexisting medical conditions. Premiums for such coverage, however, doubled between 2013 and 2017, leading to turmoil in individual markets. Both Congress and the Centers for Medicare and Medicaid Services (CMS) sought to grant states more authority to stabilize their markets through a waiver process established by section 1332 of the ACA. These efforts fell short. Congress did not enact significant changes to the ACA, and few states obtained CMS approval for section 1332 waivers to stabilize their markets. This paper offers several recommendations for streamlining and improving that waiver process that would provide states with more tools to stabilize individual markets.

via Federal Efforts to Stabilize ACA Individual Markets through State Innovation by Doug Badger, Rea S Hederman :: SSRN


Stabilizing the ACA’s Individual Markets Why State Innovation is Key

May 9, 2018

Prior to full implementation of the Affordable Care Act (ACA) in 2014, states had taken the leading role in regulating individual health insurance markets. The ACA’s regime of subsidies, penalties, and federal regulations made individual coverage more accessible to those with moderate incomes and those with preexisting medical conditions. Premiums for such coverage, however, doubled between 2013 and 2017, leading to turmoil in individual markets. Both Congress and the Centers for Medicare and Medicaid Services (CMS) sought to grant states more authority to stabilize their markets through a waiver process established by section 1332 of the ACA. These efforts fell short. Congress did not enact significant changes to the ACA, and few states obtained CMS approval for section 1332 waivers to stabilize their markets. This paper offers several recommendations for streamlining and improving that waiver process that would provide states with more tools to stabilize individual markets.

via Stabilizing the ACA’s Individual Markets Why State Innovation is Key by Doug Badger :: SSRN


The Effect of the Risk Corridors Program on Marketplace Premiums and Participation

January 17, 2018

We investigate the effect of the Risk Corridors (RC) program on premiums and insurer participation in the Affordable Care Act (ACA)’s Health Insurance Marketplaces. The RC program, which was defunded ahead of coverage year 2016, and ended in 2017, is a risk sharing mechanism: it makes payments to insurers whose costs are high relative to their revenue, and collects payments from insurers whose costs are relatively low. We show theoretically that the RC program creates strong incentives to lower premiums for some insurers. Empirically, we find that insurers who claimed RC payments in 2015, before defunding, had greater premium increases in 2017, after the program ended. Insurance markets in which more insurers made RC claims experienced larger premium increases after the program ended, reflecting equilibrium effects. We do not find any evidence that insurers with larger RC claims in 2015 were less likely to participate in the ACA Marketplaces in 2016 and 2017. Overall we find that the end of the RC program significantly contributed to premium growth.

via The Effect of the Risk Corridors Program on Marketplace Premiums and Participation by Daniel Sacks, Khoa Vu, Tsan-Yao Huang, Pinar Karaca-Mandic :: SSRN


Obamacare Enrollments Lagging Significantly

December 6, 2017

As of November 25, 2017, the open enrollment period for 2018 individual market coverage is more than 57% complete. To date, 2.8M individuals have signed up for coverage through HealthCare.gov, compared to more than 7M people during the prior two years’ enrollment seasons.

via 2018 Exchange Enrollment Tracking Behind Prior Years | Avalere Health


ACA Is Uninsuring the Insured | Mercatus Center

August 16, 2017

The number of people with individual health-insurance coverage is shrinking. Despite $146 billion in federal subsidies to low-income households and well-capitalized insurers, 2.6 million fewer people had individual policies in March 2017 than in March 2016, a drop of nearly 15 percent.

Source: ACA Is Uninsuring the Insured | Mercatus Center