Study on ACA projections in North Carolina

Steve Parente has an op-ed (full study) that paints a gloomy Obamacare picture for North Carolina, beginning in 2017. The op-ed is a bit hyperbolic and breathless for my taste, but it’s on the opinion page, so to each his own. It is important to look for things that need to be fixed/improved/altered in the ACA, and considering projections, and how they actually perform as compared to the unfolding reality is a worthwhile exercise. A few quick thoughts:

  • Why does he say things will get bad in 2017? The so-called risk corridors end (think of these as a “net” preventing insurance companies from losing too much, but also a ceiling to limit how much profit they can earn). Parente says without them, premiums will spike and plans will be unaffordable due to “structural problems” with the law.
  • Do other federal programs use risk corridors? Yes. Medicare Part D plans (private prescription drug plans subsidized by government + premiums), brought into being by the Medicare Modernization Act of 2003 (coverage started in 2006) still have risk corridors today, and they are never scheduled to go away.
  • Why do the risk corridors in the ACA go away in 2017? The idea was that if you got a large enough risk pool for individual private insurance coverage (and cover many others via Medicaid expansion), you wouldn’t need them. If his numbers are correct, it could signal an issue(s) that need to be addressed.
  • Could the risk corridors be extended beyond 2017? Sure. See Medicare Part D. It would be an easy fix….I am not sure that it will be needed. We need to see more years of enrollment data, and do need to constantly be asking how the ACA can be improved. [one post with some ideas]
  • A pet peeve. Anytime someone provides you with numerators, and not denominators, be wary. He does this throughout the piece, be it the increase in premiums, the number of insured, uninsured, etc. To put all of these figures in proper context requires the denominator (for example, the total population of the state; I could dig them all up but don’t have the time). Similarly, you need to compare all of these metrics to trends before the law, and what would happen to them  if you did away with the law, if you are interested in the impact of the ACA. You could also compare ACA projections to a different law that might be passed. Steve was involved in the private score of the Coburn-Burr-Hatch reform (12 posts) that I have called the most comprehensive “replace” plan. I would note that Steve never did update the private score (so far as I know) of CBH after the sponsors backed off on their aggressive changes in the tax treatment of ESI that was the key to the deficit reduction in the above linked private score.

My biggest question about Steve’s study that is behind his op-ed is how well did his model predict the actual ACA signups in North Carolina this year? He could easily run this simulation using the assumptions and methods he is using to project into the future. How well his model has already worked would be useful to know in thinking through what his projections might mean for the future.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

One Response to Study on ACA projections in North Carolina

  1. Kelsey A. Kemp says:

    Ian,

    Here’s another guy I follow regularly. He’s a prof of Public Policy at Duke, and his blog is usually pretty on point and helpful.

    Best regards,

    Kelsey A. Kemp, MPA Sent from my iPad

    >

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