If I Had A Billion Dollars

CMS released the proposed 2020 Notice of Benefit and Payment Parameters this past week. As part of the proposal the Trump Administration is proposing to reduce the exchange user fee from 3.5% to 3%. The user fee is paid for by insurers (cough, cough) who participate on the individual and SHOP exchanges.

So what, this appears to be good news that will reduce costs right? Well, yes - technically it should reduce premiums.

Except when you look at a total cost perspective.

In 2014 the average premium was $346 per month. 3.5% of the monthly premium is $12.11 or $145.32 per enrollment per year. With enrollment of 6.3 million the total amount insurers "paid" to help with exchange operations was $915,516,000.

In 2018 the average premium was $595 per month. 3.5% of the monthly premium is $20.82 or $249.84 per enrollment per year. With enrollment of 9.8 million - a conservative estimate since final effectuated enrollment hasn't been released - the total amount insurers gave to fund exchanges was $2,448,432,000.

In four years the cost of the exchange has increased by $1,532,916,000. Even when factoring in the additional people the cost increase is $1,024,296,000.

And that is what we consider "government efficiency".