Is 3.49 more than 3?

Apparently Trump’s HHS doesn’t think so. From Jonathan Cohn at the Huffington Post:

HHS has already submitted a proposal of new rules to OMB. [Under the proposal,] insurers would have more leeway to vary prices by age, so that premiums for the oldest customers could be 3.49 times as large as those for younger customers. Today, premiums for the old can be only three times as high as premiums for the young, which is what the Affordable Care Act stipulates. According to sources privy to HHS discussions with insurers, officials would argue that since 3.49 “rounds down” to three, the change would still comply with the statute.

This is kinda dumb. It’s also not so legal. The ACA says that “the rates” for health plans “shall not vary by more than 3 to 1 for adults.” The statute couldn’t be clearer. As I said to Jonathan: ”If I told you not to sell something for more than $3.00, and you went ahead and sold it for $3.49, then you’ve disregarded my instruction. It doesn’t matter if it rounds to $3.00. It’s more than $3.00.”

Under Chevron, agencies have lots of room to interpret ambiguous statutes. But there’s no ambiguity here. The statute says no more than 3, period. As Monty Python might say, 3.49 is right out. (Here’s where I insert the standard caveat that the administration hasn’t offered a legal argument—or any public comment, for that matter—and it’s possible I’m missing something. Also, the rule could easily be amended during OMB review.)

Look, as a policy matter, I don’t have a dog on this fight. More restrictive age bands reduce the price of coverage for older people but inflate the price for younger folk. Less restrictive age bands do the opposite. It’s a distributional question; what you think is fair depends on value judgments that don’t have crisp answers.

But the fact that older people would be hurt by the change means that loads of people will have standing to sue. You think for one minute that AARP’s going to stand for this? And, if a lawsuit is brought, there’s a trivial chance—it rounds to zero—that HHS will win.

That’s why I’m flummoxed. The goal of this proposal is to stabilize the individual insurance market. If the rule gets mired in a lawsuit, that’ll only contribute to the uncertainty that Trump’s victory has created. For the sake of stability—not to mention its own credibility—HHS should forget that 3.49 ever happened.


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