Tuesday, October 25, 2016

The two-track individual market for health insurance

There are basically two individual markets for health insurance in the United States: one for subsidy-eligible people earning under 201% of the Federal Poverty Level (FPL), and one for everyone else.

Subsidy-eligible marketplace shoppers with incomes up to 200% FPL are eligible for Cost Sharing Reduction (CSR) subsidies that radically reduce deductibles, copays and maximum out-of-pocket costs. CSR subsidies are available only to those who buy silver plans, as something over 80% of enrollees with incomes up to 200% FPL do.  CSR weakens sharply at 201% FPL and phases out at 251% FPL.

Some time ago I calculated that the weighted average actuarial value for plans sold on the marketplace in 2016 was just about 80%, (The actuarial value is the percentage of the average enrollee's yearly medical costs that the plan is designed to pay.)   80% AV is close to the average for employer-sponsored health plans, and it sounds good, but it masks a sharp division. For those with incomes up to 200% FPL, the average AV was 86%. For the unsubsidized, it was 69%. For those who obtained premium subsidies but had incomes over 200% FPL, it was also 69%.

While average AV was similar for the unsubsidized and the over-200% FPL-subsidized, their choices were somewhat different. About 60% of the over-200%-FPL subsidized group chose silver plans -- in part because weak CSR attaches to silver plans for those in the 200-250% FPL bracket. Among the unsubsidized, only 39% chose silver, but AV was boosted by 18.5% of this more affluent group choosing gold plans, and 3.3% choosing platinum.

This week, the Robert Wood Johnson Foundation published a study, reported by Modern Healthcare's Harris Meyer, that details plan choices (and prices) in the off-marketplace ACA-compliant individual market. And it turns out, unsurprisingly, that the choices made by those who bought their plans off-marketplace -- by definition, unsubsidized -- look much like the choices of unsubsidized marketplace enrollees: a lot of bronze, but also a lot of gold and platinum.  Here is the metal level selection off-marketplace for 2016 according to RWJF*:

Percent of
90 (platinum)
80  (gold)
70 (silver)
60 (bronze)
57 (catastrophic)
69.6 (Weighed AVG)

Their choice pattern is pretty close to that of unsubsidized enrollees on HealthCare.gov:

Percent of
hc.gov enrollees
90 (platinum)
80  (gold)
70 (silver)
60 (bronze)
57 (catastrophic)
68.9 (Weighed AVG)

Monday, October 24, 2016

See plans and prices -- and get buttonholed for Cost Sharing Reduction -- on HealthCare.gov

Healthcare.gov has launched its "shop-around" feature for 2017 -- that is, the screen where you can enter a few basic facts about yourself and then preview plans and prices, with your subsidy built into the price estimate.

As in past years, the shoparound has been redesigned. The new design has plusses and minuses in my view. As always, my primary focus is on how well the app communicates about Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, and only to people with a household income up to 250% of the Federal Poverty Level (FPL).

CSR radically lowers deductibles and copays for buyers with incomes up to 200% FPL and offers a more marginal benefit to those in the 200-250% FPL range. Because the benefit comes only with silver plans, the silver level provides the best value in absolute terms to CSR eligibles.

Because it makes silver plans more valuable than gold plans for anyone with an income up to 200% FPL, CSR is inherently counterintuitive. And because silver plans cost more than bronze, they are easy to miss when plans are ranked by premium, lowest first.

Some state-run ACA marketplaces "default to silver" for CSR-eligible shoppers -- that is, they automatically show silver plans first in the display of available plans. HealthCare.gov appears to have thought long and hard about doing this. Current CEO Kevin Counihan ran Connecticut's ACA marketplace, which has "defaulted to silver" since its launch in 2014. Connecticut has had an unusually high CSR takeup rate.

What Hc.gov decided for 2017 was a kind of optional default to silver. If you're CSR-eligible, the screen below appears before you move on to view available plans (apologies for the cut off phrase at top: it should read "only if you pick a silver plan"):

Since this screen is meant to highlight the benefits of CSR, there's a disconnect in fronting the "estimated total yearly costs." That estimate derives from a prior screen, in which you forecast whether you'll need a low, medium or high level of medical care. The estimate above is for a "low" user.

There may be an appropriate place for that information, but this is not it. What's not highlighted is the radical difference in bronze vs. silver deductibles and copays -- a disproportionate difference, thanks to the CSR subsidy added to silver alone. The light-text explanation at bottom appears to fly in the face of the cost estimate -- which of course presumes that the buyer will be a light user as expected. Risk is left out of the equation implied by the bolded text, as is the extra value added by CSR.

A second flaw is in the contrast of the average premium at each metal level. That average can be skewed by some very expensive options. Most marketplace enrollees consider only the cheapest plans available at each metal level.  In this zip (07079) and income level $23k), the cheapest-plan contrast for a 40 year-old would be between a bronze plan at $69 per month with a $3,000 deductible and a silver plan at $104 with a $300 deductible. That would make a more compelling and coherent contrast:

The good news is, I got that comparison from the shop-around's excellent "compare plans" feature. But I had to first pick through the bronze selections to find the first silver (which, to make matters more confusing, was cheaper than several bronze plans in this zip code). The contrast of CSR-enhanced silver with bronze should be clearer in the intro screen.

A third flaw is that if you go back and edit your information, for example to change the income estimate, you don't get the CSR filter screen the second time around.  You just get plans ranked by premium, and the only alternative filter available at first blush is to rank them by deductible, which can yield off-putting results if there are gold plans at premiums that quintuple lower-cost bronze or silver.

There is in fact an additional "refine results" filter that enables screening for a host of options, but it's in a different color and took me several passes to notice it (I can be a very thick user, but I'm sure I'm not alone in that).

As in previous years, once you've input your basic information and before the screen discussed above appears there's an overview screen that also provides an explanation of CSR. But it's  in light type at the bottom of the page, very subordinate to the centerpiece focused on the tax credit:

The broader shoparound tradeoff is between keeping it short and simple, so that users get a quick view of what they're likely to pay, or slowing the process by adding more information, such as plans that cover the shopper's drugs and have her doctors and hospitals in-network.  This year's shoparound takes  a bit longer to get through  than last year's, which was slower than 2015's. Added this year is a filter to indicate whether one is eligible for subsidies at all, e.g., whether the user has an offer of affordable insurance from an employer, which renders him subsidy-ineligible.

In my view that is a worthy feature, as are the drug and doctor filters, and, if properly contextualized, the total cost estimator, which varies according to whether the user anticipates low, medium or high use of medical services. But I wonder whether a two-tier process mightn't be appropriate. In 2015, you could view plans and prices, with your subsidy priced in, within 30 seconds of visiting the home page.Perhaps the shoparound should start with the most basic info -- zip code, household members with their ages, and family income -- give the price quotes, and then prompt for the additional info in a second stage.  In particular, I'm wary of total cost estimators, which tend to push the cost of unexpected accident or illness out of view. I think the results should be carefully hedged, perhaps with views of what you'll pay under alternative scenarios.

Still, the current shoparound gets you results reasonably fast, and I can't say it ignores CSR, the workings of which are notoriously difficult to communicate. We'll see how it works out for users.

See also:
The ACA's uncertain shield against underinsurance: A CSR compendium

Thursday, October 20, 2016

HHS projects no growth in individual market for health insurance in 2017

The salient point about HHS's enrollment projection for the ACA marketplace in 2017 is that it does not project any growth in the individual market as a whole.

The ASPE brief laying out the forecast projects 13.8 million enrollments in the ACA marketplace by the end of open enrollment 2017, an increase of 1.1 million over the end of the 2016 enrollment period. That estimate includes 1.1 million people expected to move from off-marketplace coverage into the marketplace -- a projection based on HHS's recent estimate that 2.5 million off-marketplace enrollees are potentially eligible for marketplace subsidies.

Since insurers' ACA-compliant off-marketplace plans share a risk pool with their on-marketplace plans, a total market that stays flat will not improve insurers' risk pools, except to the extent that those who come on-marketplace switch from pre-ACA grandfathered and grandmothered plans (as far as I can tell, the ASPE brief does not clarify whether some of the anticipated transfers will come from such plans, which are phasing out). Thus the individual market as a whole may not be any more attractive to insurers next year than this year, except to the extent that this year's price hikes cover last year's losses, or the pent-up demand for medical care on the part of previously uninsured marketplace enrollees starts to level off, or regulatory and risk adjustment changes have a positive effect.

On the other hand, as Kaiser's Cynthia Cox pointed out on Twitter, a transfer from off-marketplace to on-marketplace may reduce insurers' temptation to end their marketplace participation and sell off-marketplace only in some regions.

Tuesday, October 18, 2016

Chipping away at the uninsured: What about those who can't afford employer-sponsored insurance?

Last week, I explored  why HHS's estimate that 9 million of the uninsured may be eligible for ACA marketplace tax credits is so much larger than the Kaiser Family Foundation's estimate of 5.4 million. In brief, the chief differences seem to be a) Kaiser takes into account those among the uninsured who have an offer of insurance from an employer, most of whom are probably ineligible for tax credits, and b) Kaiser also estimates and excludes those with incomes in the 250-400% FPL range who are "potentially" tax credit eligible but in fact ineligible because the unsubsidized premium for the benchmark silver plan in their area is deemed affordable by ACA criteria (i.e., costs under 8-10% of income).

Today, Kaiser updated its 2015 estimates, published in January 2016, of various categories of uninsured. The first thing to note is that the pool has shrunk: Kaiser now estimates 27.2 million nonelderly uninsured in 2016, down from 32.3 million in 2015. Next, the estimated percentage of uninsured who are eligible for financial assistance -- either Medicaid or marketplace subsidies -- is down from 49% to 43%.

That's due in large part to Medicaid enrollment: The estimate of uninsured people eligible for Medicaid is down from 8.9 million in 2015 to 6.4 million at present. But the estimate of the uninsured who are eligible from marketplace tax credits is also down, from 7.0 million in 2015 to 5.3 million now (an estimate Kaiser had already published, with minimal difference, earlier this year, and which I cited in the prior post).

As the ACA marketplace and the larger individual market with which it shares a risk pool wobble this fall, a key question is how close to capacity those linked markets are. Kaiser's new estimates suggest that not only has the pool of uninsured and potentially subsidizable marketplace candidates shrunk, but so has the pool of those who earn too much to qualify for subsidies yet remain uninsured -- from 3.7 million in 2015 to 3.0 million this year. (One thing to watch this year is whether premium spikes reverse that progress among the unsubsidized.)

Put the two together, and the pool of uninsured who might buy health insurance in the individual market has shrunk from 10.7 million to 8.7 million.

Friday, October 14, 2016

Michelle Obama opens the doors of perception

For the second time* in this election season, Michelle Obama riveted the country and the world with moral clarity, in a speech delivered yesterday in New Hampshire. She named Donald Trump before the world. She detailed the effects of his sexual predation -- on herself, voice shaking a little, and on a series of concentric audiences -- the one before her, the nation's children, the world. As she did at the convention, she set Trump's manifest depravity against an idealized portrait of American values as she (or her husband) strives to embody them.

The denunciation was as carefully structured as it was deeply personal. She began, by way of contrast, with a norm as she experiences it, American values that she strives to advance, as expressed in an International Day of the Girl event at the White House  (part of her Let Girls Learn program). There she "had the pleasure of spending hours talking to some of the most amazing young women you will ever meet, young girls here in the U.S. and all around the world." That opened a window on the ravages of male dominance throughout human society - and the route out:

Wednesday, October 12, 2016

Are 2.5 million off-exchange health plan enrollees subsidy-eligible?

A recent HHS ASPE* analysis of the ACA marketplace and the uninsured found that an estimated 2.5 million people currently enrolled in health plans bought in the off-exchange individual market are potentially eligible for premium subsidies in the ACA marketplace. That is, 2.5 million people may have foregone subsidies by buying off-exchange or may be eligible for them in 2017. That's a pretty eye-popping number -- indicating that 70% of those currently enrolled in the individual market (on- and off-exchange) are subsidy-eligible.

HHS further estimated that 9 million of the uninsured are potentially eligible for subsidies in the ACA marketplace, and that a total of 20.9 million people are subsidy-eligible -- more than double the 9.4 million enrolled in subsidized marketplace plans as of March 31 of this year. Those estimates are markedly different from those of the Kaiser Family Foundation, which estimates that 5.4 million of the uninsured are potentially subsidy-eligible, and pegs the total subsidy-eligible population at 14.9 million.

The HHS analysis is based on different survey data than the Kaiser estimate: HHS uses the National Health Interview Survey (NHIS) while Kaiser relies on the Current Population Survey (CPS). But HHS's higher estimates may stem in large part from two more fundamental differences.

Thursday, October 06, 2016

Bill Clinton's other "craziest thing in the world"

I have a post up at healthinsurance.org that looks at an apparent slip from Bill Clinton's political id regarding Obamacare. No, not that "craziest thing in the world" slip -- the one about allowing those who earn too much to qualify for subsidies in the ACA marketplace to buy into Medicaid.

To buy into what? Who suggested that? Certainly not Hillary. But it -- or something very like it  -- might not be such a bad idea. Please take a look.

My last several posts at healthinsurance.org explore outside-the-box ideas for strengthening and/or amending the ACA. They include a Medicare buy-in that Republicans might like and a way to get public option pricing into the ACA marketplace without the 'public' part. Also pointing possible alternate paths: a close look at the Basic Health Programs and proposals to expand them in Minnesota and New York.