Friday, September 26, 2014

Did too many low income ACA shoppers buy bronze plans?

Modern Healthcare's Virgil Dickson reports on a weak link in ACA coverage:
Obamacare enrollees are straining the finances of community health centers around the country, some health center leaders say.

The issue is that many lower-income patients with insurance coverage through the federal and state exchanges bought bronze-tier plans with lower premiums but high deductibles, coinsurance and copayments and no federal cost-sharing subsidies. When these patients face high out-of-pocket costs for care that falls below the deductible, they can't afford it. 
Deductibles on bronze plans average $5000 per person nationwide. In some regions, those high-deductible plans provide office visits and generic drugs at moderate co-pays before the deductible kicks in; in others, they don't. Lots of bronze plans really just provide catastrophic coverage with the ACA's mandatory free preventive care services -- substantial but not matching everyone's top needs by any means -- tossed in.

Silver (only) bullet: the lesser-known ACA subsidies

Low income people who qualify for private-plan subsidies under the ACA-- that is, those who earn too much to qualify for Medicaid but less than 250% of the Federal Poverty Level (FPL)-- should not, for the most part, be in bronze plans.  Recognizing that deductibles in the thousands are not viable for people at these income levels (138%--250% FPL), the ACA provides Cost Sharing Reduction (CSR) subsidies -- but only with silver plans (which have lower deductibles and copays than bronze to begin with). If you don't buy silver, no CSR fo you.

The CSR subsidies are particularly generous under 200% FPL, covering 94% of an average user's costs for those earning up to 150% of the Federal Poverty Level (FPL), 87% for those earning 151-200% FPL, and a more modestly boosted 73% for those between 200% and 250% FPL.

Most who should have bought silver bought -- silver

The good news is that overall, the marketplace worked more or less as intended, in that 76% of subsidy-eligible buyers on bought silver plans, according to an HHS May 1 report. Of those who didn't, perhaps a higher percentage had incomes between 250%--400% FPL, which would at least mean that they weren't leaving CSR on the table.  Just 20% of users in all marketplaces (state-run as well as bought bronze plans, and since 33% of buyers who earned too much to qualify for subsidies bought bronze, somewhat less than 20% of the subsidy-eligible must have done so. I would hope, again, that the percentage of CSR-eligible buyers who bought bronze is lower still.

Bronze might make sense for some subsidy-eligible buyers, e.g., healthy people earning over 250% FPL.  Bronze plans were probably particularly tempting for some older buyers because of an anomaly in subsidy structure that would zero out their monthly premiums at the bronze level, as the Wall Street Journal's Louise Radnofsky and Christopher Weaver explained in August 2013:
The law sets maximum amounts that people must pay before subsidies kick in at specific income levels. Because premiums are higher for older customers, the value of the subsidies is also much larger. Thus, when older people use subsidies to buy coverage that is cheaper than the benchmark plan used to determine subsidies, they can end up paying less than younger people who earn the same.
Because premiums are much higher for older users, premium difference between a benchmark silver plan and a bronze plan is also usually greater for them. Since the subsidy is keyed to the second-cheapest silver plan, the price difference between that plan and a bronze plan may be greater than the subsidized monthly cost of the silver plan.  Saving, say, $100 per month in premium may be worth a higher deductible, particularly in a bronze plan that meets a particular user's need, such as, for example, $7 copays for generic drugs. Older buyers on the whole did not, however, buy a disproportionate share of bronze plans.

Low income, high deductible

Nonetheless, too many subsidy-eligible people probably ended up in bronze plans.On, 73% of bronze buyers, 688,280 people in total, were eligible for subsidies. Since accounted for about two thirds of signups nationally, that suggests about 1 million subsidy-eligible bronze buyers nationwide.  And that's about right: according to HHS, 15% of subsidy-eligible shoppers bought bronze, and 85% of buyers, or about 6.8 million, were subsidy-eligible.

How many of them lost the chance to access CSR by buying bronze? Washington State, which published reports breaking out enrollment figures by income level, offers a snapshot. In Washington, 73% of all those eligible for private-plan subsidies were under 250% FPL -- that is, eligible for CSR. If the same percentage holds nationally, a bit more than 750,000 CSR-eligible buyers chose bronze plans and so forfeited their CSR. Just over half of Washington private plan buyers were under 200% FPL.  Perhaps 500,000 bronze buyers nationally, then, were under 200% FPL and so left really substantial CSR subsidies on the table.

That's about one sixteenth of private plan buyers on the ACA exchanges. Perhaps that's too many -- I don't really have a basis for comparison (Medicare Advantage and Medicare Part D?).  Perhaps suboptimal bronze buys are concentrated in states with limited outreach and navigational help. Perhaps some exchanges did a better job than others steering CSR-eligible buyers into into silver plans -- that is, warning that they were forfeiting extra help if they chose a level other than silver. IN some, premiums may be particularly unaffordable. (For whatever reason, in Washington state a too-high 36% of private plan customers bought bronze, and a quarter of CSR-eligible customers bought bronze.)

Then too, as ACA navigator and program coordinator Kate Kozeniewski pointed out in my TNR piece about improving, a lot of people went through the application process at and did not recognize that they were subsidy eligible, because they answered "no" when asked if they planned to file taxes in 2014, and so did not get a subsidy (tax credit) calculation.

Could do worse

There is a lot to be improved in the ACA marketplaces on multiple fronts -- ease of use in the online exchanges, education and navigational outreach, plan offerings. But the percentage of people who chose silver, and the relatively low percentage in bronze, strikes me as at least modestly reassuring.

1 comment:

  1. The ACA mandate for free preventive care (even with bronze plans) was supposed to take care of many office vists etc for the newly insured.

    One suspects that the free services are perhaps more skimpy than we thought.

    Also, in the design of the ACA, anyone too poor to afford office visits was supposed to be covered by Medicaid. In the generous states, I think that is close to happening

    The solution of course to do what France did years ago -- to stipulate that deductibles do not apply to emergency care and for chronic illnesses like diabetes.