Saturday, October 11, 2014

News from New York: Most low-income ACA private plan buyers chose wisely

Recent readers know that I've been trying to get a bead on how many lower-income buyers of private health insurance plans on ACA exchanges bought bronze plans and so forfeited Cost Sharing Reduction (CSR) subsidies that reduce deductibles and out-of-pocket costs. CSR, on offer to those with household incomes below 250% of the Federal Poverty Level (FPL), is available only with silver plans.

In the federal exchange, covering 36 states, 76% of ACA private plan enrollees who qualified for premium subsidies bought silver plans. Not all of them also qualified for CSR, and so it seems likely that a higher percentage of those who did so qualify bought silver. In the federal exchange, which accounted for about two thirds of all plans sold, just 15% of subsidy-eligible buyers chose bronze plans, which carry the highest deductibles and out-of-pocket (OOP) costs.

Three states that I know of, Washington, Colorado and New York, have published data breaking out buyers' metal-level selections according to specific income levels. New York and Colorado are the only states I know of that report specifically, albeit indirectly, on the choices of buyers with household incomes under 200% of the Federal Poverty Level (FPL), the cutoff for really substantial CSR. Colorado is an outlier with a very high bronze takeup, to be dealt with in a future post. The news out of New York, in contrast, is quite good on this front, though a bit tricky to tease out.*

New York almost gets a 90

According to New York's Open Enrollment Report**, released this past June, 370,604 New Yorkers bought private Qualified Health Plans (QHPs) on the state exchange. 74% of those buyers qualified for premium subsidies, and 57% qualified for CSR at some level. Of the subsidy-eligible, 53%, or 145,161 if 53% were a precise figure, had household incomes under 200% FPL (pp. 3-4).

A separate chart (p.15) shows that 35% of all buyers bought silver plans at the two subsidy levels that would attach to buyers with incomes under 200% FPL (dubbed "CSR 2" and "CSR 3").  That's  about 129,700 people -- or fully 89% of those under 200% FPL.  Good job, New York!

CSR is available but considerably less valuable for those earning between 200% and 250% FPL. At that level, it raises the actuarial value (AV) of a silver plan -- that is, the percentage of the average user's annual costs paid by the insurer -- to just 73%, up from the 70% mandated for silver plans without CSR. (For those with incomes under 150% FPL, CSR raises the AV to a whopping 94%; for those between 150% and 200%, to 87%.)  It's thus not surprising that the takeup rate for silver plans drops off precipitously for those between 200% and 250% FPL.  For healthy people with at least some financial resources. a bronze plan might be a reasonable gamble.  For those who anticipate a fair amount of healthcare spending, gold or platinum plans may be best. Both had substantial takeup in New York -- 13% platinum, 10% gold.

In New York, 23% of subsidized QHP buyers were in the 200-250% FPL range. That's about 63,000 people. Of them,  about 37,060 (10% of 370.6k buyers overall), bought "CSR 3" plans -- that is, silver plans with the CSR level available to those in this income range. That means that just 59% of buyers in this range chose silver.* * * The low takeup in this more affluent group drives down the overall percentage of those accessing available CSR to 79% (about 166,8k  out of roughly 211.2k buyers under 250% FPL).

Washington looks a little better in New York light

The New York numbers shed some light on Washington state's report, which had somewhat less granular data about income. Washington reported the percentage of buyers at each metal level and overall who were under 250% FPL, but not the percentage under 200% FPL. Overall, 25% of buyers under 250% FPL bought bronze, and just 70% bought silver. If I were a Washington state health official, I'd be disturbed by those percentages. The New York numbers suggest, however, that a much higher percentage of those under 200% FPL probably bought silver and so accessed the more valuable CSR available below that threshold.

Healthcare,gov looks much better

Both New York and Washington had lower percentages of silver plan takeup than most of the 36 states in the federal exchange -- as did most of the states that ran their own exchanges. The overall average for silver plan selection in was 69%, versus 56% for New York and 53% for Washington. While HHS does not break out metal level selection by income level, the New York numbers suggest that in the states a very low percentage indeed of those under 200% FPL -- lower than New York's 11%**** -- left CSR benefits on the table. If these inferences are right, that's very good news.
*   Paragraph updated -- at first post, I was unaware of Colorado's detailed usage report.

* *Thanks to Investment Business Daily's Jed Graham, a close and adversarial follower of the ACA rollout, for pointing me to the New York data.

***The percentages are similar for the 66,000-odd buyers who qualified for premium subsidies but no CSR -- about 37,000 of them chose silver.

**** As noted above, does break out metal selection specifically for those who were accessed premium subsidies. Since 76% of these buyers chose silver and just 15% bronze, a dropoff in silver selection among those over 200% FPL, as in New York, would suggest a much higher silver takeup for those below that threshold.

Related: Shopping the exchanges
Walmart insurance vs. ACA plans
Why is bronze more popular in blue states?
Buying a health plan: Don't try this at home?
Did too many low income ACA shoppers buy bronze plans?
If you answer the first question wrong on, no soup(sidy) for you
What's a subsidy? It's hard to reach the uninsured

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