Friday, November 28, 2014

Connecticut's ACA exchange shows how to communicate with low-income health insurance buyers

In my ongoing quest to figure out why ACA private plan buyers bought low-premium, high-deductible bronze plans in much higher proportions in some states than in others (e.g., 41% in Hawaii, 8% in Mississippi), I have noted that bronze plan takeup correlates roughly, but by no means perfectly, with state median household income and public health measures.

Poorer, less healthy states tend to have lower bronze and higher silver plan takeup -- and that's as it should be. Buyers with household incomes under 200% of the Federal Poverty Level (FPL) are eligible for Cost Sharing Reduction (CSR) subsidies that radically reduce deductibles, copays and maximum yearly out-of-pocket (OOP) costs.  But CSR is only available with silver plans. (A much weaker CSR is available to buyers with incomes between 200 and 250% FPL, only marginally reducing OOP costs below the silver plan standard.)*

The tradeoff for low income shoppers is an often painfully higher monthly premium -- say, $30-$70 more for an individual -- in exchange for potentially thousands of dollars more coverage of out-of-pocket costs. For the most part, lower income shoppers made the right, if difficult, choice. Nationally, just 20% of all buyers on all exchanges chose bronze plans; just 15% of subsidy-eligible buyers in the 36 states on last year chose bronze; and the percentage among CSR-eligible buyers was even lower. In low-income Alabama, just 6% of subsidy-eligible plan buyers chose bronze. In Mississippi, just 7% did.

Not all poor states had low bronze takeup, though, and not all rich ones had high takeup. One outlier is Connecticut, the second richest state in the nation, with a 2013 median household income of 67,718. Just 16% of Connecticut buyers selected bronze, putting the state in a four-way tie for 12th-lowest nationally -- i.e., in the lower third of states. The only other relatively wealthy state in the top 16 was New Jersey, with 14% bronze takeup and a median household income of $61,782.

Why was Connecticut so successful in steering buyers away from bronze? (While bronze plans may be appropriate for some healthy and relatively wealthy buyers, low bronze takeup in a wealthy state suggests that most CSR-eligibles found their way to silver.)  One reason might be its markedly successful state exchange, and a successful outreach effort. Awareness of ACA offerings in Connecticut was high, according to a user survey conducted by the state this fall, and advertising outreach was effective.  Access Health Connecticut functioned well throughout the ACA's first open season. Private plan signups were nearly double the state's share of the CBO's national projection, according to Charles Gaba's metric.

Perhaps the key factor lies in the design of the Connecticut exchange. Its shop-around feature, which enables buyers to enter a handful of data points (location, household members with their ages, and household income) and get price quotes with subsidies built in, was last year the only shop-around in the country that actively steered CSR-eligible users to silver plans -- and explained why. [That is, assuming that the current structure doing this was up last year -- I will check that today if possible. UPDATE, 12/18: Access Health CT confirms that the feature was in place in the first open season, and that search results in the actual application also defaulted to silver for CSR-eligible users.] If your shoparound results qualify you for CSR, once you hit the tab to see the plans available, this notice is the first thing you see:

  • Since your family is eligible for premium tax creditshelp text and cost sharing reductions,help text we have pre-filtered "Silver" plans for you to take advantage of these savings opportunities.
  • The maximum amount of your eligible monthly tax credit you may apply towards a QHP's premium depends on the monthly premium of the QHP you select. You may apply some or all of your eligible monthly tax credit towards the QHP's premium, but the amount applied may never exceed the QHP's monthly premium.

Then, when you click through to plans, the CSR-aided copays for key services, along with the deductible and OOP, are hard to miss (live on the site, all the quoted dollar figures are teh same size and color ):

Carrier Logo
Silver Enhanced Standard PPO
More Savings: Cost Sharing Reductions Available help text
QUALITY RATING:  Not yet rated help text
METAL LEVEL:  Metal Silver




Price after estimated $279.06 tax credit.

That quote is for the cheapest silver plan available to  a 35 year-old in New Haven earning $18,000 per year.  Now, $60 per month at that income ain't nothing -- and a potentially tempting alternative is a bronze plan that is essentially free (until you use it!). But if the user ticks a filter to see bronze choices, the first thing she will see, again, is the notice about CSR, before scrolling down to this:





Price after estimated $231.83 tax credit.

That summary is actually misleading, as the ER and primary care copays only take effect after the deductible has been reached -- there's no coverage until that point. On the CSR-enhanced silver plan quoted above, in contrast, the copays are all one owes even prior to hitting the minimal deductible. Nonetheless, the summary setup shows the dramatic deductible and OOP max contrast -- apparently enough in most cases to induce those under 200% FPL to swallow a silver plan premium.

Connecticut's site won such a good reputation that Maryland, which launched a disastrous site last year, hired Connecticut to build a substantially identical site for Maryland - -including the silver filter for CSR. Last year, Maryland's bronze plan takeup was 31% -- almost double Connecticut's (Maryland's median household income was $65,262). Look to see that percentage drop this year. Moreover, Access Health Connecticut's former CEO, Kevin Counihan, is now in charge of the federal exchange. Is it too much to hope that will steer CSR-eligibles to silver plans?

Another key factor is whether buyers who have input their personal data in an actual application and begin the logged-in shopping process (i.e., shopping for keeps) are steered toward silver if they're CSR-eligible. does this, albeit weakly -- warning CSR-eligible applicants who move to buy a plan at any other metal level that the plan does not include the CSR benefits for which they're eligible.. I don't know whether Connecticut's exchange does, but I'd be very surprised if not. I mean to find out, and update.UPDATE, 12/18 - Connecticut actually defaults search results for CSR-eligible applicants to silver, just as in the shop-around.
*If your income is under 150% FPL, a CSR-enhanced silver plan must have an actuarial value of 94% -- that is, it must be designed to cover 94% of the average user's out-of-pocket costs. That's versus 60% for a bronze plan. If your income is under 200% FPL, the actuarial value of a silver plan must be 87% -- still comparable to high- quality employer-provided insurance. At 200-250% FPL, CSR is much weaker; it raises actuarial value to 73%, as compared to 70% to the silver plan AV without CSR.

Rational choice in the ACA marketplace
Maybe we should call blue states bronze states
In Mississippi ACA rollout, one large disaster, one small success
News from New York: Most low-income ACA plan buyers chose wisely
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?

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