Wednesday, January 14, 2015

Maryland's low income ACA customers benefit from Connecticut's site design

Maryland's ACA exchange was a disaster last year, so the state started over, creating a freely offered clone of the highly successful Connecticut exchange. That's worked out very well.

Charles Gaba reports that Maryland is one of 18 states that have exceeded HHS's goal for private plan enrollments in 2015.  As of January 11, Maryland has enrolled 91,137 residents in private plans, versus 67,757 in the first open season that ended last April.

Equally importantly. the Maryland exchange has strongly boosted the percentage of plan buyers who selected silver-level plans and reduced the percentage that bought bronze -- the lowest level, with deductibles averaging over $5,000 for a single enrollee. In 2014, just 49% of Maryland private plan customers bought  silver, and 31% bought bronze. That's in contrast to 65% silver/20% bronze breakdown in the nation as a whole,and 69%/17% in the 36 states using healthcare.gov.  This year so far, Maryland's silver plan takeup has risen to 61%, while bronze takeup has dropped to 23%.* 

A sky-high bronze takeup level suggests too many low-income buyers selecting bronze and thus forgoing the essential Cost Sharing Reduction (CSR) subsidies that attach only to silver plans. CSR radically lowers deductibles and out-of-pocket costs for buyers with incomes under 200% of the Federal Poverty Level (FPL).* In states that did a relatively good job alerting CSR-eligible buyers to the benefits attaching only to silver, around 90% of buyers with incomes under 200% FPL selected silver. In Colorado, which did a poor job highlighting CSR (and is one of the few states that reported metal level selection at different income levels), just 73% of buyers under 200% FPL bought silver (as did just 46% of all Colorado buyers, a level slightly lower than Maryland's).

Maryland's increase in silver plan takeup for 2015 is probably due to the Connecticut site design, which not only prominently alerts CSR-eligible applicants (and window shoppers who provide a household income estimate) to the availability of CSR with silver plans only, but also "defaults to silver" when showing available plans to those eligible for CSR -- that is, puts silver plans at the top of the menu of available plans. Maryland has also required prior subsidized customers to manually re-enroll for 2015 if they want to keep their subsidies, which doubtless has caused more 2014 customers to shop anew on the improved site.

Connecticut is the second-wealthiest and Maryland the third-wealthiest state in the nation, based on median household income. High income states tend to have more bronze plan buyers, as high-deductible plans are more appropriate for buyers with some financial resources..While Connecticut's 2014 bronze takeup rate, 16%, was quite low for a wealthy state, Maryland's percentages this year are arguably just about income-appropriate.

In light of Maryland's adoption of default-to-silver site design, I suspect that its silver takeup rate among buyers with incomes under 200% FPL is quite high, though the state does not break out metal level selection by income level and hasn't been able to supply me with the numbers on request.  A heavy concentration of the state's bronze buyers at incomes above 200% FPL would constitute further proof that site design matters in metal level selection.

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* Though CSR is offered up to 250% FPL, I focus on silver plan selection rates for buyers under 200% FPL because the benefit is stronger at lower income levels and is almost negligible for buyers in the 200-250% FPL range. In states that break out metal level selection by income, silver plan takeup falls off a cliff at 201% FPL.

**  The Maryland Health Connection report does not explicitly break out metal level selection, but it does give the total numbers of buyers of each plan. I toted up the total number of bronze and silver buyers to arrive at these percentages.

Related:
In Rhode Island, low-income ACA buyers choose silver plans
For many ACA beneficiaries, "Ivy League" benefits?
New data: health exchange design matters
Rational choice in the ACA marketplace
In Mississippi ACA rollout, one large disaster, one small success
News from New York: Most low-income ACA plan buyers chose wisely

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