Sunday, March 29, 2015

In Washington State, too many low-income bronze plan buyers

Washington HealthPlanFinder, the state's ACA exchange, has set the standard for enrollment data reporting, providing a more detailed and complete account of private plan buyers' demographics and behavior than any other state to date. Washington is a wealthy state, with a median household income (2013) of $60,106, compared to a national median of $51,939.   Its buyers of private plans on the exchange (known as Quality Health Plans, or QHPs) are accordingly a much wealthier group than the average among the 37 states that used the federal exchange, healthcare.gov.

Only 12.5% of Washington's QHP buyers have incomes under 150% of the Federal Poverty Level (FPL), compared to 24% in those healthcare.gov states that accepted the Medicaid expansion -- and 50% in healthcare.gov states that refused the expansion. (In non-expansion states, eligibility for QHP subsidies began at 100% FPL, versus 138% FPL in expansion states, and those between 100 and 138% FPL swelled the QHP enrollments, accounting for about a third of all enrollments in non-expansion states.) Low takeup in this low-income band perhaps explains in part why Washington has reached just 32% of its target QHP market as calculated by the Kaiser Family Foundation, versus 42% for the nation as a whole. Conversely, Washington has been very successful in expanding its Medicaid rolls. The enrollment report tallies 533,628 "Medicaid expansion adults," far exceeding a 2012 Urban Institute forecast of 330,000.

Too many poor buyers of bronze plans

While Washington's relatively small number of enrollees in the 100-150% FPL income band may be in large part a matter of demographics, there is one way in which the state exchange has seemingly failed lower-income buyers. Takeup of Cost Sharing Reduction subsidies, available only with silver plans and only to buyers with incomes below 250% FPL, is lower in Washington than on healthcare.gov, and much lower than in states like New York and Connecticut that take special measures to highlight CSR for those who are eligible for it.

Unenhanced by CSR, a silver plan has an actuarial value of 70% - that is, it covers 70% of the average user's annual medical costs.  For buyers under 150% FPL, CSR raises the actuarial value of a silver plan to 94%, better than all but the most generous employer-sponsored plans. For those in the 150-200% FPL range, CSR raises AV to a still-strong 87%. At 200-250% FPL it's almost negligible, raising AV to just 73%. In all states that provide income band data, CSR takeup falls off a cliff at 200% FPL. For that reason, I like to look at states' CSR takeup levels for buyers up to 200% FPL, who are leaving a very valuable subsidy on the table if they don't buy silver (and who will face unaffordable deductibles in the $5000-6600 range if they buy cheaper bronze plans).

In Washington, just 71% of current CSR-eligible plan holders are in silver plans, versus 77% on healthcare.gov. Only 77% of Washington buyers under 200% FPL chose bronze, versus about 81-83% on healthcare.gov (HHS provides only partial data on this front; my reasoning for the 81-83% estimate is here).

Healthcare.gov is hardly the gold standard for signpointing CSR, moreover. While the site does provide a pop-up warning to CSR-eligible buyers who make a preliminary selection of a metal level other than silver, it's not a very clear warning, and if the buyer opts to keep shopping in response to the warning, the plan menu defaults to a ranking of plans by premium, cheapest first, i.e., bronze first. New York, Connecticut, and Rhode Island do a better job of steering CSR-eligibles to silver, showing silver plans first to buyers who qualify for CSR. Accordingly, the CSR takeup rates for New York  (2014 numbers) and Washington (2015) make a striking contrast:

Washington QHP buyers

Income level
Silver selections
Total buyers
% silver
Under 100% FPL
 3136
 4470
70%
100-138% FPL
 2118
 2559
83%
138-150% FPL
10741
12816 (12.5% under                  150% FPL)
84%
150-200% FPL
35443
46258 (29% total)
77%
200-250% FPL
16369
29845
55%
250-300% FPL
 6446
19589
33%
300-400% FPL
 6903
22621
31%
Over 400% FPL
 2949
10463
28%
0-200% FPL
51438  (32% total)
66103  ((42% total)
77%
0-250% FPL
67807 (43% total)
95948 (61% total)
71%
250% FPL & up
16298
52673  (33% total)
31%
All income groups
86779
158302
55%

New York QHP buyers


Income level
Silver selections
Total buyers
% silver
Under 150% FPL
 33354
  32867 (9% total)
100% (?)*
150-200% FPL
 96357
112294 (30% total)
86%
200-250% FPL
 37060
  62994

250-300% FPL

  35605

300-400% FPL

  30128

Over 400% FPL

  96357

0-200% FPL
129711 (35% total)
145160 (39% total)
89%
0-250% FPL
166771 (45%  total)
211244 (57% total)*
79% *
250% FPL & up
  37060
174184  (47% total)
21%
All income groups
203832
370604
55%

Similar percentages of all buyers in the two states were under 200% FPL and under 250% FPL. New York does a much better job placing buyers under 200% FPL in silver plans, though its sky-high percentage of exchange buyers who earn too much to qualify for subsidies reduces the overall percentage of state residents who accessed CSR. In the 150-200% FPL bracket, where the bulk of both states' buyers who were eligible for "strong" CSR are located, 86% of New York buyers chose silver, versus just 77% in Washington.

-----
*New York numbers don't quite add up because the numbers of people at each income level and of buyers at each metal level (including CSR levels within silver) are given as rounded percentages, sometimes of all buyers and sometimes of subsidized buyers. These roundoffs create one noteworthy anomaly: the number of buyers of silver plans at the highest CSR level, who by definition have incomes under 150% FPL,is said to be 9% of all buyers (33,354), which is greater than the alleged number of buyers under 150% FPL, said to be 12% of all subsidized buyers (32,867).  Officials at the New York exchange have not been able to explain this anomaly to me. I suspect that the percentage given for buyers under 150% FPL may omit legally present immigrants whose income levels would qualify them for Medicaid (0-138% FPL) but who are shut out of Medicaid by the so-called "5-year bar"; the ACA allows those immigrants to buy subsidized QHPs.

In a second anomaly, the report states that 76% of subsidized buyers, or 208,154 out of 273,888, had incomes under 250% FPL, but elsewhere states that 57% of all buyers, or 211,244 out of 370,604, are under 250% FPL.  It seems that a shade over 3000 buyers, or a bit less than 1%, are being left out of the count in the chart that breaks the subsidized buyers out by income level (p. 4).

Related: Health exchange design matters

2 comments:

  1. I appreciate your effort in teasing out this data, but man I get confused. (and I know a fair amount about health insurance.)

    A single person making less than 150% of poverty is making about $16,000 a year.

    Isn't this person on Medicaid, in a state which accepted the Medicaid expansion? If so, who cares what their CSR is?

    The whole design of the CSR is baffling to me. Most persons who would choose a bronze level plan are stone broke. Their CSR should be higher than it is for others. The ACA would appear to be saying, "Spend more on health insurance and we will lower your out of pocket limit." Talk about a 'Kludge'.

    So here is my alternative.

    No coinsurance would be allowed for childbirth, emergency care, diabetes and athsma management, etc. France and Germany have done this for years.

    If insurance premiums go up due to this, raise the subsidies.

    End of discussion.

    ReplyDelete
    Replies
    1. In a state that expanded Medicaid, people earning up to 138% FPL qualify for Medicaid. Those earning 138-150% FPL are in the exchanges. Also, legally present immigrants who are subject to the "5-year bar" or other state waiting period before they qualify for Medicaid can buy subsidized QHPs at any income level, starting at 0%. The buyers under 138% FPL are presumably all legally present immigrants.

      I agree that CSR should be available in a plan with an affordable premium to anyone who qualifies for it. Theoretically, it is -- subsidies are designed to make silver plans affordable by the standards adapted by the ACA. In reality, silver is a stretch for a lot of people under 250% FPL. I have floated the idea that CSR should be available with bronze plans, presumably at a proportionately lower AV than in silver plans.
      http://xpostfactoid.blogspot.com/2014/12/instead-of-adding-copper-plans-to-aca.html Of course I'd like to see more generous subsidies -- or better, government-imposed uniform pricing on medical procedures -- but this is America, where we can't have really nice things.

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