Thursday, July 23, 2015

New light on QHP enrollees' income levels in states that refused to expand Medicaid

Below are some state-by-state numbers for private health plan enrollment in the 21 states that refused to expand Medicaid.  The state enrollment totals at different income levels are extracted from the county-by-county data released by HHS in early July. I've sandwiched those tallies between the states' median household incomes as of 2013 and Kaiser's estimates of the percentage of potential private plan enrollees that each state has enrolled as of March 31, 2015.*

What I'm after is possible causes of state variations in the percentage of enrollees eligible for Cost Sharing Reduction (CSR) subsidies who accessed that benefit by buying silver plans, the only metal level at which CSR is offered. CSR is available to buyers of Qualified Health Plans (QHPs) whose household incomes are below 251% of the Federal Poverty Level (FPL). In nonexpansion states, that's fully 80% of QHP buyers.**

In the chart below, states are listed in ascending order of median household income. I track the percentage of buyers in each states whose household incomes are between 100% and 150% FPL, for reasons explained below, as well as those who are CSR-eligible (0-250% FPL***). The next-to-last column tracks the percentage of CSR-eligible buyers who selected silver plans and so obtained the benefit.****

CSR is much more valuable -- and much more affordable -- to buyers at the lower end of eligibility than to those at the upper end. For buyers under 150% FPL, it raises the actuarial value (AV) of a silver plan from a baseline of 70% to 94%. At 150-200% FPL, CSR-enhanced silver has an AV of 87%; at 200-250% FPL, it falls off to 73%.  As you move up that income scale, a benchmark silver plan premium also takes a larger bite out of income. For those under 138% FPL, the premium is capped at 200% of income; at 200% FPL, it's up to 6.3%; and at 250% FPL, it 8.05%.

The higher the income level, the harder silver may be to afford, and the lower the value of the CSR subsidy. You might therefore expect that lower income buyers would be less likely to forego it. In states that refused the Medicaid expansion, eligibility for subsidized QHPs begins at 100% FPL as opposed to 138% FPL in expansion states (where people below that level are eligible for Medicaid) -- and in many nonexpansion states, people with incomes under 138% FPL, who would have been in Medicaid had their states expanded it, flooded the zone, We don't know exactly how many buyers in each state were in that 100-138% FPL range, because HHS did not slice its income data that way, but we do know how many had incomes from 100-150% FPL. In nonexpansion states, per below, buyers in that income range were 44% of the total, versus 20% in expansion states.

As shown above, though, the percentage of buyers in the 100-150% FPL range varies quite a lot in nonexpansion states -- and the percentage of CSR-eligible buyers who access the benefit does not move in lockstep with either that percentage or the state's median household income. Far from it. What is true is that the four states with the highest percentages of buyers in the 100-150% FPL range have high CSR takeup - they're ranked 1,5,6, 3 in that order -- and that seven of the top ten in percentage of buyers at 100-150% FPL have CSR takeup above the median for these 21 states. Ditto for median household income, which is what I've chosen to sequence the states by, lowest to highest. *****

Also surprising to me: the overall CSR takeup rate among the 21 nonexpansion states, 78%, is barely a tick above the rate for all 37 states using -- 77%. Single-state data in states running their own exchange (e.g., Connecticut, New York, Rhode Island, and Colorado) indicates that the higher the CSR-eligible income band, the lower the takeup. As noted above, nonexpansion states have much higher concentrations of buyers in the 100-150% FPL range than do expansion states-- and a high percentage of them are doubtless in the 100-138% FPL range, where premiums for benchmark silver plans are capped at 2% of income. I would therefore expect much more of a takeup gap between expansion and nonexpansion states.

Louisiana is an outlier -- it's got the lowest median household income in the country, and the fifth highest percentage of buyers in the 100-150% FPL income range, but also one of the lowest CSR takeup rates (70%) among these 26 states. Why? I don't see any radically huge gap between the price of bronze and silver plans, or the presence of bronze plans that offer attractive benefits before their sky-high deductibles are reached. Kaiser's estimate of potential buyers reached in the state is low -- but Mississippi's is lower, and Mississippi has the highest CSR takeup rate on (I added Kaiser's estimates of the percentage of uninsured people eligible for QHPs that each state has enrolled so far, but I don't see any particular relationship between that measure and CSR takeup.).

I've been staring at these numbers for a while, and I can't say they've yielded a wealth of new insight, except that there's an awful lot of state-by-state (and doubtless county-by-county) variation that's difficult to account for without knowledge of local conditions.

* Kaiser's estimates take into account attrition as of 3/31/15, reported by HHS in June HHS's later data drop of the county-by-county level data does not -- it's based on enrollment numbers at the end of open season in mid-to-late February. The income numbers presented here therefore do not take the roughly 16% attrition, due mainly to those who enrolled but never paid, into account.

**  The percentages of buyers with incomes in the 100-150% FPL range and the 0-250% FPL range are three points lower here than charted by HHS in its March 2015 enrollment report, because that chart (on p.14) reported percentages among those for whom income data was available, excluding about 5% of enrollees in these 21 states. I have not excluded them because I would have had to subtract unknowns for each state, and it's fair to assume that the large majority of those with unknown income earn too much to qualify for subsidies and so did not report it.

*** While most Americans with incomes under 100% FPL are not eligible for QHP subsidies, legally present aliens who are not eligible for Medicaid are eligible for QHP subsidies no matter how low their income (most states have a "5-year bar" to Medicaid eligibility, and some have even higher bars, such as 40 quarters of employment).  3% of enrollees in these 21 states had incomes under 100% FPL.

**** The March HHS enrollment report listed the percentage of buyers in each state that obtained CSR. I've used those percentages to get the total, and then matched it with the total of CSR-eligibles as reported in the July county-by-county data.

***** Among the 10 states with the lowest percentage of buyers in the 100-150% FPL range, six have CSR takeup rates below the median. Among the 10 states with the highest median household income, seven have takeup rates below the median. 

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