Monday, September 28, 2015

"Are marketplace plans affordable?"

Last week the Commonwealth Fund released a report* comparing the experiences of people who bought health plans in the ACA marketplace to that of people who get health insurance through their employers. Commonwealth surveyed nearly 5,000 adults between March and May of this year, asking questions about their income, their insurance status, plan features, usage and affordability.

With respect to out-of-pocket costs, here's the top-line takeaway as framed in the Commonwealth press release:
Overall, larger shares of adults with marketplace plans had per-person deductibles of $1,000 or more than did those with employer plans (43% vs. 34%). The differences were widest among those with higher incomes: in this group, over half (53%) with marketplace plans had high deductibles, compared to about one-third (35%) with employer plans. In the survey, people with high deductibles were less confident than those with lower deductibles that they could afford needed care.
What's equally salient, in my view, is that the subsidized marketplace has narrowed the longstanding coverage gap between employer-sponsored insurance (ESI) and nongroup market insurance for lower-income buyers. Compare those with incomes under 250% of the Federal Poverty Level (FPL) to those with ESI:

62% of all adults with employer coverage have deductibles under $1,000. So do 57% of marketplace customers with incomes under 250% FPL.  That's not a huge gap.** And three quarters of all marketplace customers have incomes under 250% FPL, according to HHS enrollment statistics (Commonwealth's weighted survey sample shows just 64% under 250% FPL).  Moreover, according to Commonwealth's weighted survey sample, 78% of uninsured adults have incomes under 250% FPL.  Presumably the percentage was even higher prior to two years of ACA implementation.

A higher percentage of marketplace customers with incomes over 250% FPL (71%) were confident that they could afford needed care than of buyers under up to 250% FPL (61%). The ACA subsidy structure is pretty flimsy for those over 250% FPL, but those numbers suggest that the phase-out of subsidies may not be too steep (whether subsidies are too skimpy across the board is another question).

Holes in the ACA cost shield

That's not to say that the Commonwealth report does not highlight serious problems with insurance obtained through the marketplace.  For one thing, the fact that Cost Sharing Reduction (CSR) subsidies are available with silver plans only, and that cheaper bronze plans with sky-high deductibles are available to low-income buyers, blows a large hole in the effort to provide adequate insurance to lower income Americans.  As Commonwealth notes,
about one of four adults in the survey with incomes in the range that make them eligible for cost-sharing subsidies enrolled in bronze-level plans. People in bronze plans are not eligible for cost-sharing subsidies and thus may have higher deductibles.
"May have" is politeness. There's not a bronze plan from sea to shining sea with a deductible anywhere near $1,000; the vast majority have deductibles over $5,000.

Secondly, as the chart above indicates, ACA private plan coverage is usually much skimpier for those with incomes above 250% FPL, the cutoff for CSR eligibility (though CSR is quite weak for those over 200% FPL; Commonwealth's charts would look quite different if they broke out numbers for those below 200% FPL). On the other hand, a higher percentage of marketplace customers with incomes over 250% FPL (73%) rate their coverage "good" or better than those with incomes under 200% FPL (68%) -- though marketplace plans are rated "excellent" by a higher percentage of those under 250% FPL than over, 25-14. I would guess that those with incomes up to 150% FPL who access CSR are likeliest to be highly satisfied, as CSR below that income threshold raises the actuarial value of a silver plan to 94% .

Further, Commonwealth does not track the experience of the nearly half of buyers in the nongroup market who buy their plans off-exchange, almost all of whom presumably earn too much to qualify for premium subsidies in the marketplace. Off-exchange, bronze is the most popular metal level, and average deductibles are high.

Finally, while ACA subsidies, particularly CSR, have somewhat closed the gap between ESI and nongroup insurance for buyers under 250% FPL at least, the convergence has been two-way: deductibles in employer-sponsored plans have been rising much faster than incomes, as Kaiser's recently released 2015 employer insurance survey recently highlighted.

Viewed from another angle, somewhat more than half of marketplace customers obtain insurance with an actuarial value close to or higher than the 83% that Commonwealth cites as the ESI average. CSR boosts the AV of a silver plan to 94% for those with incomes under 151% FPL and to 87% for those in the 151-200% FPL range. They constitute about 85% of the 5.6 million marketplace buyers who accessed CSR -- that is, about 4.7 million, just under half of the 9.9 million total marketplace customers. Another 7% of marketplace buyers have gold plans (AV 80%) and 3% have platinum (AV 90%). Only 2.1 million have bronze plans (AV 60%).  On the other hand, the average AV in plans bought off-exchange is probably well under 70%.

In short, too many Americans are underinsured, as a Commonwealth survey released in May highlighted. And underinsurance is no stranger to the ACA marketplace. But most buyers under 200% FPL are at least partially insulated from it by ACA cost-sharing and premium subsidies.

S. R. Collins, M. Gunja, P. W. Rasmussen, M. M. Doty, and S. Beutel, Are Marketplace Plans Affordable? Consumer Perspectives from the Commonwealth Fund Affordable Care Act Tracking Survey, March–May 2015,The Commonwealth Fund, September 2015.

** A brief summary podcast by lead researcher Sara Collins does point out that "differences [in average deductible sizes] were moderated for low and moderated income adults." So does the text of the report. It's the top-line emphasis that I'm quasi-quibbling with.


  1. I lost you at the turn. I sell insurance and work a lot with ACA policies. Virtually none of the policies at any FPL level have deductibles under $1000.
    (A very few gold policies.)

    And yet you say that 42% of ACA policyholders at certain income levels have deductibles less than $1000. I do not get it.

    1. Bob, in most states, most silver policies for people under 151% FPL have deductibles under $1000; actuarial value is 94%. Eureka! In Minnesota, they all go into the BHP, MinnesotaCare, for which the eligibility cutoff is 200% FPL. In the country as a whole, about 1/3 of exchange enrollees are under 151% FPL. In states that refused the Medicaid expansion, almost half are below that level.