Tuesday, September 08, 2015

Some low-income ACA shoppers bought gold plans*

* But not enough to cover Avalere's estimate of CSR-forfeiters

On August 19, Avalere Health published an analysis spotlighting ACA private plan buyers who failed to access the Cost Sharing Reduction (CSR) subsidies that are available to applicants with incomes up to 250% of the Federal Poverty Level (FPL) -- but only if they buy silver plans. Avalere estimated that about 27% of CSR-eligible buyers forfeited the subsidy by buying plans in metal levels other than silver -- usually the cheapest bronze plans, which carry very high deductibles.

In a response, I argued that Avalere had somewhat lowballed CSR takeup by overestimating the number of private plan buyers who were eligible for CSR. The numerator of the equation is not in doubt: an ACA enrollment update published by CMS in June pegged total CSR enrollment at 5,850,936 as of March 31. But the denominator (CSR-eligibles) is based on extrapolations from incomplete income breakouts of ACA private plan customers, provided by HHS in March for healthcare.gov states alone. Avalere assumed that 8.1 million of those still enrolled as of March 31 were CSR-eligible; I estimate that about 7.7 million enrollees were eligible, and that therefore, about 76% of CSR-eligibles accessed the benefit.

The difference stems from two factors: what you assume about the roughly 6% of enrollees for whom income data was unavailable, and how you estimate the percentage of CSR-eligibles in state-based exchanges, for whom income data was not included in federal enrollment reports. I assume that income distribution in the SBMs is closer to that of those healthcare.gov states that accepted the Medicaid expansion than to the overall average for healthcare.gov states, which is dominated by states that refused to expand Medicaid.

CSR-eligibles who bought neither silver nor bronze

I was struck today by additional evidence that Avalere somewhat overestimated the number of private plan holders who are eligible for CSR. According to their analysis, 2.2 million plan holders renounced the benefit by buying non-silver plans. The assumption is that those who leave CSR on the table mostly buy bronze plans, which have lower premiums. But the total number of bronze plan buyers is a known quantity: 2,164,116.  And we know that bronze plan buyers are more concentrated at higher income levels. Among buyers eligible for any kind of subsidy (not all of whom were CSR-eligible), 19% bought bronze. Among those who earned too much to qualify for subsidies, 35% chose bronze.

Thus the number of CSR-eligibles who selected bronze plans was considerably smaller than the number whom Avalere estimated forgoing CSR. Of the 8.7 million subsidy-eligible plan holders as of March 31, about 1.64 million bought bronze. And not all of them were CSR-eligible. Compare my own estimate that about 1.7 million CSR-eligibles did not buy silver.

Some CSR-eligibles must have bought gold, and a very small percentage, platinum (selected by 3.4% of all buyers). A high proportion of them were probably in the upper range of CSR eligibility with household incomes between 201% and 250% FPL (though this group makes up only about 20% of all CSR eligibles). At the 201-250% FPL level, CSR raises the actuarial value of a silver plan to just 73% from a baseline of 70%.  For those under 201% FPL, CSR raises the actuarial value of a silver plan to either 94% (for the  roughly half of CSR-eligibles with incomes under 150% FPL ) or 87% (for the roughly 1/3 of CSR eligibles with incomes from 151-200% FPL). For buyers under 201% FPL, silver provides better coverage than gold, and for most of them, better than platinum -- a rather moot point as almost none could afford platinum.

Not surprisingly, CSR takeup drops dramatically for the roughly 1.5 million enrollees in the 201-250% FPL range. In the handful of states that have broken out metal level selection by income level, silver selection in this income group ranges from 50% to 64%. If, matching the total enrollee population, 10% of the roughly 1.5 million people in this income bracket bought gold or platinum, that would suggest that about 150,000 upper-bracket CSR-eligibles opted for a higher metal level. That's probably a high estimate; I would expect the bulk of gold and platinum buyers to be concentrated at higher income levels.  Then again, only about a quarter of enrollees have incomes above 250% FPL.

As for the roughly 6.2 million enrollees whose incomes were under 201% FPL, what percentage might have bought gold plans? (Platinum can be all but discounted at this income level.) I have just a snippet to go on here: in June, Access Health Connecticut sent me an income breakout for 2015 enrollments through 6/1. A (to me) rather surprising 4.1% of buyers under 201% FPL (1,4s9 out of 34,601) had selected gold plans by that point. Connecticut, however, had more than twice the overall gold selection rate of the country as a whole --15.9% as of March 31. If, nationwide, 2% of buyers under 201% FPL bought gold, that comes to about 120,000.*

If 1% of CSR eligibles (77,000) bought platinum plans, and another 35,000 bought catastrophic plans (half the overall catastrophic total)  it's possible that about 382,000 CSR eligibles nationwide opted for metal levels higher than silver. That would leave about 1.32 million, or 17 % of CSR eligibles, buying bronze.  For some of the young and healthy between 201% and 250% FPL, that might be a reasonable choice. But there's still too many low income bronze plan holders.

* A minuscule 104 Connecticut buyers under 201% FPL bought platinum - that's .3%.  That's about 1/3 of the rate for the state as a whole, which was just under 1%. On this admittedly somewhat flimsy basis, I'm estimating the national rate of platinum takeup for buyers under 201% FPL at 1/3 of the overall 3% rate.  As for catastrophic plans, less than 1%  (.07%) bought them nationally.

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