Thursday, October 08, 2015

Cost Sharing Reduction in Covered California

(I'm hoping that dry title sounds like a pop song lyric.)

Covered California today released private plan enrollment data updated to June 2015. The report (available here under "June 2015 profile") shows that California's CSR takeup rate is in line with national averages.

By CSR takeup, I mean the rate at which California buyers whose incomes qualify them for Cost Sharing Reduction (CSR) subsidies selected silver plans and so accessed the benefit, which is available only with silver plans. As in the country at large, 76% of all CSR-eligibles in California bought silver.

Since I've described how CSR works dozens of times, I'd like to cut to the chart here. A quick rundown of the basics is below.

Income level
CSR accessed
% CSR accessed
Under 150% FPL (AV 94%)
150-200% FPL
(AV 87%)
200-250 FPL
(AV 73%)
Total Under 200%
Under 250% FPL (Total CSR eligible)

CSR is available to buyers with incomes up to 250% of the Federal Poverty Level (FPL), It's much stronger at the the lowest income levels, and premiums for the benchmark silver plan are also much cheaper at those levels, ranging from 3% of income at 139% FPL to 8.1% at 250% FPL.  In California as in most states, silver plan selection is accordingly much higher at the lowest income levels than at the upper range of CSR eligibility.

CSR raises the actuarial value of a silver plan from a baseline of 70% (for silver unenhanced with CSR) to 94% for those with incomes up to 150% FPL, 87% for those in the 150-200% FPL range, and just 73% for those from 200-250% FPL.  In California, which is distinguished by standardized benefits at each metal level state-wide, that translates to zero deductible for those under 150% FPL, a $500 medical deductible with a $50 drug deductible at 150-200% FPL, and a $1,600 medical deductible/$500 brand drug deductible at 200-250% FPL. In all silver plans, the deductible does not apply to outpatient care.

The Covered California browsing feature, which allows a visitor to enter zip code, age and income and get price quotes without registering and applying, steers shoppers who report incomes under 200% FPL toward silver plans by showing silver plan quotes at the top of search results.  The state's CSR takeup rate for those under 200% FPL is just about average, but lower than that of other states that steer CSR-eligible shoppers toward silver plans -- lower, that is, than in states including Connecticut, Maryland, New York and Rhode Island.  Perhaps some of California's lower-income buyers deem the state's standardized bronze plan design adequate. While the bronze deductible is $5,000 for an individual, the first three doctor visits are not subject to it, and neither are generic drug prescriptions.

In a press call today, Covered California executive director Peter Lee explained that when a visitor to Covered California fills out a full application, results are filtered through a more complex decision support tool that estimates the total yearly cost of each plan looked at. I believe that that estimate is based in part on responses to questions about medical usage, but I'm not sure -- I'm seeking confirmation on that point. [UPDATE: A CoveredCA spox writes that "the out of pocket cost estimator on Plan Preview asks about doctor visits and drug utilization."] It's possible that the tool steers some healthier buyers toward bronze. Overall, the state's bronze selection rate is rather high, 24.9%, compared to 21.1% nationwide.

The Covered California data set shows a 91% CSR takeup rate for those in the 138-150% FPL range. My slightly lower figure above (88.9%) is for all subsidy-eligible buyers under 150% FPL, including about 25,000 under 138% FPL. These would be legally present noncitizens who are not eligible for Medicaid or other public insurance.  CSR takeup below 138% FPL is a weak 69% --  disturbing in that silver plans premiums should be very low (under 2% of income) in that income band. Oddly, too, the sub-138% FPL band shows 15% buying gold or platinum --both of which have lower actuarial values than CSR-enhanced silver at that income level [this paragraph edited 10/12].

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