Friday, October 30, 2015

Forecast: Bronze plan takeup will rise in California in 2016

I fear that more health plan buyers on Covered California are going to buy bronze plans, with their $6,000 deductibles, in 2016 than in 2015.

That probably means that more low-income buyers are likely to forgo Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans. Under California's standardized benefit design in 2016, silver plans have a $75 deductible for buyers with incomes under 150% of the Federal Poverty Level ($17,655 for a single person) and a $550 deductible for buyers up to 200% FPL ($23,540).

Silver plan premiums can be hard for low income people to afford, particularly at the upper reaches of eligibility (weaker CSR is available up to 250% FPL). For someone earning $23,000, the benchmark second-cheapest silver plan costs $121 per month.

In some regions the cheapest silver plan is considerably less, though, and bronze plan prices vary widely. In a prior post, I demonstrated that in California regions where the price difference between cheapest silver and cheapest bronze was smallest,  silver plan selection was highest. In parts of LA County where the spread was just $20 for a 40 year-old earning $23,000, 70.5% of enrollees bought silver and 18.3% bought bronze. In the Eastern Counties, where the spread was generally over $100, just 41.5% bought silver and 55.8% bought bronze.

In 2016, bronze-silver spreads have widened, at least in the 12 of 19 pricing regions I spotlighted earlier. In some regions silver "discounts" narrowed, because the cheapest silver plan is closer to the benchmark; in others, cheaper bronze plans are on offer in 2016 than in 2015; and in some, both changes have taken place (in some regions, too, one change or the other is in the opposite direction).

Below are prices for 2015 and 2016 of the cheapest bronze and silver plans in the six California regions that had the lowest bronze plan selection in 2015 (Covered CA has divided the state into 19 regions). Prices are those that a single 40 year-old with an income of $23,000 (just under 200% FPL) would pay. While most regions have different offerings in different counties and zip codes, I've focused in each region on counties with the most enrollments.

Regions with lowest percentage bronze selection - 2015
Price of cheapest bronze and silver plans for a 40 year-old with $23,000 income

CA region
% buy bronze
2015
% buy silver
2015
Cheapest bronze 2015  
Cheapest silver 2015
Price spread 2015
Cheapest bronze 2016
Cheapest silver 2016
Price spread 2016
15
Los
Angeles
18.3
70.5
$73 

$ 94
$21
$ 70
$118
$ 48
16
Los
Angeles
24.2
63.8
$73
$108
$35
$ 55
$100
$ 45
10.
San
Joaquin
26.0
66.0
$20
$ 90
$70
$  8
$105
$ 97
18
Orange
County
26.6
61.4
$46
$ 94
$48
$ 29
$114
$ 85
17
Inland
Empire
29.3
60.1
$71
$ 119
$48
$ 55
$101
$ 46
14
Kern
County
32.6
59.3
$44
$115
$71
$ 47
$113
$ 66
Avg. - six regions
26.2
63.5
$55
$ 96
$49
$ 44
$109
$ 65

Source: Covered California 2015 Active Member Profile. Prices from Covered California "shop and compare" tool

In these regions, silver plans will generally be more expensive in 2016.  In the six regions that had the highest bronze selection in 2015, the movement is more on the other end: in 2016 all of them offer bronze plans with premiums in the single digits to a 40 year-old earning $23k (bronze prices would be higher for younger buyers, and lower for older ones).

Regions with highest percentage bronze selection
Price of cheapest bronze and silver plans for a 40 year-old with $23,000 income

CA region
% buy bronze 2015
% buy silver 2015
Cheapest bronze 2015
Cheapest silver 2015
Price spread 2015
Cheapest bronze 2016
Cheapest silver 2016
Price spread 2016
13
Eastern Counties
55.8
41.5
$ 7
$107
$100
$1
$  1
$  0
9 Monterey Coast
43.0
50.6
$25
$ 121*
$ 96
$1
$109
$108
1 Northern Counties
40.2
53.6
$25
$105
$ 80
$6
$115
$109
7
Santa Clara
38.2
51.9
$22
$110
$ 84
$8
$114
$106
2
North Bay
38.1
51.6
$26
$121
$ 95
$5
$116 $95*
$ 90
8
San Mateo
38.0
49.9
$  7
$113
$107
$1
$113
$112
Avg. - six regions
42.2
51.3
$19
$117
$ 94
$4
$ 95
$ 88

While a truly freakish pricing decision by Molina in the Eastern Counties -- pricing the cheapest silver plan $136 below the benchmark for a 40 year-old -- skews the averages, bronze-silver spreads have widened in the other five regions, and bronze is all but free to a 40 year-old earning under 200% FPL in all of them. That will probably fatten the temptation and reduce silver selection among CSR eligibles. More buyers with incomes under 200% FPL may opt for bronze plans with $6,000 deductibles (and a separate $500 drug deductible)  and forgo silver with deductibles of $75 or $550.

CSR takeup in California in 2015 was roughly in line with national averages: 76% of all CSR-eligibles selected silver, as did 82% of those under 200% FPL.  The state expressed some pride in keeping overall average rate hikes to just 4% in 2016, and that pride is justifiable.  While overall hikes affect the federal government's spending, however, what matters most to subsidy-eligible buyers is the spread between a plan they want and the benchmark, which will always cost the subsidized buyer the same price regardless of its unsubsidized cost. If the cheapest silver plan is significantly cheaper than the benchmark, more people will buy silver -- especially if its price is in the same ballpark as the cheapest bronze (say, $90 per month vs. $70, instead of $121 vs. $1). 

A Kaiser Family Foundation analysis of rates in selected cities indicated that prices for the cheapest silver plan may have risen somewhat more on average than prices for the benchmark. If that's the case nationwide, then bronze selection may rise.

I really should look at bronze vs. silver prices in 2015 and 2016 in the seven counties I haven't charted.  I originally focused on these 12 counties because my aim was to examine the relationship between price spread and choice, not forecast selections going forward. I'll try to update soon.

----
* There are some question marks in the pricing data posted on Covered California's "Shop & Compare" tool.  Late last week, as 2016 prices went live, 2015 prices (still viewable and available to those who qualify for Special Enrollment Periods) went haywire for several days. By yesterday, 2015 pricing seems to have been mostly straightened out. Subsidized prices, however, now appear $3-4 higher on all the plans I checked than they did two weeks ago, when I collected data for the prior post. Apparently, subsidized premiums for benchmark silver have gone up modestly, perhaps reflecting the 2016 price scale, albeit for 2015 plans as quoted.  

Further, in two  pricing regions included here, differences in prices within the region, which I had recorded earlier, disappeared.  The one of most concern to me is Region 9 the Monterey Coast, since I devoted a previous post to differences in pricing (and so in silver selection) in Monterey and Santa Cruz. Now, a Blue Shield silver plan that was previously posted for Santa Cruz but not Monterey ($92/month for a buyer with an income of $23k) is shown as available in Monterey. I'm pretty confident that that's newly added, erroneously or not, because Anthem Blue Cross had 99% market share in Monterey County as of June, according to the data published in Covered CA Active Member Profile, available here. I have therefore quoted the Anthem silver plan as the cheapest available in Monterey in the chart above, as Monterey and San Benito together had slightly more enrollees than Santa Cruz as of June, and San Benito showed the same options as Monterey until the data shift of last week.  I am awaiting some clarification from the communications team at Covered CA, which acknowledged the scrambled data from last Friday through at least this past Wednesday (for part of that time, Covered CA took down the Shop & Compare tool for 2015).

In addition to Monterey, prices in Region 17, the Inland Empire, seem to have undergone a change, in that Riverside County is showing cheapest silver and bronze quoted for most of San Bernadino (a county in the same region), and a cheaper option that was quoted two weeks ago seems to have melted away. Unfortunately I did not write down which insurer made the offering, but the prices quoted for a 40 year-old with $23k income were $95 for cheapest silver and $54 for cheapest bronze -- a $41 spread as opposed to the $48 quoted above.

I should acknowledge the possibility of error here, too. Most of these regions have more than one county and dozens of zip codes. While I took samplings of each county, and gave more weight to those with most enrollments, I did not check every zip code.  Also, the data shakeup on Covered CA in the last week made final checks tricky, as prices went up a few dollars across the board, and some offerings seem to have changed. Plain math and transcription errors are also possible. But I'm confident that the broad outline in this and the prior post relating bronze-silver spreads to metal level selection is on point.

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*  The $95 silver plan appears to be available in most of Region 2 -- I missed that when first posting this.

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