Tuesday, September 13, 2016

As more Americans move out of poverty, will some move into ACA marketplace?

Data from the Census Bureau's just-released Current Population Reports for 2015 records a trifecta for the U.S. economy: incomes soaring (after years of stagnation and shrinkage), poverty reduced, health insurance rates rising.

A thought occurred to me while reading this part of economist Jared Bernstein's overview:
The official poverty rate fell from 14.8 percent in 2014 to 13.5 percent last year, a decline of 3.5 million people in households whose incomes put them below the poverty threshold for their family type (the poverty threshold for a single parent with two children was around $19,000 in 2015). 
The thought: Families rising out of poverty could be pushing ACA marketplace enrollment from the bottom up, particularly in states that refused the ACA Medicaid expansion.

In such states,  eligibility for subsidized coverage in the ACA marketplace begins at 100% of the Federal Poverty Level (FPL), as opposed to 139% FPL in expansion states. Those below 100% FPL are left out in the cold, and so may have an added incentive to scrape together (or report) an income that crosses the line.

In 19 nonexpansion states, fully 36% of marketplace enrollees have incomes in the 100-138% FPL range, as of the end of 2016 open enrollment, according to a recent CMS study.  Ten of the nineteen are in the south, and a large majority of marketplace enrollees in nonexpansion states are concentrated in those ten southern states.

According to the Census, in the south, the 2015 poverty rate was 15.3 percent, down from 16.5 percent in 2014, while the number in poverty decreased to 18.3 million from 19.5 million.  While Census measures of family income don't match up exactly with household income reported to the marketplace, those findings suggest a substantial number of people crossing the 100% FPL line, some of whom would become newly eligible for subsidized marketplace coverage.

Below is a look at marketplace enrollment growth from 2014 to 2015* in the four nonexpansion states with the largest enrollment, compared to the country as a whole, along with the percentage of enrollees that were in the 100-138% FPL range as of the end of open enrollment in 2016.(those numbers were not broken out before this year).   Most adults in that income range would be eligible for Medicaid were their state to accept the expansion (the children are generally eligible for CHIP or Meidcaid).

ACA Marketplace Enrollment Growth in high-enrollment nonexpansion states, 2014-2015

Percent of
Enrollees in
100-138% FPL
Range (2016)**

Many other factors are at work, of course, but I think it's at least possible that income growth increased the eligibility pool, particularly in nonexpansion states.  In expansion states, while income growth might push an equivalent number from Medicaid to marketplace eligibility, it might also push more people out of subsidy range and so out of the marketplace, as expansion states are wealthier on average. On the other hand, as premiums spike this year, more prospective enrollees in the 300-400% FPL range may become subsidy-eligible, as more unsubsidized premiums exceed 10% of income. In fact, premium growth this year is way outpacing any imaginable income growth.

If  large numbers of people continue to move out of poverty in 2016 and 2017, they may continue to push marketplace enrollment up from the bottom, offsetting (wholly or partly) those who move from marketplace to Medicaid coverage as more states expand.

Of course, it would be better both for the individuals involved and for the marketplace risk pool*** if more of the holdout states embrace the Medicaid expansion. In that case, continued income growth might push more people over the 138% FPL threshold that separates Medicaid eligibility from marketplace eligibility in expansion states -- again, partly offsetting marketplace enrollment losses to Medicaid.

9/14 afterthought: to the extent that personal income reporting can be massaged, I would suspect that people who "earn out" of Medicaid in expansion states would be less likely to report that fact than people who "earn into" the marketplace in nonexpansion states. Medicaid is substantially more affordable than a silver, CSR-enhanced plan for someone near the 138% FPL line.

* The charted figures are from the end of open enrollment in each year and so don't account for attrition. I used them because I couldn't find "effectuated enrollment snapshots" at equivalent points in 2014 and 2015.

** State percentages in the 100-138% FPL income range are broken out by Charles Gaba here.

*** A recent CMS study calculated that marketplace premiums are about 7% in expansion than in nonexpansion states, controlling for other factors. Kaiser Family Foundation survey data indicates that lower income enrollees are better off in Medicaid than in marketplace coverage, and are more satisfied with the former.

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