Wednesday, October 12, 2016

Are 2.5 million off-exchange health plan enrollees subsidy-eligible?

A recent HHS ASPE* analysis of the ACA marketplace and the uninsured found that an estimated 2.5 million people currently enrolled in health plans bought in the off-exchange individual market are potentially eligible for premium subsidies in the ACA marketplace. That is, 2.5 million people may have foregone subsidies by buying off-exchange or may be eligible for them in 2017. That's a pretty eye-popping number -- indicating that 70% of those currently enrolled in the individual market (on- and off-exchange) are subsidy-eligible.

HHS further estimated that 9 million of the uninsured are potentially eligible for subsidies in the ACA marketplace, and that a total of 20.9 million people are subsidy-eligible -- more than double the 9.4 million enrolled in subsidized marketplace plans as of March 31 of this year. Those estimates are markedly different from those of the Kaiser Family Foundation, which estimates that 5.4 million of the uninsured are potentially subsidy-eligible, and pegs the total subsidy-eligible population at 14.9 million.

The HHS analysis is based on different survey data than the Kaiser estimate: HHS uses the National Health Interview Survey (NHIS) while Kaiser relies on the Current Population Survey (CPS). But HHS's higher estimates may stem in large part from two more fundamental differences.

First, Kaiser's analysis of the uninsured population includes an estimate of those among the uninsured who have access to an offer of insurance from their employer. Kaiser pegs this group at 4.9 million. Those for whom the employer offer is deemed affordable according to ACA standards are ineligible for ACA marketplace subsidies. They include people caught in the so-called "family glitch" -- those for whom the employer-sponsored insurance on offer is deemed "affordable" for the employee alone (premium under 9.66% of income) though it may be unaffordable by any measure for his or her family. Estimates for the number of people in this situation are in the 2-4 million range. ASPE has confirmed to me that their analysis does not take employers' offers of insurance into account.

Second, HHS includes among the "potentially eligible" anyone whose income is between the minimum threshold for eligibility (100% or 138% FPL, depending on whether the state of residence has expanded Medicaid eligibility) and the maximum (400% FPL). A significant number of prospective enrollees with incomes in the 300-400% FPL range are ineligible for subsidies, however -- the subsidy only kicks in if the premium for the benchmark silver plan in the shopper's area exceeds the percentage of income deemed affordable (9.66% of income in the 300-400% FPL range). For some younger enrollees, subsidies fade out at incomes as low as about 250% FPL.  Kaiser accounts for this phase-out in its estimate of the subsidy-eligible. ASPE confirmed to me that their analysis does not.

Of the 2.5 million off-exchange enrollees who may be subsidy-eligible, HHS estimates that 1.1 million have incomes under 250% FPL and so may be eligible for Cost Sharing Reduction subsidies. That percentage is much lower than among marketplace enrollees, over three quarters of whom are below 250% FPL. Of the 1.4 million with incomes over 250% FPL, a substantial percentage may be subsidy-ineligible -- although, as the HHS brief points out, this year's premium spikes will render more of them eligible this year than last, since unsubsidized premiums will more often cross the affordability threshold for this group.

On the flip side of the equation, the ASPE analysis leaves out of the account a smallish population of marketplace enrollees and potential marketplace whose incomes are below the normal eligibility threshold for marketplace subsidies. That threshold does not apply to legally present noncitizens who are subject either to the federal "5-year bar" for Medicaid eligibility or to even more stringent state bars to eligibility. Noncitizens in this situation are eligible for marketplace subsidies no matter how low their income.

In the 38 states using the federal marketplace, HealthCare.gov, 3% of enrollees in 2016 had incomes under 100% FPL. If that percentage holds for the whole marketplace, it would come to about 330,000. Another 230,000 or so of HealthCare.gov enrollees have incomes in the 100-138% FPL range and live in states that expanded Medicaid.  There are probably roughly as many in states that run their own exchanges, all but one of which expanded Medicaid. Thus almost 800,000 marketplace enrollees may have incomes in a range that would render them Medicaid-eligible and ineligible for marketplace subsidies if they a) did not live in a nonexpansion state or b) were not time-barred from Medicaid.

I don't know what percentage of this rather large group are legally present noncitizens and so subsidy-eligible. Also unknown: how many legally present noncitizens who have incomes in Medicaid eligibility range but who are  time-barred from Medicaid remain uninsured. But there may well be several hundred thousand of them.

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* ASPE, the Office of the Assistant Secretary for Planning and Evaluation, produces HHS's analyses of ACA marketplace data.

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