Monday, October 31, 2016

Fly-specking a myth-busting from HHS on the ACA marketplace

As the ACA's fourth open enrollment kicks off in the face of steep rate hikes and reduced competition, HHS Secretary Burwell feels compelled to engage in some "myth busting."

Fair enough, but I in turn feel compelled to, shall we say, qualify the clarifications. My two cents are in italics, below each myth-bust.

Myth #1: Health coverage on the Marketplace is unaffordable.

On the surface, headline rate changes can look spooky – but they don’t actually reflect what the vast majority of people will pay.

If you dig deeper, most consumers shopping on the Marketplace will be able to find a plan between $50 and $100 per month, thanks to financial assistance.

Well...it depends what your definition of "vast majority" is. At present there are 10.5 million marketplace enrollees, and about 1.5 million of them are unsubsidized. There are also 6.9 million enrollees in the off-marketplace individual market, however, by HHS's tallying. Off-marketplace enrollment estimates vary; Mark Farrah Associates pegged the total individual market at 20.2 million in August, which would suggest about 9 million off-marketplace.  

HHS estimates that 2.5 million current off-marketplace enrollees are "potentially" eligible for subsidies, but "potential" does not mean "actual," and the actual number is probably considerably smaller, as I explained here

If 2.5 million off-marketplace enrollees were indeed subsidy-eligible, and if the 6.9 million off-marketplace count is accurate, then about 2/3 of current individual marketplace enrollees would be eligible for subsidies. The actual percentage is probably somewhat smaller. At present, by HHS's count, barely more than half of individual market enrollees are subsidized. 

It may be literally true that "the vast majority" of people shopping on the Marketplace will be subsidy eligible, but that's because most individual market customers who are subsidy ineligible are aware of that fact and don't bother with the marketplace.

The unsubsidized individual market is where the wild things are -- and will indeed be spooky for many who are not eligible for subsidies but not truly wealthy.

Thursday, October 27, 2016

25% premium hikes "just a flesh wound," say some Democrats

As the steep premium hikes in the individual market for health insurance have become official and specific, some progressives are comforting themselves with the thought that the market's 8-9 million unsubsidized enrollees constitute just 3% of the U.S. population. That's a silly frame.

If the ACA marketplace and larger individual market were firing on all burners, according to Kaiser Family Foundation estimates*, it would serve 27.4 million people, slightly more than half of them subsidized. That's about 60% of the population the ACA was designed to serve most directly b two means:  the Medicaid expansion (envisioned to newly insure about 17 million) and reform/subsidization of the individual market. A core purpose of the law was make the individual market accessible and affordable to all who needed it. That was always going to include 8-10 million people who don't qualify for subsidies -- not all of whom earn over 400% FPL (some have an employer's offer of insurance that they find unaffordable, though the law doesn't deem it so).

About a fifth of the law's current direct "beneficiaries" are unprotected from premium hikes averaging 25% overall and 22% in benchmark silver plans, the best measure of what those seeking decent insurance will be forced to pay. In some states, average increases are far worse -- 45% in Illinois, 57% in Arizona and Minnesota, 76% in Oklahoma. Note that two of those states are blue states, committed to making the law work. If hikes at this year's levels are more than a one-year correction, they're unsustainable.

Tuesday, October 25, 2016

The two-track individual market for health insurance

[Update/correction - This post originally included an important error: the RWJF breakout of off-marketplace metal levels referred to plans offered, not plans selected. While leaving that data in place, I've added survey data from the Commonwealth Fund regarding off-marketplace enrollees' metal level selections that also is not based on actual selection data but does also look rather similar to metal level selection among unsubsidized on-marketplace enrollees, as reported by HHS.]
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There are basically two individual markets for health insurance in the United States: one for subsidy-eligible people earning under 201% of the Federal Poverty Level (FPL), and one for everyone else.

Subsidy-eligible marketplace shoppers with incomes up to 200% FPL are eligible for Cost Sharing Reduction (CSR) subsidies that radically reduce deductibles, copays and maximum out-of-pocket costs. CSR subsidies are available only to those who buy silver plans, as something over 80% of enrollees with incomes up to 200% FPL do.  CSR weakens sharply at 201% FPL and phases out at 251% FPL.

Some time ago I calculated that the weighted average actuarial value for plans sold on the marketplace in 2016 was just about 80%, (The actuarial value is the percentage of the average enrollee's yearly medical costs that the plan is designed to pay.)   80% AV is close to the average for employer-sponsored health plans, and it sounds good, but it masks a sharp division. For those with incomes up to 200% FPL, the average AV was 86%. For the unsubsidized, it was 69%. For those who obtained premium subsidies but had incomes over 200% FPL, it was also 69%.

While average AV was similar for the unsubsidized and the over-200% FPL-subsidized, their choices were somewhat different. About 60% of the over-200%-FPL subsidized group chose silver plans -- in part because weak CSR attaches to silver plans for those in the 200-250% FPL bracket. Among the unsubsidized, only 39% chose silver, but AV was boosted by 18.5% of this more affluent group choosing gold plans, and 3.3% choosing platinum.

This week, the Robert Wood Johnson Foundation published a study, reported by Modern Healthcare's Harris Meyer, that details plan choices offerings (and prices) in the off-marketplace ACA-compliant individual market. [Update: per note above, see Commonwealth Fund data below.] And it turns out, unsurprisingly, that the choices made by those who bought their plans off-marketplace -- by definition, unsubsidized -- look much like the choices of unsubsidized marketplace enrollees: a lot of bronze, but also a lot of gold and platinum.  Below is the breakout of metal level selections offerings off-marketplace for 2016 according to RWJF.*

Actuarial
Value
Percent of
Off-marketplace
enrollees plan offerings
90 (platinum)
  7.0**
80  (gold)
21.6
70 (silver)
33.7
60 (bronze)
33.1
57 (catastrophic)
  4.6**
69.6 (Weighed AVG)


Their choice pattern [insofar as it reflects plan offerings]  is pretty close to that of unsubsidized enrollees on HealthCare.gov:

Actuarial
Value
Percent of
unsubsidized
hc.gov enrollees
90 (platinum)
  3.3
80  (gold)
18.5
70 (silver)
39.0
60 (bronze)
33.0
57 (catastrophic)
  6.8
68.9 (Weighed AVG)

Monday, October 24, 2016

See plans and prices -- and get buttonholed for Cost Sharing Reduction -- on HealthCare.gov

Healthcare.gov has launched its "shop-around" feature for 2017 -- that is, the screen where you can enter a few basic facts about yourself and then preview plans and prices, with your subsidy built into the price estimate.

As in past years, the shoparound has been redesigned. The new design has plusses and minuses in my view. As always, my primary focus is on how well the app communicates about Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, and only to people with a household income up to 250% of the Federal Poverty Level (FPL).

CSR radically lowers deductibles and copays for buyers with incomes up to 200% FPL and offers a more marginal benefit to those in the 200-250% FPL range. Because the benefit comes only with silver plans, the silver level provides the best value in absolute terms to CSR eligibles.

Because it makes silver plans more valuable than gold plans for anyone with an income up to 200% FPL, CSR is inherently counterintuitive. And because silver plans cost more than bronze, they are easy to miss when plans are ranked by premium, lowest first.

Some state-run ACA marketplaces "default to silver" for CSR-eligible shoppers -- that is, they automatically show silver plans first in the display of available plans. HealthCare.gov appears to have thought long and hard about doing this. Current CEO Kevin Counihan ran Connecticut's ACA marketplace, which has "defaulted to silver" since its launch in 2014. Connecticut has had an unusually high CSR takeup rate.

What Hc.gov decided for 2017 was a kind of optional default to silver. If you're CSR-eligible, the screen below appears before you move on to view available plans (apologies for the cut off phrase at top: it should read "only if you pick a silver plan"):


Since this screen is meant to highlight the benefits of CSR, there's a disconnect in fronting the "estimated total yearly costs." That estimate derives from a prior screen, in which you forecast whether you'll need a low, medium or high level of medical care. The estimate above is for a "low" user.

There may be an appropriate place for that information, but this is not it. What's not highlighted is the radical difference in bronze vs. silver deductibles and copays -- a disproportionate difference, thanks to the CSR subsidy added to silver alone. The light-text explanation at bottom appears to fly in the face of the cost estimate -- which of course presumes that the buyer will be a light user as expected. Risk is left out of the equation implied by the bolded text, as is the extra value added by CSR.

A second flaw is in the contrast of the average premium at each metal level. That average can be skewed by some very expensive options. Most marketplace enrollees consider only the cheapest plans available at each metal level.  In this zip (07079) and income level $23k), the cheapest-plan contrast for a 40 year-old would be between a bronze plan at $69 per month with a $3,000 deductible and a silver plan at $104 with a $300 deductible. That would make a more compelling and coherent contrast:




The good news is, I got that comparison from the shop-around's excellent "compare plans" feature. But I had to first pick through the bronze selections to find the first silver (which, to make matters more confusing, was cheaper than several bronze plans in this zip code). The contrast of CSR-enhanced silver with bronze should be clearer in the intro screen.

A third flaw is that if you go back and edit your information, for example to change the income estimate, you don't get the CSR filter screen the second time around.  You just get plans ranked by premium, and the only alternative filter available at first blush is to rank them by deductible, which can yield off-putting results if there are gold plans at premiums that quintuple lower-cost bronze or silver.

There is in fact an additional "refine results" filter that enables screening for a host of options, but it's in a different color and took me several passes to notice it (I can be a very thick user, but I'm sure I'm not alone in that).

As in previous years, once you've input your basic information and before the screen discussed above appears there's an overview screen that also provides an explanation of CSR. But it's  in light type at the bottom of the page, very subordinate to the centerpiece focused on the tax credit:


The broader shoparound tradeoff is between keeping it short and simple, so that users get a quick view of what they're likely to pay, or slowing the process by adding more information, such as plans that cover the shopper's drugs and have her doctors and hospitals in-network.  This year's shoparound takes  a bit longer to get through  than last year's, which was slower than 2015's. Added this year is a filter to indicate whether one is eligible for subsidies at all, e.g., whether the user has an offer of affordable insurance from an employer, which renders him subsidy-ineligible.

In my view that is a worthy feature, as are the drug and doctor filters, and, if properly contextualized, the total cost estimator, which varies according to whether the user anticipates low, medium or high use of medical services. But I wonder whether a two-tier process mightn't be appropriate. In 2015, you could view plans and prices, with your subsidy priced in, within 30 seconds of visiting the home page.Perhaps the shoparound should start with the most basic info -- zip code, household members with their ages, and family income -- give the price quotes, and then prompt for the additional info in a second stage.  In particular, I'm wary of total cost estimators, which tend to push the cost of unexpected accident or illness out of view. I think the results should be carefully hedged, perhaps with views of what you'll pay under alternative scenarios.

Still, the current shoparound gets you results reasonably fast, and I can't say it ignores CSR, the workings of which are notoriously difficult to communicate. We'll see how it works out for users.

See also:
The ACA's uncertain shield against underinsurance: A CSR compendium

Thursday, October 20, 2016

HHS projects no growth in individual market for health insurance in 2017

The salient point about HHS's enrollment projection for the ACA marketplace in 2017 is that it does not project any growth in the individual market as a whole.

The ASPE brief laying out the forecast projects 13.8 million enrollments in the ACA marketplace by the end of open enrollment 2017, an increase of 1.1 million over the end of the 2016 enrollment period. That estimate includes 1.1 million people expected to move from off-marketplace coverage into the marketplace -- a projection based on HHS's recent estimate that 2.5 million off-marketplace enrollees are potentially eligible for marketplace subsidies.

Since insurers' ACA-compliant off-marketplace plans share a risk pool with their on-marketplace plans, a total market that stays flat will not improve insurers' risk pools, except to the extent that those who come on-marketplace switch from pre-ACA grandfathered and grandmothered plans (as far as I can tell, the ASPE brief does not clarify whether some of the anticipated transfers will come from such plans, which are phasing out). Thus the individual market as a whole may not be any more attractive to insurers next year than this year, except to the extent that this year's price hikes cover last year's losses, or the pent-up demand for medical care on the part of previously uninsured marketplace enrollees starts to level off, or regulatory and risk adjustment changes have a positive effect.

On the other hand, as Kaiser's Cynthia Cox pointed out on Twitter, a transfer from off-marketplace to on-marketplace may reduce insurers' temptation to end their marketplace participation and sell off-marketplace only in some regions.

Tuesday, October 18, 2016

Chipping away at the uninsured: What about those who can't afford employer-sponsored insurance?

Last week, I explored  why HHS's estimate that 9 million of the uninsured may be eligible for ACA marketplace tax credits is so much larger than the Kaiser Family Foundation's estimate of 5.4 million. In brief, the chief differences seem to be a) Kaiser takes into account those among the uninsured who have an offer of insurance from an employer, most of whom are probably ineligible for tax credits, and b) Kaiser also estimates and excludes those with incomes in the 250-400% FPL range who are "potentially" tax credit eligible but in fact ineligible because the unsubsidized premium for the benchmark silver plan in their area is deemed affordable by ACA criteria (i.e., costs under 8-10% of income).

Today, Kaiser updated its 2015 estimates, published in January 2016, of various categories of uninsured. The first thing to note is that the pool has shrunk: Kaiser now estimates 27.2 million nonelderly uninsured in 2016, down from 32.3 million in 2015. Next, the estimated percentage of uninsured who are eligible for financial assistance -- either Medicaid or marketplace subsidies -- is down from 49% to 43%.

That's due in large part to Medicaid enrollment: The estimate of uninsured people eligible for Medicaid is down from 8.9 million in 2015 to 6.4 million at present. But the estimate of the uninsured who are eligible from marketplace tax credits is also down, from 7.0 million in 2015 to 5.3 million now (an estimate Kaiser had already published, with minimal difference, earlier this year, and which I cited in the prior post).

As the ACA marketplace and the larger individual market with which it shares a risk pool wobble this fall, a key question is how close to capacity those linked markets are. Kaiser's new estimates suggest that not only has the pool of uninsured and potentially subsidizable marketplace candidates shrunk, but so has the pool of those who earn too much to qualify for subsidies yet remain uninsured -- from 3.7 million in 2015 to 3.0 million this year. (One thing to watch this year is whether premium spikes reverse that progress among the unsubsidized.)

Put the two together, and the pool of uninsured who might buy health insurance in the individual market has shrunk from 10.7 million to 8.7 million.

Friday, October 14, 2016

Michelle Obama opens the doors of perception

For the second time* in this election season, Michelle Obama riveted the country and the world with moral clarity, in a speech delivered yesterday in New Hampshire. She named Donald Trump before the world. She detailed the effects of his sexual predation -- on herself, voice shaking a little, and on a series of concentric audiences -- the one before her, the nation's children, the world. As she did at the convention, she set Trump's manifest depravity against an idealized portrait of American values as she (or her husband) strives to embody them.

The denunciation was as carefully structured as it was deeply personal. She began, by way of contrast, with a norm as she experiences it, American values that she strives to advance, as expressed in an International Day of the Girl event at the White House  (part of her Let Girls Learn program). There she "had the pleasure of spending hours talking to some of the most amazing young women you will ever meet, young girls here in the U.S. and all around the world." That opened a window on the ravages of male dominance throughout human society - and the route out:

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.

Thursday, October 06, 2016

Bill Clinton's other "craziest thing in the world"

I have a post up at healthinsurance.org that looks at an apparent slip from Bill Clinton's political id regarding Obamacare. No, not that "craziest thing in the world" slip -- the one about allowing those who earn too much to qualify for subsidies in the ACA marketplace to buy into Medicaid.

To buy into what? Who suggested that? Certainly not Hillary. But it -- or something very like it  -- might not be such a bad idea. Please take a look.

My last several posts at healthinsurance.org explore outside-the-box ideas for strengthening and/or amending the ACA. They include a Medicare buy-in that Republicans might like and a way to get public option pricing into the ACA marketplace without the 'public' part. Also pointing possible alternate paths: a close look at the Basic Health Programs and proposals to expand them in Minnesota and New York.

Tuesday, October 04, 2016

Hillary, speak to service workers

In this aphorism by Binyamin Appelbaum lies latent, I think, the organizing principle, articulated or not (okay, not), of Hillary Clinton's economic agenda:
Soon, we will be living in the United States of Home Health Aides, yet the candidates keep talking about steelworkers. 
Let's back up for some context. While U.S. manufacturing output is at an all-time high,  80% of Americans work in the service sector, Appelbaum reports, Yet politicians of both parties keep romanticizing and prioritizing manufacturing jobs:

Monday, October 03, 2016

In which Obama feels the pain of the price tag he imposed on the ACA

In an interview with Jonathan Chait, President Obama rather casually ticked off his first priority for shoring up the ACA:
In my mind the [Affordable Care Act] has been a huge success, but it’s got real problems. They’re eminently fixable problems in terms of strengthening the marketplace, improving the subsidies so more folks can get it, making sure everybody has Medicaid who was qualified under the original legislation, doing more on the cost containment. But you hit a point where if Congress just is not willing to make any constructive modifications and it’s all political football, then you’re getting a suboptimal solution. 
By now, the imperative to enrich the marketplace subsidies is a matter of consensus among progressive healthcare scholars and officials. Out-of-pocket costs are just too high for prospective enrollees with incomes over 200% of the Federal Poverty Level (FPL)*, the cutoff for strong Cost Sharing Reduction (CSR) subsidies, and premium subsidies leave buyers paying too high a percentage of their income -- between 6.4% and 9.7% of income for those in the 200-400% FPL range. In August 2015, Urban Institute scholars Linda Blumberg and John Holahan put out a detailed proposal for subsidy enrichment that included raising the actuarial value of the benchmark plan to 80% from the current 70% , with richer CSR extending further up the income ladder, as well as capping premiums at 8.5% of income for all income levels. Hillary Clinton's rather vague proposal for subsidy enrichment is apparently based on Blumberg and Holahan's. ACA improvement proposals by Timothy Jost and Harold Pollack and Sabrina Corlette and Jack Hoadley also prominently feature subsidy boosts.

The inadequacy of marketplace subsidies was evident to progressives from the beginning. Complaints began when Max Baucus's Senate Finance Committee released its bill in fall 2009, with a subsidy schedule that was far skimpier than that of the House bill.** In his 2011 book about the battle to pass the ACA, Richard Kirsch, national campaign manager from 2008-12 for Health Care for America Now (HCAN), an  umbrella group formed by unions and progressive nonprofits to advocate for universal health care, pins responsibility for the skimpy subsidies primarily on Obama:

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