Monday, November 06, 2017

For Whom the Bronze Bell Tolls in the ACA Marketplace

My last post looked at the likely impact of the availability of free or very cheap bronze plans for ACA marketplace customers who are eligible for strong Cost Sharing Reduction (CSR), available only with silver plans, in the five largest markets in the country.

In this post, we'll look at current CSR takeup in the five counties in question and consider how it's likely to change. Here are the counties, with their 2017 initial marketplace enrollment totals:

Miami-Dade, FL              387,848
Los Angeles, CA             380,520
Broward, FL                    240,984
Harris, TX (Houston)      240,064
Cook, IL (Chicago)         144,418

While bronze plans generally have deductibles above $6,000, CSR-enhanced silver plans, for enrollees with incomes up to twice the Federal Poverty Level, generally have deductibles in the $0-1,000 range. Silver plan premiums can be hard for CSR-eligible buyers to afford, though. The wider the spread between cheapest bronze and cheapest silver premiums, the more people will choose bronze.

This year, the spreads have widened dramatically, so CSR takeup is likely to drop, particularly at the higher CSR-eligible income levels, where silver is relatively more expensive. In three of the five counties in question, and parts of a fourth (Los Angeles), free bronze is available to 40 year-old buyers with incomes just below 200% FPL, the threshold for strong CSR. In Cook County, IL (including Chicago), bronze is $20 per month at that age and income level, vs. $118 for cheapest silver.

CSR takeup has generally been above 80% for enrollees with incomes up to 200% FPL.  In the five counties in question, which together account for about 11% of ACA marketplace enrollment, it's above 80% this year for all CSR eligibles taken together.

CSR Takeup in U.S. Counties with Highest Marketplace Enrollment (2017)

County
Total Enrolled
Total Enrolled at 100-250% FPL
CSR enrollment
CSR takeup*
Miami-Dade
  387,848
   350,359
298,015
85%
Los Angeles
  380,520
   255,420
207,710
81%
Broward
  240,984
   203,511
176,809
84%
Harris
  240,064
   188,816
157,868
81%
Cook
  144,418
     87,633
  73,581
84%
Total
1,393,834
1,085,739
913,983
84%

* About 2% of enrollees with CSR have incomes under 100% FPL, a population that HHS did not break out this year. Conversely, though, 1-2% of enrollees in the 100-250% FPL income range are not eligible for CSR. The CSR takeup rates cited here may be about 1% too high.

CSR takeup is high, but it falls as income rises. That's natural, because CSR weakens as income rises, while the percentage of income required to buy the benchmark (second cheapest) silver plan also rises. CSR raises the actuarial value of a silver plan from a baseline of 70% (silver without CSR) to 94% for enrollees with incomes up to 150% FPL, to 87% for enrollees with incomes ranging from 151-200% FPL, and to just 73% for those with incomes between 201-250% FPL.  Here are 2017 CSR takeup rates at the three levels of CSR in the 38 states using HealthCare.gov:

Metal Level Selections at Different CSR-eligible Income Levels (% FPL)
HealthCare.gov states, 2017

                              Strong CSR          Weak CSR            

Metal level
100-150%
151-200%
201-250%
bronze
 9.2%
14.4%
27.1%
silver
89.4%
83.2%
67.6%
gold
 <  1%
 1-2%
  4-5%

In 2018, silver plan selection is likely to fall off in the middle range of CSR eligibility, where it's historically been quite high.  It should fall even more steeply in the highest eligible bracket (201-250% FPL), where CSR is negligible and this year gold plans are in many cases either close to silver in price or actually cheaper.

Here is what the bronze-vs.-silver choice looks like in 2018 for a single 40 year-old at various incomes in Miami-Dade and Broward counties, which together account for 5% of all ACA enrollment.  The choice is broadly similar in all five counties considered here, except in large swaths of Los Angeles, where the cheapest bronze plan is $48 per month..

Miami-Dade 33012: Cheapest Bronze, Silver and Gold plans for 40 year-old

Income
Cheapest bronze premium (60% AV)
Cheapest silver premium
Cheapest gold premium (80% AV)
$16,000 (133% FPL)
$ 0
$ 19 (94% AV)
$ 40
$18,000 (149% FPL)
$ 0
$ 52 (94% AV)
$ 73
$24,000 (199% FPL)
$ 0
$118 (87% AV)
$139
$30,000 (249% FPL)
$56
$194 (73% AV)
$215

At bottom, I've pasted more comprehensive plan comparisons from hc.gov for three income levels: just over 100% FPL, just under 200% FPL, and just over 200% FPL

Bronze, I suspect, is going to start to look very tempting at incomes over 150% FPL, and to a lesser extent in the 138-150% FPL band, where the premium for benchmark silver is 3-4% of income, as opposed to just 2% for those in the 100-138% FPL range. In the 201-250% bracket, gold, at 80% AV, may outdraw silver, at 73% AV, while bronze may also draw many.

Now let's look at the incomes at which CSR-eligible enrollees are concentrated in these counties. Florida and Texas refused to implement the ACA Medicaid expansion, and consequently, eligibility for marketplace subsidies starts there at 100% FPL, as opposed to 138% FPL in the expansion states, e.g., California and Illinois. Needless to say, silver plans are most affordable for those in the "should have been in Medicaid" 100-138% FPL band -- and there's a lot of them. Unfortunately, this year HHS did not break out the 100-138% FPL cohort separately, so 100-150% FPL is shown below, As noted in the prior post, though, in 2016 46% of enrollees in Florida and 34% in Texas had incomes between 100-138% FPL.

Silver Enrollment in 100-250% FPL Range by Income Level (2017)

County
100-150% FPL
94% AV silver
151-200% FPL
87% AV silver
201-250% FPL
73% AV silver
Miami-Dade
75%
18%
 7%
Los Angeles
36%
48%
16%
Broward
68%
21%
10%
Harris
59%
26%
15%
Cook
30%
45%
26%
CSR takeup rate - all hc.gov states
89%
83%
68%


To think in Republican terms for a moment, a person earning $24k who might in a previous year have ponied up $118 per month for high-AV silver could theoretically buy a free bronze HSA-linked plan, and put the saved premium toward medical expenses. No one is going to do that. More mundanely, a lot of prospective enrollees can now get a rough equivalent of the subsidy value of strong CSR in a bronze plan -- as perhaps they should always have been able to do. This, however, is an inefficient and convoluted way to do it.

Appendix: The choice at three income levels in Miami-Dade (zip 33012)

     Income $12,000, 40 year-old



            Income $24,000, 40 year-old



           Income $25,000, 40 year-old


Prequel: Free bronze or CSR-boosted silver? The choice in 5 top marketplace countie

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