Saturday, March 17, 2018

Who'd be hurt by restored federal CSR funding? A snapshot from Maryland

Update: snapshot from Rhode Island added at bottom, 3/19.

Based on 2017 ACA marketplace enrollment data, Aviva Aron-Dine of the Center on Budget and Policy Priorities estimates that as many as 36% of marketplace enrollees might be harmed if federal funding for Cost Sharing Reduction (CSR) payments is restored by Congress. That's an upper bound, if all who could potentially benefit in 2018 by switching from silver plans to other metal levels did so. It comes to about 22% of all individual market enrollees, since about 40% of those in ACA-compliant plans bought their plans off-exchange -- and so are ineligible for subsidies.

One sample of data already available for 2018 -- Maryland's -- indicates that Aron-Dine's estimates are on target. I have something of a quibble with how the potentially harmed population is defined, however.

To estimate how many enrollees might be harmed by CSR funding, Aron-Dine analyzed 2017 enrollment data for the 39 states using Those counted as harmed include 1.6 million subsidized enrollees -- 18% of the total --  who bought plans other than silver (almost all bronze or gold), since they would lose the discount created in 2018 by pricing CSR into silver plans only.  Another 1.7 million enrollees had incomes in the 200-400% FPL range and selected silver plans. In 2018, an unknown number of them (or similarly placed new enrollees) might have switched, or benefited from switching, to gold or bronze in 2018 -- and so are counted as potential "harmees" if that opportunity to buy discounted gold or bronze disappears.

In Maryland, I have a breakout (provided by the Maryland Health Exchange and previously discussed here) of 2018 enrollees' metal level selection by income. So we can see the choices of buyers in the 200-400% FPL range, who have most to lose or gain if CSR is no longer priced in, as well as in other income brackets. Unfortunately I don't have a similar breakout of 2017 choices.

In Maryland, the effects of "silver loading" -- concentrating the cost of CSR in premiums for on-exchange silver plans only -- were particularly pronounced (see note below for a summary of how the CSR cutoff affected pricing generally). In January, I  summarized those effects as follows:
Throughout the state, all subsidy-eligible* enrollees with incomes below 200% of the Federal Poverty Level (FPL) could obtain an bronze plan for under $20 per month. Most at this income level -- e.g., everyone over 30 -- could get a bronze plan for under $4 per month. In the state's most populous counties, subsidy-eligible buyers could get a gold plan for just a few dollars more than a silver one.  And in several rural counties, an enormously expensive benchmark (second cheapest) silver plan, which determines subsidy size, rendered silver and gold plans as well as bronze plans all but free for many enrollees.
Here is the breakout of metal level selection by income:

Who among these 153,608 (or the roughly 85% of them likely to pay their first premium and remain enrolled for any length of time) might be harmed if the federal government once again reimbursed insurers for CSR? Well...

  • 37.3% (57,220) have incomes up to 200% FPL and chose silver plans. They would be more or less unaffected.  For buyers in this income range, silver plans are roughly equivalent to platinum (94% AV for those up to 150% FPL, 87% AV for those in the 150-200% FPL range).  Silver remains more valuable than gold (80% AV) and bronze (60% AV) -- though the free benefit provided by CSR is partly offset by new premium discounts for bronze and gold.

  • 12.3% (18,834) have incomes over 200% FPL and selected silver plans. They too would be unaffected by federal CSR funding, as their subsidies would adjust with the cost of benchmark silver. Some of them may well have benefited had they chosen gold plans that were close in price or even cheaper than silver plans.  More than half of this group (10,493) accessed the weak CSR available in the 200-250% FPL range, raising the AV of a silver plan to 73% (still well below that of gold plans). Perhaps some might be harmed by lost new opportunities to access gold or bronze discounts.

  • 18.8% (28,775) either have incomes unknown or incomes over 400% FPL. They are all unsubsidized, as are another 3,396 with incomes below 400% FPL -- 21% in all. They theoretically also would be unaffected by restored CSR funding -- except that 8,928 of them (5.8% of all enrollees) selected silver plans and so presumably paid a premium inflated by priced-in CSR, from which they didn't benefit. Were CSR funded, the on-exchange unsubsidized would have the benefit of cheaper silver plans, as did off-exchange Maryland enrollees this year (more on that below). Still, their non-silver options this year were not affected by the CSR cutoff (except insofar as nine months of uncertainty about CSR and other political threats to the marketplace may have induced insurers to inflate premiums across the board to the extent they could get away with) . Unsubsidized silver plan enrollees who bought on-exchange in 2018 presumably made a suboptimal choice.

  • 11.3% (17,410) have incomes up to 200% FPL and chose plans other than silver. They might be harmed or helped by restored federal CSR funding. Their bronze or gold discounts may be roughly equivalent to the cost-free value of CSR available to them  if they select silver (though they're probably somewhat less valuable). Some enrollees may have been unduly tempted by all-but-free bronze plans, with their $5500-6500 deductibles, to forgo silver ($0 deductible for those under 200% FPL in Baltimore County and other populous areas). Others might not recognize that gold plans provide less coverage to them  than silver.  If CSR is no longer priced in to silver premiums, the price spread  will narrow between bronze and silver and widen between silver and gold.   

  • 21.2% (32,583) had incomes in the 200-400% FPL range and selected plans other than silver. Virtually all of this population would lose a real discount obtained this year, a bit more than half of them (16,346) obtained gold plans that in most of Maryland had $0 deductibles. About 2,000 of them are likely unsubsidized. 

  • Roughly 110,000 Marylanders were enrolled in the off-exchange individual market in August 2017, according to the Maryland Insurance Administration.** Off-exchange enrollees in Maryland in 2018 theoretically were held harmless by Trump's CSR cutoff, as premium increases to cover CSR were concentrated on-exchange. Off-exchange silver plans offered by Kaiser Permanente are in fact cheaper than those available on-exchange. In Baltimore County, the cheapest silver plan offered on-exchange is $436 for a 40 year-old; the same plan is $373 off-exchange.  Restoration of federal CSR funding should be neutral for off-exchange Maryland enrollees.
So there you have the enrollment results of full-bore on-exchange silver-loading of CSR costs in one state.  In all, 49,993  on-exchange enrollees with incomes up to 400% FPL chose plans other than silver. About 48,000 of them were subsidized.  That's 31.2% of all enrollees, within striking distance of Aron-Dine's upper bound of 36% for all marketplace enrollees.

I would not go so far as to say that all of them stand to be hurt by CSR re-funding, however. The "harmees," I would argue, are mainly the roughly 30,000 subsidized with incomes over 200% FPL who chose non-silver plans. That's about 20% of on-marketplace enrollees -- and about one eighth of all individual market enrollees in Maryland. Their ranks should perhaps be partly offset by some subset of the 17,410 with incomes below 200% FPL who chose bronze or gold plans. Some of them may have been lured into suboptimal choices -- gold worth less than silver, or bronze that would pay for none to little of any care they actually sought.

It's also true, however, that restoring federal CSR reimbursements would not help many individuals at this point. Arguably it would benefit none -- if all states require insurers to concentrate the cost of CSR in on-exchange silver plans (right now not all states do, and unsubsidized buyers in those states are paying some portion of the cost of CSR, from which they don't benefit). "Silver-loaded" CSR has provided a much needed backdoor subsidy to many subsidized enrollees with incomes over 200% FPL, and a perhaps-valuable lure to some low-income folks who get a bronze plan for free, or close to it. It's not an efficient way to improve ACA subsidies -- but those subsidies were in sore need of improvement. Until it's politically feasible to replace this market distortion with a more rational enhanced subsidy schedule, Democrats should resist efforts to restore the federal reimbursements.


*  The Maryland Health Benefit Exchange told me that a total of 32,171 enrollees were unsubsidized.

** The rating document in question, dated Aug. 29, 2017, pegs total individual market enrollment at approximately 243,000. Effectuated on-exchange enrollment in Maryland as of mid-2017 was 133,317, according to CMS, .

Note: Effects of CSR funding cut-off 

To review briefly: when Trump cut off federal reimbursement of insurers for the Cost Sharing Reduction subsidies they're legally required to provide to lower income ACA marketplace enrollees who select silver plans (57% of marketplace enrollees in 2017), most states allowed or required insurers to concentrate the cost of CSR in premiums for silver plans only. States in which 70% of individual market enrollees live concentrated the cost of CSR in on-exchange silver plans only, allowing for cheaper silver plans to be sold off exchange.

Since ACA premium subsidies are keyed to the price of the benchmark (second cheapest) silver plan in each rating area, subsidies rose to cover inflated silver premiums, generating often dramatic discounts in non-silver plans, i.e. gold and bronze (platinum availability and purchase is negligible). In many states, steep increases in silver plan premiums resulted in zero-premium bronze plans becoming available to many buyers (or nominal $1-3/month premiums), and gold plans that were either cheaper than silver or close in price.

Cheap gold plans were a particular boon to enrollees with incomes between 200% and 400% of the Federal Poverty Level (FPL). These buyers are not eligible for strong CSR, which makes silver plans roughly equivalent to platinum plans for buyers up to the 200% FPL threshold. Normally,  enrollees in the 200-400% FPL range would pay between 6% and 10% of their income (percentage rising with income) for a benchmark silver plan with an actuarial value of 70%, i.e. with an average deductible of around $3600). With CSR priced into silver plans in 2018, gold plans  (80% AV, with an average deductible of around $1100) came within reach of many in this income range.  Gold plan selection quadrupled in Maryland in 2018.

Update, 3/19: Rhode Island today released an enrollment report that included a comparison of metal level selection at different income levels in the 2017 and 2018. In Rhode Island, as in Maryland, insurers concentrated the cost of CSR in on-exchange silver plans. There too, the shift to gold was dramatic (and enrollment was up 5%):

Charles Gaba concludes that 28.5% of RI enrollees -- all subsidized bronze and gold enrollees -- would be hurt by restored federal CSR funding. Since the bronze uptick was modest and did not significantly reduce silver selection among those eligible for strong CSR (Silver 87% AV and Silver 94% AV above), I think that's fair. Gaba makes it graphic:

Choosing a metal level in the CSR-addled Maryland marketplace (Jan 12, 2018)
Subsidized enrollment rose 2% in Maryland in 2018 (Jan. 11, 2018)
Maryland ACA marketplace enrollment spotlights effects of Trump's sabotage (Jan. 8, 2018)


  1. It is all well and good to tease out how some enrollees are actually better off with a premium increase, thanks to subsidies.............

    but are we missing something?

    Aren't the insurers legally owed the money for the CSR's that they funded?

    To this day I do not understand why the CSR's were not cancelled when a series of Republican congresses refused appropriations.
    I am not saying I wanted them to be cancelled, but if Congress will not pay for something it should stop.

    1. Insurers were able to price in the cost of CSR. Isn't that a net gain for them? Reconciliation of federal advance CSR payments with actual claims was a huge headache.

  2. The intent of the law was that all taxpayers would in effect pay the cost of CSR's.

    But pricing the CSR cost into policies seems to mean that the cost is being borne by unsubsidized persons on the exchanges.

    These poor folks over 400% of poverty on are the whole not rich, and I am sick of their being hit over and over with the costs of the ACA.

    1. It's an interesting thought, and the charge is true in states that don't require/allow insurers to concentrate the whole cost of CSR on on-exchange silver plans. When such silver-loading is done, however, unsubsidized enrollees are effectively held harmless.