New data: health exchange design matters

Why was there such huge variation among states in the proportion of ACA private plan buyers in the first open season who bought bronze plans -- the plans with the lowest premiums and highest deductibles and copays? In Hawaii, 41% of ACA shoppers bought bronze; in Mississippi, 8% did.

Part of the answer, as I've noted before, lies in a state's relative levels of wealth and health. Lower income buyers are eligible for generous Cost Sharing Reduction (CSR) subsidies that reduce deductibles, co-pays and yearly out-of-pocket (OOP) maximums -- but only if they buy silver plans.

Fortunately, most did. If you're sick and poor, a $6,000 deductible is likely to give you pause -- even if the plan is all but free and you don't come in knowing what a deductible is. On Healthcare.gov, only 15% of buyers eligible for any kind of subsidy bought bronze. The percentage is probably considerably lower among those eligible for strong CSR subsidies -- that is, buyers with incomes under 200% of the Federal Poverty Level (data from states that broke out metal level selection by income band, cited below, suggests as much).

Another factor plainly has a strong impact, though, and may account for some wealth/health anomalies in state performance. That's website design. In Connecticut, which had a 2013 median household income of $67,781, second highest in the nation, just 16% of all buyers in the first open season selected bronze. In Colorado, with a median income of $63.371, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the menu of plans available to a given user defaults to silver, both in the pre-application "shop-around" feature and in the actual application. The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is cumbersome; the filter by metal level is hard to find (at the bottom of the screen, and you have to scroll back up to activate it). Perhaps more importantly, unlike on Healthcare.gov, applicants who qualify for CSR and make a move to buy a bronze plan receive no warning that they're leaving benefits on the table.

New data from Connecticut

The strongest evidence of the impact of site design comes from data about the choices of buyers with household incomes below 200% FPL (CSR is available but much weaker for those between 200-250% FPL). HHS did not provide this information for the 36 states that used Healthcare.gov in the first open season, and neither did most states. Colorado did, however, and so did New York (median 2013 household income $53,843).  And now, Access Health Connecticut has provided me with CT numbers for the current open season, which began on November 15.
New York's exchange did not have a shop-around in the first open season. But as in Connecticut, CSR-eligible applicants were shown silver plans first once they had input their personal data and moved to view available plans and prices. The silver plan takeup for buyers under 200% FPL in New York in in the first open season and in Connecticut for 2015 are strikingly similar -- and make a telling contrast with Colorado's.

New York's 2014 Open Enrollment Report, released in June, shows that 89% of buyers with incomes under 200% FPL bought silver plans (that is, about 129,700 out of about 145,160).*  In Connecticut so far this season (I don't have figures for the first open season), the figure is 88% -- 18,765 out of 21,214.   Only 5% (1,062) bought bronze.** In Colorado, in contrast, only 73% of buyers under 200% FPL bought silver plans. Bronze takeup figures for buyers under 200% FPL are not available for New York and Colorado.

In all three states, silver plan selection dropped off sharply in the 200-250% FPL income range. That's appropriate, as CSR is marginal at this level. Silver plans with no CSR are mandated to have an actuarial value of 70% -- that is, to cover 70% of the average user's annual out-of-pocket costs. CSR raises the AV to just 73% for those between 200-250% FPL, as opposed to AV 87% and 94% at lower income levels. In New York, accordingly, just 59% of buyers between 200-250% FPL bought silver; in Connecticut this season, 62% have.  In Colorado, 50% of buyers in this income range bought silver in the first open season.

In their success connecting low income buyers with CSR-enhanced silver plans, Connecticut and New York were outliers among the state exchanges; Healthcare.gov outperformed most of them on this front -- and in fact, may have performed as well as New York and Connecticut. Unfortunately, HHS did not break out metal level selection by income band. But 76% of buyers eligible for any kind of subsidy on Healthcare.gov chose silver. Given the sharp drop-off in silver selection that state data shows at the 201% FPL level, we can infer strong silver takeup on Healthcare.gov at incomes below 200% FPL -- particularly in poor states like Mississippi and Alabama. Connecticut's results are impressive in large part because the state is so wealthy. New York also outperformed its wealth level, though less dramatically.

On the federal exchange, shopping results do not default to silver for the CSR eligible -- the default filter shows plans ranked by premium, cheapest first. But the metal-level filter is easy to find and easy to use. In the shop-around, CSR-eligible buyers see a notice, prior to seeing plans and prices, to the effect that CSR benefit is available, and only with silver plans -- though the mention of "silver' is easy to miss, subordinated like this:

In addition this household may also be eligible for a cost-sharing reduction on a Silver plan that reduces the out-of-pocket expenses paid for deductibles, copayments, and coinsurance.

Perhaps most decisive, though, is the pop-up warning for CSR-eligible would-be bronze buyers when they're actually at the point of sale:

This warning does have a baffling design flaw -- not mentioning silver, and not defaulting results to silver for those who click on "no, I'll select a new plan." Perhaps HHS has some inhibitions about "steering" customers too pointedly. If not optimal, though, the warning seems to have been effective.

What we may learn this winter

The current open season should provide a couple of natural experiments with regard to ACA buyers' metal selections. First, Maryland outsourced its exchange redesign to Connecticut's, and it now shares Connecticut's "default to silver" for CSR-eligibles. As of December 11, the state's bronze takeup rate was 22%, down from last year's 31%.  Maryland is a wealthy state (though not quite as wealthy as Connecticut), and I'm hoping to get numbers for buyers under 200% FPL.

Second, California (bronze takeup 25%) and Idaho (15%)  have introduced decision support tools that ask visitors how heavy their medical usage is likely to be and ranks plans accordingly. I suspect that these tools will steer fewer CSR-eligible buyers to silver than a simple default. Some might argue that that's good, if healthy low-income buyers forecast their medical usage accurately. I disagree. Insurance is about risk management. I don't think a $5,000 or $6,000 deductible makes sense for anyone who's not wealthy.

Silver bullets are hard to swallow

To step back for a moment: the overall high level of silver plan selection among the CSR-eligible is impressive, as a silver premium is usually considerably higher than a bronze one, even for the heavily subsidized, and can be a really heavy lift for those with little money to spare. For a 44 year-old earning $23,000 per year, the benchmark second-cheapest silver plan in 2015 will cost $118, and the cheapest silver is usually (though not always) only a few dollars cheaper.  The cheapest bronze plan price for this 44 year-old varies widely by state and county, falling most commonly in the $50--$75 range. Parts of Connecticut last year had a particularly large spread; in New Haven, a 35 year-old earning $18,000 per year would pay $0 per month for the cheapest bronze, vs. $60 for the cheapest silver (and those options are almost unchanged this season). The price spread between bronze and silver widens with age; a buyer in her 60s at this income level will often pay nothing or next to nothing for a bronze plan, versus the same $118 for silver (the subsidized benchmark price is a percentage of income and doesn't change with age. But since the unsubsidized premium does rise with age, so does the spread between silver and bronze plans).

I worry that silver premiums are too high for many buyers in the middle range of CSR eligibility. For that reason I've suggested that it might make sense to attach CSR to bronze plans, at proportionately lower actuarial levels. That would create a more viable premium-vs.-out-of-pocket-costs choice between bronze and silver, as well as ensuring that no one eligible for CSR forgoes it.
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* There's an apparent anomaly here, as the New York enrollment report seems to suggest that the number of buyers of plans with the highest-level CSR (dubbed "CSR3") -- expressed as a percentage of all private plan buyers -- exceeds the number of buyers under 150% FPL -- expressed as a percentage of all subsidized buyers. That is, 12% of 273,888 subsidized buyers were under 150% FPL -- that would be 32,867, if 12% were a precise figure. But another chart claims that  9% of all buyers (370,604) bought CSR3 silver -- that comes out to 33,354. I'm waiting for an explanation of this. A New York Health Dept. spokesperson has told me that 99.5% of buyers under 150% FPL (in which range silver premiums are low and AV is 94%) bought silver. I'll credit that in the post body when the anomaly is resolved.

** Perhaps unsurprisingly for the nation's second wealthiest state, Connecticut had a high level of gold plan takeup -- 18% overall, or twice the all-state average of 9%. Gold plan selection among the CSR eligible also seems high, although I have no basis for comparison here.  Among those under 200% FPL this open season, more have chosen gold (1,246, 5.8%) than bronze (1.062, 5%).  Chad Brooker, manager of policy and strategy at Access Health CT, who supplied the numbers above, writes, "Some carriers might have offered non-standard plans in the gold and platinum tiers that were different products and as such had different networks or with different Rx coverage than what was offered in the silver or other tiers." I would guess, too, that many low-income upper-tier buyers may be able to rely on family support, which is likelier to be available in a wealthy state.

UPDATE, 1/8: In 2015, the Rhode Island exchange has had marked success steering CSR-eligible buyers toward silver plans. A spokesperson for HealthSource RI, the state exchange, provided a breakout of metal level selection showing that 82.8% of all CSR-eligible buyers selected silver plans. Since that figure includes buyers between 200 and 250% FPL, a range in which silver selection invariably and appropriately falls off a cliff, it's almost certain that the silver takeup rate among those under 200% FPL is over 90% (in New York in 2014, the silver takeup rate among all CSR-eligible buyers was 79%). According to an email from the Rhode Island spox, the high silver takeup rate under 200% FPL is no accident:

we do signal strongly to CSR-eligible people, in the following ways:
·        A pop-up when people are CSR income-eligible, encouraging them to look at silver plans.
·        Listing silver plans first.
·        We created a rate sheet just for CSR plans that clearly lists the 3 levels of CSRs - all silver plans. This is a   significant document that we created this year for the first time.
·        Having our enrollment specialists talk about it.
·        Specific mention of the CSR/Silver connection in our outreach events.

I've discussed the Rhode Island numbers in more detail here.

Related:
For many ACA beneficiaries, "Ivy League" benefits?
Rational choice in the ACA marketplace
Connecticut's exchange shows how to communicate with low-income buyers
In Mississippi ACA rollout, one large disaster, one small success
News from New York: Most low-income ACA plan buyers chose wisely