Sunday, April 26, 2015

ACA customer satisfaction: it's the prices

J.D. Power released a health insurance satisfaction survey this past week in which a headline finding was that customers who bought private insurance plans on ACA exchanges expressed slightly higher average satisfaction than people in employer-sponsored plans* - 696 to 679 on a 1000-point scale.

Power polled plan holders both on their satisfaction with the plan itself and with the enrollment process.  A few notes on specific findings:

1. Regarding the sources of satisfaction with the plans themselves, Power reports, "Cost is the most influential attribute driving satisfaction among Marketplace plan members" but also that "plan members are most satisfied with the provider selection and claims processing attributes." I'm not sure how those findings fit together. Perhaps plan members gave selection and claims processing the highest absolute ratings but also said that cost was the most important factor to them? I'll see if I can find out. [UPDATE 4/27: Rick Johnson, senior director of the health care practice at J.D. Power, confirms that the inference above is correct: respondents rated price their top concern, but gave the highest scores to provider selection and claims processing.]

2. Re the satisfaction related to cost: 87% of marketplace customers qualified for premium subsidies, and among those, the federal government paid 72% of the premium on average, leaving the customer with an average premium share of  $101. Small wonder if those low premiums were a source of satisfaction.

3. Relatedly, 60% of plan buyers on (and somewhat fewer on state exchanges) accessed Cost Sharing Reduction subsidies (available only with silver plans). For over 80 percent of them, CSR raised the actuarial value of their plans to either 87% or 94%  -- better than the average AV of an employer-sponsored plans, which the Kaiser Family Foundation estimated at 82% back in 2011 (it's almost certainly deteriorated since them). Another 10 percent of marketplace customers bought gold (AV 80%) or platinum (AV 90%) plans. Of course, that does leave perhaps a third of customers who bought plans with AV 70% (silver with no CSR) or 60% (bronze).

4. Since marketplace plans have taken a lot of heat for the prevalence of "narrow networks," it's somewhat surprising that customers expressed satisfaction with "provider selection." I'd like to know more about that.

5. Those who "auto-enrolled" in the same plan for 2015 that they held in 2014 were understandably especially pleased with the enrollment process, as they didn't have to do anything. Power also found,  "Re-enrolling in the same Marketplace plan is largely due to satisfaction with monthly premiums. More than three-fourths (78%) of re-enrollees keep their plan, while 22 percent switch plans primarily due to cost concerns such as monthly premiums." These findings are potentially worrisome. While auto-enrollees would be notified by their insurer of any price increase, they would not be notified if the plan in question lost "benchmark" status (that is, if it was undersold by a new competitor) or if the benchmark plan in their area in 2015 cost less than the 2014 benchmark, Such customers are hit with a double whammy: lower subsidy, higher premium. Auto-enrollees may not be aware of this until tax time 2016.

6. Power found customer satisfaction highest in Pennsylvania. This does not surprise me, as Pennsylvanian enrollees had access to a major windfall in 2014 -- and almost all the state's 2014 enrollees renewed coverage in 2015.  The windfall consisted of a silver plan that was way cheaper then the benchmark second-cheapest silver. My spot checks of various regions on showed this to be quite rare. Because subsidies are set to the benchmark (second cheapest silver plan), people could get the super-cheap silver plan for as little as buyers in most states would pay for bronze. Consequently, a lower percentage of Pennsylvanians bought bronze plans than residents of any other state -- and most of them qualified for Cost Sharing Reduction. Unfortunately, that windfall disappeared this year -- the price on the once-cheap plan went up, while the benchmark plan price went down, which means the subsidy went down. I fear that many of Pennsylvania's 160,000-plus auto-enrollees, and probably a fair number of the state's 113,000-plus active re-enrollees, may be in for the double whammy described in point 5 above. And that double whammy in Southeast PA (which encompasses Philadelphia) can be huge, as described here.

 * Or, to be exact, compared with "a survey of traditional, mostly employer-based plans not purchased on a Marketplace exchange."

Postscript, 4/27: A further reflection on point 2 above: Reporting about the ACA often spotlights the prevalence of high deductibles in the exchange plans. Silver plans, unenhanced by CSR, have an actuarial value of 70%; bronze plans, 60%. Those levels mean a lot of cost-sharing: silver plan deductibles average around $3,000 for a single person, and bronze, over $5,000. But such stories usually either under-emphasize the impact of Cost Sharing Reduction subsidies or leave them out entirely. On at least, more than half of all customers buy plans with an actuarial value of 80% or better. 60% get CSR, and about 80% of those have incomes under 200% FPL, which means that CSR raises the AV to 87% or 94%. Another 10% buy gold or silver. On the other hand, an awful lot of customers -- about 40% -- do end up in plans with AV under 73%.  In the pre-ACA individual market, however, average AV was under 60%..


  1. Thanks as always for your fact-filled contributions.

    The average cash premium of $101 surprises me. To get a cash premium of $101, one would be a single person making about $20,000 a year.

    Which is fine, but where are the families? Aren't some families making $50,000 buying coverage on the exchanges? And where are the self-employed invidivuals making $35,000 a year?

    Your comments are welcome!

    1. Bob, my guess is that $101 is a per-person average - usually per-adult, as the children in most subsidy-eligible families will end up in CHIP, which has eligibility thresholds that vary by state (up to 400% FPL in NY) but are mostly over 200% FPL. Most private plan enrollees are under 200% FPL - 68% on