Friday, July 31, 2015

Rejoice, Uticans! A shower of silver shall rain upon you in 2016.

UPDATE: I'm afraid I have to retract the gist of this post, which comes mainly near the end: we don't actually know the spread between the benchmark and cheapest silver plans in each New York region for 2016.  Looking at the spread between the silver-plan prices posted by the different insurers, it escaped me that a given insurer could put up the cheapest and second cheapest silver plan in a given area -- so the difference between insurers' average silver prices, as reported by the state, is not the spread between benchmark and cheapest silver. The posted averages do not reveal the benchmark. I apologize to anyone who absorbed the misinformation.

P.S. I discovered the error when I went to check 2015 prices and how a "cheapest silver" windfall would affect them. Of course I might have known, as I've done a lot of "shopping" on and have rarely seen a really significant gap between cheapest- and second-cheapest silver. I think I was thrown off by California's just-published 2016 rate chart, which explicitly highlights some very large spreads between benchmark and cheapest silver, with one plan price quoted for each insurer. That's presumably because benefits in CA are standardized for each metal level.

P.P.S. I also seem to have forgotten for the moment that NY is launching a Basic Health Plan in 2016, thereby wiping out the under-200% FPL market and rendering the issue of CSR takeup all but moot, as CSR is negligible at 200-250% FPL. That'll teach me to post in haste before rushing out on a Friday evening reverse commute to hang over the balconies at the new Whitney Museum:

New Whitney
So, never mind, except for the general principle:

Today New York posted 2016 rates for health insurance plans offered on NY State of Health, the state's ACA exchange. I was planning to write about the factors that affect what subsidized ACA private plan buyers will actually pay, when the rates posted for Utica, NY brought me up short. They are a stark illustration how the spread between certain plans offered in one market matters more to subsidized buyers than the sticker price of a given plan -- if they're willing to buy the cheapest plan at a given actuarial value.

On ACA exchanges, premium subsidies are set as a fixed percentage of a buyer's income, benchmarked to the second cheapest silver-level plan in the buyer's market. In 2016, solo buyers who earn exactly 200% of the Federal Poverty Level (FPL) will all pay $124 for the second cheapest silver plan available to them, regardless of where they live. Buyers earning 150% FPL will pay $59 for the benchmark plan.

Of course, there are plans cheaper than the benchmark: most bronze plans, and the cheapest silver plan in a given area.  The buyer's subsidy, calculated to bring the benchmark to the target level, may cover all or most of a cheaper plan's premium. If the unsubsidized premium for the buyer paying $124 for the benchmark is $324, that $200 subsidy will leave the buyer paying just $50 per month for a plan with an unsubsidized price of $250.

For buyers with incomes under 201% FPL, a key opportunity arises when the cheapest silver plan available is significantly cheaper than the benchmark second-cheapest. That's because silver plans for buyers up to 200% FPL carry strong Cost Sharing Reduction (CSR) subsidies that reduce deductibles, copays and maximum out-of-pocket costs.  But for someone earning 200% FPL ($23,450 in 2016), $124 per month can seem out of reach. Some buy bronze plans, with deductibles average over $5,000, and leave CSR (which at that income will usually lower the deductible to $500 or less) on the table.

For 2016, Syracuse has the biggest cheapest-silver windfall I've seen to date. The unsubsidized price of the benchmark silver plan (from CDPHP) is a sky-high $503 -- highest in the state. The cheapest silver plan, from Fidelis, is $373. (In New York, prices do not vary according to age, as Margot Sanger-Katz reminded me this afternoon.)

That's a $130 difference -- rendering a silver plan with an actuarial value of 87% -- better than most employer-sponsored plans -- free for our buyer earning $23,450 or less. For wealthier buyers, moreover, the cheapest gold plan in Utica, also from Fidelis, is $457. That's a lesser boon, but still real: a subsidized buyer who would pay $250 a month for the benchmark plan, with an actuarial value of 70%, will pay $204 for the gold plan, AV 80%.

I'm up an off for a Friday evening out. Hope there's not too many typos herein...


  1. I recently went on the New York ACA exchange at my insurance agency. The clients were a family making too much for subsidies. Both spouses were 28 years old.
    The rates were grotesquely high, though I suppose that New York has had high rates for many years.

    Most readers of your fine website make a lot more than $23,540 a year. In fact I suspect that most New York residents with full time jobs make more than that sum

    Your writing is well intentioned, but I think it shows why so many middle class voters are cold or even hostile to the ACA

    1. A large majority of those who can't get good insurance through their employer are helped by the ACA. Those who earn too much to be subsidized *and* have no one on plan with a pre-existing condition are the losers (at least short-term, until someone develops a preexisting or suffers a job loss or has an adult child who needs insurance, etc.). Winners far outnumber short-term losers. The law would be better if subsidies were more generous at the higher end of eligibility *and* if some price universality were imposed, say by all-payer. But it's improved our healthcare system on balance -- unless consolidation more than offsets its cost control measures, which could happen.

  2. A 40 year old single man in NYC making $38,000 a year gets a whopping subsidy of $77 a month. And no cost sharing assistance.

    Yet this person is not even middle class. Again I express my distaste for the fact that subsidies only work for the poor.

  3. I looked at another actual case this week in NY. A 40 year old man making $38,000 a year got a subsidy of $77 a month, for a silver plan costing over $500 a month.
    Now I know that New York has the same premium at all ages, and has for years, which really hurts younger people.
    But this is still an example where the ACA does not help the middle class at all. I go back to Tom Geoghegan's 2010 article in the Nation on
    "Ten Things the Democrats Could Do to Win"