Tuesday, September 29, 2015

"You oughta be in Medicaid" revisited

Charles Gaba and I have at different times both taken a shot at estimating how many of the private plan buyers in the ACA Marketplace would have been eligible for Medicaid had their states not refused to implement the ACA Medicaid expansion. In 2015, slightly more than half of Marketplace customers were in states that had refused the expansion.

Our estimates were based on HHS's March 2015 report of the percentage of healthcare.gov buyers whose incomes were between 100% and 150% of the Federal Poverty Level (FPL). That's a frustratingly blurry frame, since it includes both buyers who would and would not have been eligible for Medicaid in "nonexpansion" states. Buyers up to 138% FPL would have been eligible for Medicaid (as they are in "expansion" states).

Now, the Commonwealth Fund has added an  equivocal hint. I'll get to that in a minute. First, the current estimates.

Slightly more than half of all private plan buyers in the ACA marketplace were in nonexpansion states. In those states, HHS reported that a whopping 44%* had incomes in the 100-150% FPL range. At the time of the March 10 report, that came to 2.8 million buyers. Attrition since then, if proportionate across income levels, would bring the total down to about 2.4 million.

To estimate the number of should-have-been-Medicaid-eligible buyers, Charles simply took three quarters of the 100-150% FPL total, since 138 is three quarters of the way from 100 to 150. That would now suggest 1.8 million, almost exactly 20% of all private plan buyers on ACA marketplaces.

I took a somewhat more convoluted tack, using the percentage of buyers in the 100-150% FPL band in expansion states (about 20%) to estimate how many of the 2.8 million in that range (pre-attrition) in nonexpansion states were under the 138% FPL threshold. I came up with 1.9 million, which attrition would have reduced by now to 1.6 million (about 16-17% of all Marketplace buyers).. Taking further account of HHS income audits that reduced subsidies (and so raised income estimates), the figures might be somewhat further reduced.

Enter the Commonwealth Fund, reporting results of a survey probing the insurance status of nearly 5,000 adults, including 458 respondents who bought their plans in the Marketplace. Commonwealth "oversampled" low income buyers, but then weighted their samples to estimate marketplace composition. They came up with a whopping 27% of Marketplace customers with incomes under 138% FPL. Discounting the roughly 3% of buyers with incomes under 100% FPL -- legally present immigrants time-barred from Medicaid but eligible for ACA subsidies -- that suggests a near-impossible 2.4 million current plan holders who would have been Medicaid-eligible had their states accepted the expansion.

Commonwealth estimated a margin of error of  +/- 2.1% at a 95% confidence level. Sara Collins, the lead researcher in the survey, cautions me that "millions estimates" should not be extrapolated from these subgroup details. Nonetheless, it seems fair to me to posit that this survey result adds a gravitational pull toward a higher estimate of the shoulda-been-in-Medicaid cohort of Marketplace customers -- an estimate closer to or exceeding Gaba's.

Put another way: if you add in the 3% of buyers under 100% FPL, I previously estimated that 20% of buyers were under 139% FPL. Gaba estimated 23%. Commonwealth estimates 27%

All of these estimates highlight a challenge for the Marketplace going forward. Enrollment thus far has lagged behind CBO projections, and numerous surveys and studies have shown that the private plan offerings are far more attractive to buyers at the bottom of the eligible income scale than to more affluent buyers. As states that initially refused the Medicaid expansion embrace it (as Pennsylvania and Indiana did in 2015, and as Alaska and Montana will do in 2016), the 'low-hanging fruit" drops out of their private plan marketplaces and so out of insurers' risk pools. That's a significant headwind as HHS (and those state governments that are committed to making the HHS work) struggle to attract more buyers into the Marketplace.
The Commonwealth report analyzing survey results compared the coverage and experience of marketplace plan holders with that of people who get their insurance from their employers, asking, "is marketplace coverage affordable"?  The answer, essentially: more or less, for more than half. In the preceding post, I noted that the marketplace has narrowed the longstanding coverage gap between individual market insurance and employer-sponsored insurance for most lower income marketplace customers.

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