Forecast: Bronze plan takeup will rise in California in 2016

I fear that more health plan buyers on Covered California are going to buy bronze plans, with their $6,000 deductibles, in 2016 than in 2015.

That probably means that more low-income buyers are likely to forgo Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans. Under California's standardized benefit design in 2016, silver plans have a $75 deductible for buyers with incomes under 150% of the Federal Poverty Level ($17,655 for a single person) and a $550 deductible for buyers up to 200% FPL ($23,540).

Silver plan premiums can be hard for low income people to afford, particularly at the upper reaches of eligibility (weaker CSR is available up to 250% FPL). For someone earning $23,000, the benchmark second-cheapest silver plan costs $121 per month.

In some regions the cheapest silver plan is considerably less, though, and bronze plan prices vary widely. In a prior post, I demonstrated that in California regions where the price difference between cheapest silver and cheapest bronze was smallest,  silver plan selection was highest. In parts of LA County where the spread was just $20 for a 40 year-old earning $23,000, 70.5% of enrollees bought silver and 18.3% bought bronze. In the Eastern Counties, where the spread was generally over $100, just 41.5% bought silver and 55.8% bought bronze.

In 2016, bronze-silver spreads have widened, at least in the 12 of 19 pricing regions I spotlighted earlier. In some regions silver "discounts" narrowed, because the cheapest silver plan is closer to the benchmark; in others, cheaper bronze plans are on offer in 2016 than in 2015; and in some, both changes have taken place (in some regions, too, one change or the other is in the opposite direction).

Affordable underinsurance? That's where healthcare.gov's new total cost estimator may steer you

Buying health insurance is hard, experts tell us. Even highly educated customers have trouble weighing monthly premium vs. deductibles and copays - especially since many Americans don't know offhand what terms like "deductible" and "coinsurance" mean.  To help, many have called for a "total cost estimator" that will ask users about their current medical usage and then estimate what their total yearly costs are likely to be under each plan.

This year, healthcare.gov has delivered. The "Preview Plans and Prices" feature, which asks a handful of questions about age, income and household size before delivering price quotes, now includes a total yearly cost calculator. It's optional, easy to use, and only adds one question before showing plans and prices (two, if you count the question whether you want to use it).

I don't like it. At least, I don't like its prominent placement; I think it should be a Step 2 offering, after you see plans and prices. I fear it will make some people focus on the wrong number, and the wrong question.  It leaves out a core factor in the insurance equation: risk.

Take the case of a single 40 year-old man earning $17,000 a year in Las Vegas (gender and age affect the estimated medical cost calculus). Here's the cheapest bronze offering -- the first result the user (let's call him Vince) will see:

More on Charles Gaba's "Two glaring errors in the WSJ anti-Obamacare editorial"

Charles Gaba has caught a couple of glaring errors in a Wall Street Journal editorial claiming that the ACA private plan marketplace is on the road to failure. The most important error misrepresents the state of the current and potential nongroup market -- that is, the pool of people who buy or could buy their health insurance on their own, with or without ACA subsidies.

Gaba captures the main point: that contra WSJ assertions, most of those who buy their insurance off-exchange are not subsidy eligible, and are mingled in the same risk pools as those who buy on-exchange. I'd like to further clarify, though, how much progress those markets have made toward full capacity, and to what extent those who are eligible for subsidies have so far enrolled.

Here's the WSJ editorial board's "state of the market" overview:

Surprise! Where silver plans are cheaper, more people buy them

Math test! Should you buy a health plan that costs $70 per month with a $5,000 deductible, or a plan that costs $90 per month with a $500 deductible?  Easy, right?

Try this one, then.  The plan with the $500 deductible costs $109 per month, versus three dollars per month for the $5,000 deductible plan.  Also factor in that the $5,000-deductible plan allows three doctor visits before the deductible kicks in. Not so simple  -- unless perhaps you know that you'll need a lot of medical care.

Those are actual choices facing 40 year-olds earning $23,000 and seeking solo insurance in 2015 in different regions of California's ACA marketplace, Covered California.  The first choice is between the cheapest silver and cheapest bronze plans available in half of Los Angeles County. The second is cheapest silver versus cheapest bronze in San Mateo.

The spread between deductibles for bronze and silver plans ($500 vs. $5,000) is so stark because a silver plan for a person earning $23,000 in 2015 is enhanced with Cost Sharing Reduction (CSR) subsidies -- available only with silver. Without CSR, the silver plan deductibles in both cases above would be $2,000. CSR-eligible buyers who choose any metal level but silver are leaving a valuable benefit on the table.

As for the spread between premiums, California enrollment data indicates that buyers are quite sensitive to it. In regions where the spread between cheapest bronze and cheapest silver is narrowest, more people buy silver and so access CSR (statewide, two thirds of buyers are CSR-eligible, as are 80% of those who select silver).

Hillary homes in on antitrust enforcement

Hillary Clinton is putting antitrust enforcement front and center as a tool to fight income inequality, fingering industry consolidation as a major driver of said inequality. As I noted recently, antitrust enforcement was perhaps also the most important, if little-noticed, plank in the healthcare reform package Clinton put forward last month.

This is a big deal. Clinton is tying together high prices in key industries -- pharma and healthcare chief among them -- outsized compensation for the top 1%, including via stock buybacks, and the weakening of labor:

Who leaves employer-sponsored insurance on the table?

The Kaiser Family Foundation's latest estimate of the still-uninsured population in the U.S. includes about 4.8 million whose employers offer health insurance that they decline to buy.

Some are locked out by the ACA's so-called "family glitch," which denies marketplace subsidies to those for whom an employer's insurance offering would cost less than 9.5% of income for individual coverage, even if the family coverage offered by the employer costs far more than that. But many low income workers find even individual employer-sponsored insurance (ESI) unaffordable. Probably the bulk of Kaiser's estimated 4.8 million who forgo ESI could do well in the ACA marketplace if the ESI offer didn't disqualify them from subsidies.

The New York Times' Stacy Cowley has a good story that spotlights the plight of those who can't afford insurance offered by their employers:

The opposite of Bernie Sanders

Dressed up like Bernie Sanders, Larry David on SNL looked and sounded almost exactly like Bernie Sanders. But that's not why he was funny. Or rather, that's only half of why he was funny. 

In his public persona at least, Sanders focuses relentlessly on problems that in his telling threaten the future of American democracy and humanity itself: galloping income inequality and climate change. Larry David's humor focuses relentlessly on life's trivialities: tuck or don't tuck your shirt, slip a water bottle into a theater, suffer the consequences of  new pants tenting around the crotch.

The joke was that David looked and sounded like Sanders but acted (or thought) like Larry David's character on Curb Your Enthusiasm. 

David did spoof Sanders on the big picture: We're doomed! But it was funny precisely because he made no distinction between the momentous and the trivial:

Eh, not a fan of the banks. They trample on the middle class. They control Washington. And why do they chain all their pens to the desks? Who's trying to steal a pen from a bank? It makes no sense!

In ACA marketplace, low-hanging fruit is more than half picked

My long two-pointed ladder's sticking through a tree

Toward heaven still,

And there's a barrel that I didn't fill

Beside it, and there may be two or three*

Apples I didn't pick upon some bough.

Goddamn it, don't stop apple-picking now!

(Apologies, Robert Frost)

* or 7 or 8 million

Gearing up for the ACA's third enrollment season, HHS has released an analysis estimating 10.5 million uninsured individuals are eligible to buy private plans in the ACA marketplace. In a separate brief, HHS forecasts that between 2.8 and 3.9 million from this pool  will select marketplace plans in 2016 -- which sounds low until you pick through the numbers a bit.

HHS estimates that 48% of the 10.5 million live in households with incomes under 250% of the Federal Poverty Level (FPL) -- qualifying them for both premium subsidies and Cost Sharing Reduction (CSR) subsidies. Another 30% have incomes between 250% and 400% FPL and so "may qualify" for premium subsidies. But not all of them do.*  And buyers in that range, who are expected to pay at least 8% of income for the benchmark second-cheapest silver plan in their region, have proved a tough sell to date.

About three quarters of all current marketplace enrollees and 88% of subsidized enrollees -- about 7.4 million -- (as of June 30) have incomes under 250% FPL*  If half of the estimated 5 million marketplace-eligible uninsured people with incomes under 250% FPL enroll in plans, and if they constitute about 75% of new enrollees (as they do of current ones), that suggests 3.3 million new enrollees -- almost exactly the midpoint in HHS's forecast range.

Rational choice in the ACA marketplace - Santa Cruz edition

[reposted]

Attention, ACA shopper #1: You can buy a silver health plan  for $117 per month with a $500 deductible, or a bronze plan that costs $22 per month -- with a $5,000 deductible. What'll it be?

Attention, ACA shopper #2: Same choice as for shopper #1, but in your case the silver plan is just $88 per month, and the bronze, $22.

The shrinking subsidizable ACA private plan buyer pool

This week the Kaiser Family Foundation estimated that among 32.3 million non-elderly uninsured U.S. adults, 22%, or 7.1 million, should be eligible for subsidized private plans in the ACA marketplace. HHS estimates a total of 10.5 million uninsured who are eligible for marketplace coverage, almost 80% of whom are subsidy-eligible.*

There were 8.3 million subsidized marketplace enrollees as of June, suggesting a total pool of about 15-16 million who lack access to employer-sponsored or other insurance and are eligible for subsidies. The Congressional Budge Office's most recent forecast is that by 2017, 18 million people will be buying subsidized plans in the marketplace.  Allowing for a bit of population growth, why the apparent overshoot?

The answer may lie in expectations about employer response to the ACA. CBO's 2015 projection estimates that employer-sponsored insurance will be down 6 million from the pre-ACA baseline in 2016 (and down 1 million this year).

Hey, Jeb! Who's getting those "huge new subsidies" under the ACA?

Touting his new ACA replacement plan, which would wipe out ACA coverage rules for insurers and replace means-tested ACA private plan subsidies with tax credits for catastrophic coverage available at any income level, Bush asserted:

Obamacare created huge new subsidies for low-income Americans, but it left middle-income Americans facing higher premiums and higher out-of-pocket costs.

There are some grains of truth to that.  People who 1) get their insurance in the individual market,  2) earn too much to qualify for subsidies (that is, over 300-400% of the Federal Poverty Level (FPL)), and 3) don't have pre-existing conditions pay more  than they would have pre-ACA.* You could argue, too, that the ACA has driven up out-of-pocket medical costs, if not premiums, for people with employer-sponsored insurance (ESI) -- or at least that it will do so once the Cadillac Tax kicks in, if it ever does. The claim is highly contestable, though, as neither premiums nor out-of-pocket costs have risen faster in ESI than in pre-ACA years and myriad factors are at work. Really, it's simply too early to tell.

But Bush's statement, like most Republican claims to speak in defense of "the middle class," reveals a top-heavy view of what "middle class" means. His sneer at "huge subsidies" is also a sneer at huge swaths of the U.S. population -- where the uninsured are concentrated.

A recent Census report** indicates that in 2014 the ACA caused large drops in the uninsured rate among Americans with incomes under 100% FPL ( a 4.2 point drop, from 23.5% to 19.3%), 100-199% FPL (a 5.3 point drop) and 200-299% FPL (4.2 points.).

Cost Sharing Reduction in Covered California

(I'm hoping that dry title sounds like a pop song lyric.)

Covered California today released private plan enrollment data updated to June 2015. The report (available here under "June 2015 profile") shows that California's CSR takeup rate is in line with national averages.

By CSR takeup, I mean the rate at which California buyers whose incomes qualify them for Cost Sharing Reduction (CSR) subsidies selected silver plans and so accessed the benefit, which is available only with silver plans. As in the country at large, 76% of all CSR-eligibles in California bought silver.

Since I've described how CSR works dozens of times, I'd like to cut to the chart here. A quick rundown of the basics is below.

Income level	CSR-eligible	CSR accessed	% CSR accessed
Under 150% FPL (AV 94%)	219,260	195,090	88.9%
150-200% FPL (AV 87%)	438,730	345,720	79.3%
200-250 FPL (AV 73%)	221,310	125,650	56.8%
Total Under 200% FPL	657,990	540,810	82.2%
Under 250% FPL (Total CSR eligible)	879,300	666,460	75.8%

Mysteries of the Maryland ACA Marketplace, cont.

As I noted on Oct. 3, Maryland Health Connection, the state's ACA exchange, sent me enrollment data indicating that Maryland may have the highest "CSR takeup rate" in the country. That is, in 2015, Maryland private plan buyers whose incomes qualify them for Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, chose silver and access the benefit at market leading rates. In Maryland, 86% of CSR-eligible buyers chose silver, compared to a national average of about 76%. That's doubtless in large part because Maryland cloned the web interface of the Connecticut exchange, which does an excellent job steering CSR-eligibles toward silver.

There are some peculiarities in the Maryland data, though, and they're thrown into sharper relief by the raw numbers of silver plan enrollees at each income level, which I did not have when I posted last week. Chief among them is a relatively huge number of buyers, 22%, with incomes low enough to qualify them for Medicaid, unless they're lawfully present non-citizens not yet eligible for Medicaid because they've been in the country less than five years.

What's a "typical" silver plan? Not what Emory researchers say it is

Nothing drives me battier than to see silver-level health plans unenhanced by Cost Sharing Reduction (CSR) subsidies presented as the "average" offering, either of silver plans or of all plans offered in ACA marketplaces. Over 80% of silver plan buyers in ACA marketplaces get CSR. Of those, about 80% have incomes under 201% FPL, which means their plans have an actuarial value of either 94% or 87% --  better than the average employer-sponsored plans.

An Emory University study purporting to show that "in the ACA Marketplaces, "out-of-pocket expenses for medications in a typical silver plan are twice as high as they are in the average employer-sponsored plan" is particularly frustrating because the researchers, led by Kenneth Thorpe, Chair of Emory's health research department, are well aware of how CSR is functioning in the marketplaces. Deep in the text, they acknowledge that 87%* of silver buyers in the marketplaces have CSR attached to their plans -- yet they persist in constructing a "typical" silver plan with AV 70% and very high pharma cost-sharing -- and compare the typical ESI plan exclusively with that construct.

Their rationale: The study considers the likely ill effects on pharma usage if employers drop insurance and dump their employees onto the exchanges. Because over 80% of employees with ESI have incomes over 250% FPL, the authors assert briefly that CSR is irrelevant. They don't address the fact that CBO projections of modest ESI losses assume that those losses will be among lower income workers.

I have a post up on healthinsurance.org that contrasts patient drug costs in the Emory researchers' "typical" silver plan with those of actual silver plans on the marketplaces available to buyers with incomes under 201% FPL -- again, almost two thirds of silver plan buyers in the marketplaces. Hope you'll take a look.

--
Now 82% after attrition and a federal audit of those whose income statements on their ACA applications did not match tax data.

UPDATE, 10/8: As originally worded, this summary could be read to imply deliberate obfuscation on the part of the study's authors. That was not my intent, and I regret if I gave that impression. I have have edited accordingly.

Addled by the metal level

Austin Frakt has a series of posts (1,2,3) reviewing research that highlights what a hard time most people have making good choices among insurance plans -- mainly in balancing premium against deductibles and copays. One such study, by a team led by Peter Ubel, highlights (to my mind) a defect in ACA marketplace design:

...two of us recruited a convenience sample of participants from public buses in Durham, North Carolina, and asked them which category of plans they would look at first if they were shopping for health insurance. To half the people, we described the gold plans as having higher monthly premiums and lower out-of-pocket costs — the language used by many exchanges. For the other half, we switched the gold and bronze plans, describing the gold plans as having lower monthly premiums and higher out-of-pocket costs.

...among participants who were below the median in mathematical ability, the majority said they preferred gold plans over bronze plans, regardless of which plan was labeled as gold.

In real life, of course, labeling skimpier plans "gold" would be deceptive marketing, and labeling superior plans with a less-valuable metal would be just plain stupid. But for about two thirds of marketplace customers, that latter mislabeling is pretty much what the marketplace does.

Mysteries of the Maryland Marketplace

(Update post here)

As I've noted before, Connecticut's ACA exchange has been a market leader in steering private plan buyers whose incomes qualifying them for Cost Sharing Reduction (CSR) subsidies into silver-level plans (CSR is available only with silver). Also noted, back in January: When Maryland cloned Connecticut's technology and web interface in 2015, silver plan takeup improved.

Now, Maryland Health Connection, the state's ACA exchange, is reporting a market-leading level of silver plan selection among CSR-eligible buyers -- that is, buyers with incomes up to 250% of the Federal Poverty Level (FPL).  Nationally, about 76% of private plan enrollees who qualify for CSR buy silver plans and obtain the benefit (coincidentally, CSR-eligibles also make up about three quarters of all marketplace customers). Yesterday, Maryland announced that 86% of CSR-eligible enrollees in the state bought silver and accessed the benefit.

That's all the more the more striking in that just 62% of all buyers on the Maryland exchange selected silver, versus 68% nationally. The numbers indicate:

So, ACA marketplace, how're you doin so far? [Updated 10/14]

[Update, 10/14/15: This week Kaiser estimated that about 7.1 million uninsured people are currently eligible for private plan subsidies in the ACA marketplace. As of June, the marketplace had 8.3 million active subsidized enrollees. Thus the marketplace has reached about 54% capacity among the subsidized, if Kaiser's estimate of the uninsured population is on point. The Kaiser estimate, like a recent HHS estimate of the 2016 target market, indicates that CBO's projections of what will constitute full marketplace capacity may be too high. ]
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A dispiriting backdrop for those assessing the progress of the ACA private plan marketplace is the Kaiser Family Foundation's estimate that state marketplaces have enrolled just 35%  of the "potential marketplace population." 28 million are eligible; 9.9 million have enrolled.

That stat is easy to misinterpret, though, in that the "potential eligible population" encompasses those who earn too much to qualify for subsidies -- including those who buy plans off-exchange. Taking off-exchange buyers into account*, probably about 17 million of Kaiser's 28 million "potential" enrollees are currently insured in the individual market.

Subtracting about 2.5 million who are in "grandfathered" or "grandmothered" pre-ACA plans, perhaps 14.5 million are in the unified risk pools that insurers who participate in the state marketplaces must establish for all their customers in each state who are enrolled in ACA-compliant plans.

Spotlight on the subsidy-eligible

What about the percentage of potentially subsidizable marketplace customers reached thus far? They're the real target market of the marketplaces. If you earn too much to qualify for ACA subsidies, there's little reason** to buy your plan via an exchange.