Two reasons the proportion of young adults in ACA marketplace may be rising

Sarah Kliff has marshaled good evidence that the individual mandate is working over time to pull more young adults into the ACA marketplace. As the penalty ratchets up each year, the proportion of young enrollees increases. The evidence in brief: 1) that's how it worked in Massachusetts; 2) young adults identify the mandate as a chief motivator in polling data; 3) HHS and Enroll America have brought the mandate to the fore in marketing messages; and 4) the proportion of enrollees under 35 (including children) has risen modestly this open season, from 35% in OEII to 38% so far this time around.

All of this is convincing. But the perspective of Anne Filipic, of Enroll America, also indirectly highlighted something I've put forward as a secondary cause of this year's modest spike in young enrollment: Because prices are higher this year, more young adults qualify for subsidies. Here's Filipic:

Filipic and her team already think the mandate could play a bigger role in their messaging going forward. Right now, Enroll America has a calculator that lets potential enrollees see how much financial help they'd be eligible to receive if they signed up for coverage.

Marketplace watch: ACA year in review

As an amateur student of U.S. healthcare, I'm always conscious that I'm talking to (and reading) people who know far, far more than I do.  And I wish I knew how to locate and talk to more marketplace and Medicaid enrollees about their experiences. Perhaps that can be my resolution for 2016.

That said, by carefully reading sources I've come to trust (and studies they recommend), and burrowing into a few preoccupations (CSR, anyone?), I do think I've managed to bring a few important points to light or into focus in the past year. Chief among them may be the extent to which enrollees who should have been Medicaid-eligible propped up the private plan marketplace in states that refused the Medicaid expansion; the extent to which the uninsured were concentrated in low income bands where ACA offerings have been most effective; the various ways in which subsidy-eligible uninsured people may have got the impression they were ineligbile for aid; the extent to which news coverage and even sophisticated research misses the effects of Cost Sharing Reduction; and the extent to which exchange design affects CSR takeup.

A lot of my 'discoveries' are surely obvious to those who closely study healthcare or work at implementing the ACA. But it may not be obvious to them that the points need highlighting. Below are a few of those highlights from 2015. Thanks for reading!

Dollars to donut holes, Ambetter undercuts the competition (11/20)
     Cut-rate insurers with roots in Medicaid managed care are driving down benchmark premiums in some major markets

The counter-Upshot: Obamacare is quite as egalitarian as it seems (11/20)
     Most of America's uninsured have incomes below 250% of the Federal Poverty Level

Supporting the biggest decision for ACA marketplace shoppers (11/3)
     That would be whether to access or forgo Cost Sharing Reduction subsidies

What about a state-level public option (with a remixed subsidy schedule?)

ACA marketplace plans work reasonably well for a majority of subsidy-eligible buyers -- but leave far too many underinsured, or paying premiums they can't readily afford. There's virtually a progressive consensus on that point by now.

The latest crystallization of this consensus is in an analysis of ACA plan holders' costs by the Urban Institute's* Linda Blumberg, John Holahan and Matthew Buettgens, which spotlights high combined premium and out-of-pocket costs for the sickest, oldest and wealthiest of subsidized plan holders in the ACA marketplace (as well as for those a notch above subsidy eligibility).

Among the subsidy-eligible, median costs are most acute for buyers with incomes over 200% of the Federal Poverty Level (FPL), the threshold at which strong Cost Sharing Reduction (CSR) subsidies phase out while subsidized premiums as a percentage of income rise. Median combined premium and out-of-pocket costs for marketplace customers with incomes ranging from 200-500% FPL range from 10,8% to 13.4%, according to the study authors. The spike in costs at the 200% FPL threshold is reflected in ACA takeup rates, which  according to a cited study,** fall off a cliff at 200% FPL, from 62% of eligible individuals to 29%.

The authors recommend, as Blumberg and Holahan have previously, that ACA subsidies be enriched across the board, and that tax credits be added above the current 400% FPL cap. While the cost would be relatively modest -- covered, in fact, by reduced spending projections for the ACA and Medicare-- the political lift is plainly impossible for the foreseeable future.

There may, however, be revenue-neutral steps that would boost affordability and so, takeup. If so, they will have to be taken at the state level. That's not only because Congress is incapable of constructive action where the ACA is concerned. It's also because the ACA benefit structure militates against any realized cost savings being passed directly to the consumer.

"Coordination without consolidation!"

This month, the findings of a rigorous study of new data on healthcare spending in the U.S. private market hit healthcare policymakers and scholars with gale force. The main findings:

1. While U.S. cost control efforts, through the ACA and more generally, are focused mainly on reducing wasteful care, in the private market the price of care is the primary driver of spending differences within and between regions, and so of high overall costs (or, as Sarah Kliff put it three years ago, it's  the prices, stupid).

2. Region by region, there's very little relationship between Medicare spending and private market spending. Many regions with low Medicare spending have high private market spending.

3. "Hospital prices are positively associated with indicators of hospital market power." The more concentrated the market, the higher the spending.

Points one and three have bene recognized to some extent for years -- though the new data is very valuable for boosting the growing attention to antitrust enforcement, which Hillary Clinton has promised to ramp up. Point two -- the lack of correlation between Medicare spending and private spending, -- is the surprise, and would seem to suggest a need to recenter cost control efforts to some degree, especially since out-of-pocket costs for the privately insured seem to keep rising relentlessly.

I'd like to highlight one point in the study's framing that may be obvious to healthcare professionals, but seems worth thinking about:

Higher health plan prices may bring *more* young buyers into the exchanges

In its latest ACA enrollment snapshot, CMS is touting an increased percentage of younger enrollees compared to last year.

As of the Dec. 17 deadline to obtain coverage beginning Jan. 1, enrollees under age 35 comprised 35% of all HealthCare.gov customers, compared to 33% in the year prior (that includes children, who last year accounted for about 7% of enrollees on the federal exchange). Among new enrollees only, 41% are under 35 this year, compared to 38% last year.

The modest de-aging of the risk pool is good news, and, according to Sarah Kliff, relieves a worry:

Obamacare premiums went up a lot faster for 2016 coverage (the year this current open enrollment covers) than they did for 2015. That created some worry that young people might not sign up in high numbers. Because younger people tend to have fewer medical needs, they tend to be more price sensitive and willing to forgo coverage in the face of a premium spike.

It's possible, though, that the price spike actually brought more young customers into the marketplace.

Obama to Inskeep: I'm not Eisenhower, ISIL is not the Soviet Union, the media is not the culprit, the country is not in crisis

NPR's Steve Inskeep began an interview with Obama by setting on a tee what might have looked to some like a giant softball:

STEVE INSKEEP: I have been reading a history of part of the Cold War. Dwight Eisenhower was president, he's meeting his cabinet sometimes in this room where we're sitting. The Soviet Union has emerged as a major nuclear threat. The country is very worried at this point in the 1950s. But Eisenhower is convinced that they are not that strong, that the United States is stronger, that the U.S. will win if we just avoid a huge war.

And he decides to try to reassure the public, gives a series of speeches, saying, keep your chin up, everything's fine, our strategy is working. It's a total failure. The public doesn't believe him. He is accused of a failure of leadership, and his approval rating goes down.

Are you going through the same experience now with regard to ISIS?

Obama took it for a ball:

What if all private health insurers paid 120% Medicare rates?

In my last post, I noted that some insurers fielding narrow networks plans in the ACA marketplace appear to be paying providers at rates as low or even lower than a strong public option would have. That left me wondering why those lower payment rates don't translate into much lower costs for plan holders willing to put up with the limited choice of providers. (One part of the answer may be that the ACA subsidy and benefit structure partly insulates subsidized buyers from the actual cost of care, potentially for worse as well as for better.)

The broader question is, what would be the effect on US healthcare if insurers generally paid a reasonable multiple of Medicare rates -- say, Medicare plus ten or twenty percent? And I just came across a short answer of sorts in a study that's having a swift impact on healthcare scholars' understanding of what drives healthcare prices. That's The Price Ain't Right? Hospital Prices and Health Spending on the Privately Insured, by Zach Cooper, Stuart Craig, Martin Gaynor and John Van Reenen,  which analyzes a huge new database of payments to hospitals for privately insured patients. Here is one conclusion that bears on the broad question:

Narrow networks: a crooked path to affordable healthcare?

Richard Mayhew has a post suggesting that even a strong public option in the ACA exchanges would generate only "marginal pressure to reduce prices." In a competitive market, it might not undersell all commercial plans, and in a non-competitive market it might be able to field only a very narrow network -- most providers wouldn't opt in. Be that as it may, one claim brought me up short:

Mayhew Insurance is in a competitive market region for the Exchanges.  The lowest priced Silver plans offered by all of the insurers in this region are narrow network HMOs where the providers get paid Medicare rates plus 5% to Medicare plus 10%.  The public option would be just another plan that is in the cluster for the 2nd Silver subsidy point.

In other words, there are insurers on the exchanges who are paying providers no more than a strong public option would pay. In fact it's been suggested to me that the lowest-priced insurers in the marketplace probably pay something closer to Medicaid rates than to Medicare.

This is one of those scratchpad posts, put up as I explore further. If you see any faulty assumptions, please let me know.

About that deadline, HealthCare.gov..

HealthCare.gov really, really wants the uninsured to get covered by Jan. 1. Hence these daily emails:

The moment when the rise of the oceans began to slow

Not to minimize the dangers posed either by ISIS or Trumpism, but the odds are pretty good that both will fairly swiftly end up in the ashcan of history. Meanwhile, as we in the US obsess about both, a 195-nation climae accord has been negotiated in Paris that may lay the foundation for  continued human progress without catastrophic interruption.

While the US is maintaining a relatively low profile at the conclusion, the accord would not have been possible without forceful and effective climate action on the part of the Obama administration and the long, intensive efforts of John Kerry. Thank God we have a president who knows what's most important, knows how to prioritize and persist.

Obama was mocked for grandiosity when he laid out this hope on the night he secured the Democratic nomination in 2008 (my emphasis):

Once more, slowly: Obama sends a signal through the noise

There was conceptually nothing new in the interpretation of American history that Obama voiced in his speech yesterday commemorating the passage of the 13th Amendment. Yet what an intense, somber, formal, meditative distillation it was.

As in his speech in the eye of the Reverend Wright storm in March 2008, and his speech celebrating the Selma march early this year, this speech reiterated the core Obama narrative:

• American history is a long quest to live up the principles articulated in the country's founding documents -- and to shake off the "original sin" of slavery.


• Heroes of American history have at critical junctures advanced that quest, widening the circle of those encompassed by the promise of equal rights and opportunity.


• It's incumbent on us today to write the next chapter in that history of bumpy, incremental progress.

What was different yesterday: There was more emphasis on the original sin, and less on the moments of glory. Three of the four "warriors of justice Obama cited were black, (Harriet Tubman, Frederick Douglass and Martin Luther King as well as Lincoln), keeping the focus on the "original sin" with less zooming out to other causes (women's rights, gay rights) than in other recent speeches.* Most of all, Obama was pushing back, obliquely but unmistakably, against the rising tide of nascent fascism in the current campaign:

Ripples in the ACA risk pool

When a state that initially refused to implement the ACA Medicaid expansion embraces it, that's great news for state residents who were in the so-called "coverage gap" -- earning too little to qualify for subsidized private plans in the ACA marketplace, but denied the Medicaid coverage which the ACA had originally mandated for them, before the Supreme Court rendered the expansion optional for the states.

For another income group, those with household incomes between 100% and 138% of the Federal Poverty Level (FPL), the expansion may be a blessing for some but not all. People in this income range are eligible for subsidized private plans in states that have refused the Medicaid expansion -- but for Medicaid only in states that implement it.

As of the end of the ACA's last "open season" enrollment period in February 2015, 22 states had not yet adopted the law's Medicaid expansion, and one state, Indiana, had just adopted it, effective February 1.  In those states, about one third of enrollees in private health plans purchased in the ACA marketplace had incomes in the 100-138% FPL range and so would have been eligible for Medicaid if their states had embraced the expansion.  They constitute perhaps 15-20% of all enrollees in the ACA private plan plan marketplace.

Trump, the musical

(Updated*) As I caught myself humming the Nazi crowd-raiser Tomorrow Belongs to Me from Cabaret a bit back, it occurred to me that Trump needs an anthem. Since he's promising restoration, what better template than Happy Days are Here Again?  So here goes:

Barbarians at the gate again!
To make America great again
we've got to learn how to hate again --
make America great again.

Attention, Secretary Burwell: If you really want ACA shoppers to consider more than price....

This is all very well, Secretary Burwell...

Burwell acknowledged that people have had some trouble picking the right policies, with some deciding based mainly on how expensive policies were, rather than on what’s covered.

But why then did I get a voicemail on Thursday from healthcare.gov telling me that "most people" can get plans for under $75? Here's the email version of that mantra (also sent Thursday):

The message here is that monthly premium price is all that matters. Based on current enrollment, a large subset of those who can find a plan for $75 per month can find only a bronze plan below that ceiling.  Most bronze plans have deductibles north of $6,000. Meanwhile, anyone who can get a bronze plan for under $75 is eligible for Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, which have higher premiums.

Partial protection against balance billing? More on the NAIC model law

I have an article up at healthinsurance.org that assesses (in more detail than the previous post here) the consumer protections against balance billing in the model law recently adopted by the National Association of Insurance Commissioners. 

A key question is what happens after a patient forwards a balance bill to her insurer for negotiation or mediation. Can it come back to bite her?  There's some precedent in Texas law. Here's the gist:

If adopted as is,  how fully will the model act protect a balanced-billed patient who exercises her option to send the bill to her insurer? "If it goes to mediation, the intention is that the patient will be held harmless," say Stephanie Mohl of the American Heart Association, who served as a consumer liaison to the NAIC and advocated for balance billing protections.

The model act does not explicitly guarantee, however,  that once the insurer settles the bill with the provider, it won't hold the patient responsible for a portion larger than he would pay for in-network care.  The Texas law, upon which this provision is most closely modeled, does not provide such a guarantee, according to Stacey Pogue of the Texas-based Center for Public Policy Priorities.

In practice, however, Pogue says that when patients do initiate mediation, the system seems to be "working really well." Anecdotally, she has heard (mainly from insurers)  that the bill is usually resolved with a brief phone call, and insurers usually cover the whole.

The NAIC takes on balance billing

Of all the dysfunctions of the U.S. healthcare system, perhaps the most egregious (besides leaving tens of millions uninsured) is the "balance billing" of insured patients at in-network hospitals by out-of-network providers.

Elisabeth Rosenthal has documented some particularly extreme examples -- e.g.,  a man who arranged with his orthopedist for neck surgery at an agreed price -- and was billed $117,000 by an out-of-network assisting surgeon. Sarah Kliff found a particularly sharp illustration of the roulette-like character of hospital care, in which two women working for the same employer and having the same insurance gave birth within weeks of each other at the same hospital. One was billed $1600 for an epidural by an out-of-network anesthesiologist who happened to be at work that day; the other (who also had an epidural) was billed nothing.  A Consumers Union survey conducted this past March indicated that 30% of  privately insured Americans received a surprise medical bill in the past two years, with their health plan paying less than expected.

This week, the National Association of Insurance Commissioners (NAIC) adopted a model act for health plan network adequacy that includes some protections for patients faced with balance billing. Such model acts are meant to serve as templates for state legislatures to adapt to local needs and political propensities.

I plan to write about the balance billing section of the model rule in some depth next week. This post is a sketchboard -- and an invitation for anyone with expertise in the area or a personal experience to relate to comment or contact me.

HHS embraces high deductibles

It's funny how a trend impinges on your consciousness: you think something is new, then it gradually dawns that it's been going on for some time. Such is the case (for me) with an emerging mode of compensating for the unaffordability of healthcare at U.S. prices.

On Tuesday CMS, apparently stung by news accounts of ACA marketplace customers whose plan deductibles were so high they found care inaccessible, put up a blog post touting many plans' provisions of some services that are covered before the deductible is reached:

On Thursday, I took a look at the benefit structure provided by Centene's Ambetter, an insurer that has "cornered the silver market" in several large cities, including Miami, Chicago and Seattle. Ambetter plans feature high deductibles and a relatively broad array of services offered beneath the deductible:

Dollars to donut holes, Ambetter undercuts the competition (including UnitedHealthcare)

In late October, when Healthcare.gov first released plan prices for 2016, Jed Graham noted that Ambetter (parent company Centene) had "seized the pole position" in several of the federal exchange's largest markets, offering the cheapest bronze and the two cheapest silver plans in those markets.

Graham further pointed out, "By shrinking the cost of silver through its high-deductible strategy, Centene is lowering the subsidies available for all plans."  A few days later, Richard Mayhew wrote that Ambetter was "spamming" the exchanges by cramming a half-dozen barely-different silver plans into its lineup, all priced below the nearest competitor's cheapest silver. A managed Medicaid provider, Centene is fielding narrow networks in the ACA marketplace and probably paying very low rates to healthcare provides.

Yesterday I took a close look at the way Ambetter has combined sticker-shock silver deductibles (e.g., $6,400 for silver unenhanced by CSR in Chicago) with a relatively broad array of benefits that kick in before the deductible is reached. Swiss cheese coverage is apparently an ingredient in the secret sauce by which the insurer has calculated it can undersell its rivals.

In all Healthcare.gov markets taken together, we're told that on average the unsubsidized price of benchmark silver plans has gone up 7.5% (CMS), and for the cheapest silver plans in each market, 7% (Kaiser).  Not surprisingly, in markets in which Ambetter competes, the base price of the cheapest silver plan has generally gone down -- at the same time that most most of their competitors have felt compelled to raise their prices.

Ambetter's donut hole coverage: high deductibles alloy ACA silver

In pre-ACA times, many low income workers were enrolled in "mini-med" health plans that provided first-dollar coverage up to very low limits, and no insurance after those limits were reached. Such plans still exist, though they don't satisfy the ACA's "personal responsibility" requirement.

Also long available: "catastrophic" insurance that provides no coverage at all (or, post-ACA, preventive care only) until a high deductible is met. That's basically a stop-loss policy for people with enough assets not to be deeply indebted by by the time they reach the deductible. Many if not most bronze plans offered in the ACA marketplace are in this category: deductibles are usually north of $6,000 per person.

Yesterday, CMS touted an under-recognized fact: lots of marketplace plans offer some benefits before the deductible is met. Put this in the category of consolation prize:

In ACA exchanges, the key word is "exchange"

The Kaiser Family Foundation has published an in-depth analysis of rate hikes and their actual likely effects on users in the 2016 federal ACA marketplace (healthcare.gov).

Crunching the data for all of the counties in 36 states* in which last year's cheapest silver plan can be compared to this year's, Kaiser highlights the savings that many if not most current enrollees can realize by switching plans. The study focuses on the lowest-cost silver plan in each county, because those are the most popular plans.  Among the key findings:

• The average unsubsidized premium for the lowest-cost silver plan for a 40 year-old in 2016 is 7% higher than for the cheapest silver plan in 2015.


• In 73% of counties examined, last year's cheapest silver plan is not this year's.


• The premium for last year's cheapest silver plan will rise an average of 10% for a 40 year-old earning $30,000, and 28% for a 40 year-old earning $20,000.

The 7% average hike bespeaks some pain for the federal treasury, and the volatility in plan price and rank spells trouble for many who auto-renew without comparison shopping. However: 

"A million bin Ladens will bloom"

Whatever else it offers, Twitter often serves up some remarkable juxtapositions.

Last night, someone posted one more demonstration that The Onion is our oracle of Delphi, except that it speaks unambiguously (cf. Bush's inaugural: "our long national nightmare of peace and prosperity is finally over"). On March 23, 2003, the paper published a Point/Counterpoint: This War Will Destabilize The Entire Mideast Region And Set Off A Global Shockwave Of Anti-Americanism vs. No It Won’t. Startling verification of one of those representative opinions also turned up on Twitter yesterday.

The Onion's "point person" argues that an attempt to impose democracy by force on a foreign culture is doomed to fail. It includes a prophecy:

A month of "yes buts"

For some reason, in the past month or so I've found myself pushing back against, or at least qualifying, assertions about the ACA by people with deep expertise in healthcare, or economics, or healthcare economics. They all know a good deal more than I do, but touched on areas that I've been preoccupied with.

These posts aim to put a corrective lens on...not myths, but partial truths that in some cases leave a misleading impression. Specifically:

It's fair, O Robert Pear, to spotlight high deductibles in ACA plans. But some context is missing.

An article by the New York Times' Robert Pear, spotlighting the plight of ACA marketplace customers who bought plans with sky-high deductibles, had my eyeballs shooting lasers in two directions.

On the one hand, kudos to Pear, not only for showing the absurdity of offering plans with deductibles north of $6,000 per person to people who are not affluent, but for spanking HHS for emphasizing low premiums uber alles:

Sylvia Mathews Burwell, the secretary of health and human services, issued a report analyzing premiums in the 38 states that use HealthCare.gov. “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.

I have complained about that misdirection repeatedly, most recently noting that only about 5 in 10 will be able to buy a silver plan for under $100 and thus access the Cost Sharing Reduction (CSR) subsidies that are available only with silver. So Burwell is effectively hawking bronze plans to those who, as Pear illustrates, won't be able to use them.

On the other hand, Pear exaggerates the prevalence of super-high deductibles among marketplace enrollees. His acknowledgment of CSR is buried deep and lacks context:

Premium vs. deductible: New tools oversimplify

Buying health insurance is hard, we're told. Forced to weigh premium against deductible and other out-of-pocket costs, people will make the wrong choice more often than not.  Decision support tools like total cost estimators can reduce that likelihood.

Maybe, maybe not. It seems to me that a cost estimator has to be pretty sophisticated not to oversimplify the decision.

The new Plan Match tool rolled out this month by DC Health Link, the District's ACA marketplace, is in one way at least more informative than healthcare.gov's Total Cost Estimator. The DC tool, furnished by Consumer Checkbook, provides not only a Yearly Cost Estimate that factors in the user's rating of his health, but also an estimate of "Cost in a Bad Year." The latter total is simply the plan's yearly out-of-pocket maximum plus the annual premium.

I'm not sure that that information doesn't give the wrong impression by leaving out a vast middle.

The tool might actually be more useful in any market other than DC -- which, uniquely, extends Medicaid eligibility to adults with incomes up to 210% of the Federal Poverty Level (FPL).  By so doing, DC eliminates the strong Cost Sharing Reduction (CSR) subsidies that are available in most states* to private plan buyers with incomes up to 200% FPL -- but only to buyers of silver plans. For those up to that income threshold, silver plans' out-of-pocket maximum is capped at $2,250  -- compared  to a $6,850 allowable OOP max for bronze plans. In most ACA markets, the "Cost in a Bad Year" would reflect that yawning gap for buyers under 200% FPL.

Weaker CSR is available, in DC and everywhere else, to buyers with incomes in the 200-250% FPL range. At that income level, the out-of-pocket maximum for silver plans is $5,450. That smaller contrast does come into play in the Cost in a Bad Year estimates.

The Counter-Upshot: Obamacare is quite as egalitarian as it appears

Tyler Cowen draws a rather odd conclusion from the spike this year in premiums for health plans sold in the nongroup market: The ACA is not as egalitarian as it appears.

Cowen legitimately spotlights the weakness of the ACA value proposition for uninsured people with incomes above 250% of the Federal Poverty Level (FPL) and so for a large group of the remaining uninsured. But his discussion of its "egalitarian" impact is limited by his leaving the Medicaid expansion out of the equation (if not entirely out of the discussion).

Cowen bases his case that "by some measures, the Affordable Care Act has had only a limited impact on economic inequality" mainly on a recent study* by Wharton School researchers led by health economist Mark Pauly.* Pauly et al found that slightly less than half of the still-uninsured who are eligible to buy health plans on the ACA exchanges would not experience "welfare improvements" if they buy health plans. Cowen summarizes:

An NHIS non sequitur

Back in February, I complained that Gallup had conflated the effects of a state expanding Medicaid with the effects of a state running its own ACA exchange. All states running their own exchanges but one (Idaho) accepted the Medicaid expansion, making the conflation easy. But their superior performance in reducing the uninsurance rate was due entirely to the Medicaid expansion, not the decision to create their own exchanges. State-run exchanges got good press early on because most were not as dysfunctional as healthcare.gov in fall 2013. But some were even worse, and by the end of open season 2015 they had not collectively outperformed the federal exchange with regard to enrolling their potentially eligible populations.

CDC today released results of the National Health Interview Survey for the first 6 months of 2015. It's a trove of information about who's gained insurance over the last two years and who's still uninsured. But it contains one apparent non sequitur that recalls Gallup's:

Your health insurer may not want to control the cost of medical care

Two facts about the business of health insurance that must be obvious to practitioners and those who study the subject occurred to me recently.

First, if the cost of medical care goes up and the actuarial value of a health plan remains the same, consumers' out-of-pocket costs will go up.  87% of $5,000 is more than 87% of $4,000.

Second: A rise in the cost of medical care (theoretically) does not affect insurers' profit margins, since actuarial value and medical loss ratio stay the same. But the cost-hike does increase their revenue. They are, in a sense, reselling medical care to plan holders. Selling more expensive care is equivalent to selling more of it. If I sell you $120 in care and keep 20% of it, I earn more than if I sell you $100 worth and kept 20%.*

Supporting the biggest decision for ACA marketplace shoppers

People make poor decisions when buying health insurance. So demonstrates health economist Austin Frakt in a review of studies probing Americans' health insurance decisions and knowledge base. Frakt cites studies finding that:

• most people choose wrong when faced with relatively small tradeoffs between premium and deductible; 
• Americans have a poor grasp of core insurance terms like "coinsurance; 
• low income people will choose a plan labeled "gold" over one labeled "bronze" even if the "gold" plan is manifestly inferior (researchers swapped the labels to test comprehension); and
• when given an estimate of our yearly medical costs, a typical ACA marketplace shopper can't determine which plan would cost them least.

The upshot: When choosing among Medicare plans, employer-sponsored plans, or private plans on offer in the Affordable Care Act marketplace, we all need help.

But what kind of help? That depends, in part, on the menu of choices. And the ACA marketplace is unique -- different in at least one vital way from the markets for Medicare or employer-sponsored plans.

How bronze plans offer fool's gold to the Treasury

I have more than once expressed frustration that HHS, when urging the uninsured to buy health plans in the ACA marketplace, emphasizes low premiums at the expense of good coverage. For example, CMS's snapshot of plan prices for the Open Season beginning today leads like this:

The next Open Enrollment period for the Health Insurance Marketplace begins on November 1, 2015 for coverage starting on January 1, 2016. According to an HHS analysis, about 8 out of 10 returning consumers will be able to buy a plan with premiums less than $100 dollars a month after tax credits; and about 7 out of 10 will have a plan available for less than $75 a month.

Only perhaps 5 out of ten returning customers will be able to buy a silver plan for under $100 per month, and many of those who slip beneath that round-number threshold by buying bronze plans will be forgoing the Cost Sharing Reduction (CSR) subsidies that are available only with silver plans.  Yet the messaging about CSR on healthcare.gov and in HHS's communications is confusing and underemphasized.

Perhaps the ambivalence or inattention to CSR stems in part from a financial conflict of interest between the federal government and shoppers on the ACA exchanges.  When a CSR-eligible shopper selects a bronze plan, the Treasury saves not only on the forgone CSR subsidy, but also, in some cases, on the premium subsidy. Bronze plans are in some regions priced so low that the full unsubsidized premium is less than the premium subsidy to which the buyer is entitled, which is calculated to leave her paying a fixed percentage of income for the second-cheapest silver plan available. That's likeliest to be the case for older buyers, for whom unsubsidized premiums can be up to three times as high as for young buyers

This pricing permutation is very much in play in California in 2016. In 2015, 53.5% of California's subsidized enrollees were between the ages of 45 and 64 -- and again, for older buyers, premium subsidies often cover the whole cost of a bronze plan, and then some.

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. ]
---
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.

"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.

"Are marketplace plans affordable?"

Last week the Commonwealth Fund released a report* comparing the experiences of people who bought health plans in the ACA marketplace to that of people who get health insurance through their employers. Commonwealth surveyed nearly 5,000 adults between March and May of this year, asking questions about their income, their insurance status, plan features, usage and affordability.

With respect to out-of-pocket costs, here's the top-line takeaway as framed in the Commonwealth press release:

Overall, larger shares of adults with marketplace plans had per-person deductibles of $1,000 or more than did those with employer plans (43% vs. 34%). The differences were widest among those with higher incomes: in this group, over half (53%) with marketplace plans had high deductibles, compared to about one-third (35%) with employer plans. In the survey, people with high deductibles were less confident than those with lower deductibles that they could afford needed care.

What's equally salient, in my view, is that the subsidized marketplace has narrowed the longstanding coverage gap between employer-sponsored insurance (ESI) and nongroup market insurance for lower-income buyers. Compare those with incomes under 250% of the Federal Poverty Level (FPL) to those with ESI:

The Pope's swift turns of thought

I knew before this week that the Pope is a man of good will. As I read his speech to Congress, it dawned too that his is a mind of extraordinary subtlety.

He is the opposite of a fundamentalist. He sees the mix of good and evil in all -- in persons, political systems, historical events.  As he speaks, he keeps flipping the Janus head:  Every chastisement is an affirmation. Every affirmation -- of, say, an inherited national virtue -- is a challenge.

The Pope's paragraphs take swift turns.You think he's headed one way, and he goes into reverse -- present to past, praise to reproach, abortion to death penalty.  He sees six sides to everything.

Follow the switchbacks in this passage appealing to our better angels:

Hillary Clinton's pocket patches for healthcare costs

Hillary Clinton's  just-released package of proposed health reform proposals is very...Hillary Clinton. It's got a lot of moving parts and takes incremental whacks at a pervasive problem -- ever-rising out-of-pocket medical costs for the insured -- from multiple angles.  On the one hand, it layers complexity on complexity. On the other hand, its patches are tailored to provide complementary plugs to different holes in coverage that deter people from obtaining needed care and drain thousands from their earnings. And by the way, the most powerful ideas are are well below the top line.

Pocket patches

The  two lead proposals are aimed directly at the relentless rise in health plan holders' out-of-pocket costs for care. To reduce insureds' "skin in the game" that has become in many cases a pound of flesh, Clinton would

ACA exchanges in 2016: targeting just 6.4 million subsidy-eligible uninsureds?

In a speech at Howard University College of Medicine today, HHS Secretary Sylvia Burwell laid out a few facts about the target market for the ACA exchanges -- those still uninsured and eligible for private plan coverage. A couple of key points:

• About 10.5 million uninsured Americans are eligible for Marketplace coverage in the upcoming open enrollment.


• Almost 40 percent of the uninsured who qualify for Marketplace plans are living between 139 and 250 percent of the federal poverty level (about $34,000 to $61,000 for a family of four).

HHS has confirmed for me that the 10.5 million estimate is not limited to the subsidy-eligible. At present, according to Kaiser estimates, about half of those who have bought plans in the nongroup market are ineligible for subsidies, and most of the subsidy-ineligible have bought their plans off-exchange. 

Does that, then, suggest a target market of just 5 million subsidy-eligible uninsureds? Not quite.* HHS's estimate of the target market between 139% and 250% FPL (4.2 million or a bit less) provides a basis for estimating the size of the subsidizable target market.  In 2015, about 76% of private plan buyers on the exchanges had incomes under 251% FPL.*  According to HHS's most recent enrollment snapshot, 83.7% of all exchange enrollees qualified for premium subsidies. Thus 91% of subsidy-eligible buyers were under 251% FPL. Not all of them, however, fit HHS's "40 percent" category of 139-250% FPL - because in states that refused the Medicaid expansion, eligibility for subsidized marketplace coverage begins at 100% FPL.*** In 2015, about 15% of all enrollees**** (and 20% of those under 250% FPL) were under 139% FPL and so outside HHS's category. Those between 139% and 250% FPL thus constituted about 60% of total enrollment. If that percentage holds in 2016, that would suggest that about 7 million of the 10.5 million in the target market are subsidy eligible.

But the percentage of potential buyers under 139% FPL will probably be considerably lower this year. Takeup among that group was disproportionately high: Avalere Health estimated that 76% of eligible buyers from 100-150% FPL did in fact enroll, and the percentage was probably still higher under 139% FPL (and dramatically lower for all higher income bands). Moreover, two (small states) have accepted the Medicaid expansion for 2016. If, in 2016, 10% rather than 20% of those under 250% FPL are also under 139% FPL, then that suggests about 580,000 fewer subsidizable targets. Since we're now in the realm of educated guesswork, let's say that HHS's estimate of the 139-250% market suggests that about 6.4 million of their 10.5 million overall target market is subsidizable.

At present, 83.7% of 9.9 million exchange enrollees are subsidized. If there indeed are only about 6.4 million subsidy-eligible uninsured still out there, then about 57% of the subsidy-eligible target market has been enrolled. That doesn't sound right. Kaiser has pegged the percentage of potential exchange population enrolled through June 20 at 35%.Though that estimate is not limited to the subsidy-eligible, uninsured rates are much higher in lower income brackets.

The 10.5 million estimate excludes the Medicaid-eligible and -- I assume but have not confirmed -- those in the Medicaid gap, who theoretically could buy unsubsidized plans on the exchanges. Those who earn too little to qualify for premium subsidies are unlikely to pay full price for plans on the marketplace -- although, confusingly (to me), the just-released census report on health insurance showed greater gains in private coverage than in government insurance for those whose incomes should qualify them for Medicaid under the ACA expansion.

The still uninsured: can't afford coverage or don't know what's on offer? (Or both?)

With respect to reaching the still-uninsured, Burwell cited findings from a PerryUndem study that reflect a tension between two key factors:

• About half of the uninsured have less than $100 in savings.

• Nearly three in five of the uninsured are either confused about how the tax credits work or don’t know that they are available.

The first point is a proxy for several points highlighting the financial precariousness of the uninsured. Another: 58% of respondents report having less than $100 left over each month after paying bills. In other words, many would have a very tough time with the average premium paid for marketplace plans, net of subsidies: $101 per month. At the same time, most who consider coverage unaffordable do not know what's on offer.

I have noted the same tension in data from the Urban Institute, and in other surveys of the uninsured. If the still-uninsured who qualify for premium and cost-sharing subsidies knew what was on offer, would they still consider it unaffordable? Doubtless some would and some would not. The proportion in each camp will go a long way toward determining how viable the ACA private plan marketplace will prove over the long haul.

Researchers at the Urban Institute and healthcare reporter Jed Graham have argued that the ACA subsidy structure is too skimpy to meet the needs of large percentages of the uninsured.  To whatever extent that's true overall, it's increasingly true as you move up the income scale -- as Avalere Health's analysis of takeup rates at different income levels indicates. Avalere estimated that about 76% of the subsidy-eligible uninsured with incomes under 150% FPL bought subsidized private plans, compared to 41% for those from 151-200% FPL, 30% for those from 201-250% FPL, 20% of those from 251-300% FPL, and so on down.  The threshold for really strong Cost Sharing Reduction, 200% FPL, is one dividing line between strong and weak aid.  The ACA works best for those up to that income level. At the same time, that's where most of the uninsured are concentrated.

P.S. The PerryUndem study, conducted in May 2015 and surveying some 1,270 adults, is full of interesting info about the finances and priorities of the uninsured.

UPDATE, 10/14/2015: Kaiser yesterday estimated that 7.1 million uninsured people are eligible for subsidized private plans in the ACA marketplace.

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* I originally oversimplified this calculation, simply taking the percentage of exchange buyers under 250% FPL. Correction is in this paragraph.

** I calculated the percentage of exchange enrollees with incomes under 251% FPL in this post.

*** Thanks to Jed Graham for pointing out that HHS's estimate began at 139% FPL (rather strangely, when you consider the doubtless still-sizable number of uninsureds between under 139% FPL in states that refused the Medicaid expansion. Also among subsidized buyers under 139% FPL: legally present immigrants who are time-barred from Medicaid; they are eligible for premium subsidies even if their income is under 100% FPL (in nonexpansion states) or 139% FPL (in expansion states).

**** See this post for a calculation of 2015 exchange customer with incomes under 139% FPL. In this post, I've slightly dropped the estimate, from 16% of all buyers to 15%, in light of the recent purge of those who failed to verify their state income when asked.

Why does the Census show such small gains among the poor in government-provided health insurance?

If I may reiterate: it seems quite strange to me that the Census health insurance surveys show a net gain for 2014 of just 1.3 million people with incomes under 138% of the Federal Poverty Level enrolled in government insurance plans -- whereas according to HHS, Medicaid enrollment increased by over 9 million in 2014, thanks to the ACA expansion. 138% FPL is the eligibility threshold for Medicaid under the ACA expansion.

The second half of this post provides more detail. According to the Census surveys, those with incomes under 138% FPL showed much stronger gains in private insurance than in public, while those in higher income brackets showed stronger gains in public insurance than in private. That's odd.

The difference may in large part be due to differences in how households are defined: the ACA marketplaces determine eligibility according to who is included in a household tax filing, while the Census surveys (CPS and ACS) consider who lives under one roof. Many other factors are in play, including a modest acceleration in Medicare eligibility and higher income thresholds for children in CHIP than for adults in Medicaid. But none appear on the face of things (as far as I can see) to explain the very low recorded gains in government insurance among adults under 138% FPL (and even more strikingly, under 100% FPL).

Again, there's more detail below the second subhead here (along with some updates added over the weekend). This post is simply to unbury the lead a bit, as I look into the state data.

Sure, Kasich hates the ACA and the Iran deal

I, Democrat, think John Kasich is the Republican presidential candidate best qualified to be president. Ergo, he's doomed.

It's become a cliche that Kasich is this cycle's Jon Huntsman, a GOP candidate who seems borderline sane to Democrats and hence is a total political anaphrodisiac to Republicans. Kasich is more formidable than Huntsman and getting a better response from GOP audiences, at least in New Hampshire. But the principle does apply.

I'm not the closest observer in the political audience but that's why I'm so sure. In a year, I've sopped up two subtexts from Kasich: the ACA is okay, and so is the Iran deal. He'd deny both, but he's pricked my political pituitary twice. First, on the ACA. Last October Kasich told the AP:

The Census on health insurance gains: who got what and how?

This week the Census reported on changes in Americans' health insurance rates from 2013 to 2014, based on results of its two yearly surveys, the Current Population Survey and the American Community Survey. The two together show what is probably the most dramatic drop in the percentage of people without insurance since Medicare and Medicaid were implemented. The drop in the ranks of uninsured was steepest among the roughly one third of the population living in households with incomes under 200% of the Federal Poverty Level (FPL) -- where lack of insurance is most concentrated.

In my grand personal tradition of burying the lead, I discuss an apparent oddity in the data under the second subhead below. Feel free to skip! If you're well-versed in these matters, it may be no mystery to you.

The near-poor gain most

The ranks of the uninsured dropped more steeply for the near-poor than for those below the poverty line, and for the part-time employed than for the nonworking population,  The pattern does not hold for educational level: the uninsured rate dropped most for those without a high school diploma and next most for high school grads, with smaller drops at each level of educational attainment.