Saturday, June 04, 2016

Silver plan selection dropped among new enrollees in California in 2016

Something went wrong in Covered California's 2016 open enrollment [or maybe not- see update, 6/7].

Among the 439,400 new enrollees (31% of total enrollees), bronze plan selection spiked to 31.9%, compared to 24.9% of those enrolled as of June 2015. Silver plan selection among new enrollees was 58.2%, compared to 64.6% as of June 2015 (the data is available here).

Among enrollees in income ranges that are eligible for Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, silver selection dropped from 75.8% as of June 2015 to 68.1% among new enrollees in 2016.

The CSR benefit weakens sharply at 201% FPL. Among those in the income range for "strong" CSR, that is, those with incomes up to 200% FPL, silver selection dropped from 82.2% as of June 2015 to 75.0% for those who enrolled for the first time in 2016.

In California, plan benefits at each metal level are standardized. In 2016, bronze plans had deductibles of $6,000 for an individual. Deductibles for CSR-enhanced silver are $75 for those with incomes up to 150% FPL, $550 for those in the 150-200% FPL range, and $1900 for those with incomes from 200-250% FPL.  48.6% of all new enrollees (213,630) had incomes under 201% FPL. (2.2% of them were not subsidized, suggesting either that they had an insurance offer from an employer, they were Medicaid-eligible, or their application was screwed up in some way.)

Here is a comparison of silver selection rates in CSR-eligible income brackets for all enrollees as of June 2015 versus new enrollees in 2016.  For each income level, I've included the actuarial value of a CSR-enhanced silver plan -- that is, the percentage of the average enrollee's medical costs that the plan is designed to cover.

Income level
% silver selection:
Total June 2015
% silver selection:
New enrollees 2016
0-138% FPL
(AV 94%*)
138-150% FPL
(AV 94%)
150-200% FPL
(AV 87%)
200-250 FPL
(AV 73%)
Total Under 200% FPL
Under 250% FPL (Total CSR eligible)

* Among the small number of enrollees under 138% (7,150), 33% did not obtain any subsidy and so were ineligible for CSR.  See note below.

CSR takeup in California as of June 2015 was in line with national averages, which overall, didn't change much in 2016. Takeup among the new enrollees is well below average. We don't yet have metal level selection broken out by income for all current California enrollees.**

Why the drop in silver plan selection?  One possibility is illustrated by an analysis of CSR takeup in California that I undertook last fall. The upshot was that in many California zoning regions, a "CSR discount" was available, in that the cheapest silver plan available was priced significantly below the second-cheapest "benchmark" silver plan, which is used to calculate each enrollee's subsidy. More precisely, it seems that the narrower the price gap between the cheapest silver and cheapest bronze plan available, the higher the silver plan takeup. It may be that such CSR discounts narrowed or evaporated in some populous regions. I may check this out.

Covered California, the state marketplace, does "steer" applicants with incomes up to 200% FPL toward silver plans. On the "shop and compare" tool, silver plans are shown first if your income is below that threshold, For a quarter of those eligible for strong CSR, that nudge wasn't enough to make them choose the higher premium with disproportionately lower out-of-pocket costs.

* A note on California's low silver plan selection rate in the 0-138% FPL range: Because California accepted the ACA Medicaid expansion, eligibility for premium subsidies begins at 139% FPL for most residents -- below that level, the applicant qualifies for Medicaid. There's an exception for legally present noncitizens who are barred from Medicaid: the ACA allows applicants in that category to obtain private plan subsidies even if their income is below 139% FPL.Unlike in most of the U.S., however, legally present immigrants in California whose income qualifies them for Medicaid are not subject to a "5-year bar." Still, a third of California private plan enrollees below that income threshold did not qualify for premium subsidies (or CSR), compared to less than 2% of enrollees in higher CSR-eligible income brackets.

** HHS does provide a rounded percentage breakout for overall metal level selection: 64% silver and 26% bronze, indicating just a slight overall shift toward bronze compared to last June. It's possible that re-enrollees shifted a bit toward silver this year -- hard to tell with those rounded percentages. [Update, 6/7: But As Mr. Rochester said, "arithmetic, you see, is useful" tilt toward silver almost entirely offsets new enrollees' tilt toward bronze. More here.]

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