Sunday, January 08, 2017

The Rosetta Stone of Cost Sharing Reduction takeup in the ACA marketplace

I don't know why it's taken me so long to notice, but something I've always wanted to know about ACA enrollment has been hiding in plain sight since July.

The question is what percentage of marketplace enrollees at different income levels who are eligible for Cost Sharing Reduction (CSR) subsidies do in fact access the benefit by selecting silver plans, the only metal level at which CSR is available. This is important, because out-of-pocket expenses for lower income enrollees -- which means most enrollees -- are basically only manageable in CSR-enhanced plans.

CSR raises the actuarial value of a silver plan from a baseline of 70% to 94% for those with incomes up to 150% FPL; to 87% for those in the 150-200% FPL range, and to just 73% for those between 200% and 250% FPL.  Conversely, the percentage of income required to buy a silver plan rises with income -- disproportionately, to judge from takeup, which is higher at lower income levels.  Those who opt for a lower premium by buying bronze plans are leaving a valuable benefit on the table and letting themselves in for deductibles generally north of $6,000.

Every year since the launch of the ACA marketplace for 2014, HHS has published ever-more specific enrollment data (for states in particular). But CSR takeup at different levels has had to be extrapolated from various not-quite-complete hints, including data published by states that run their own marketplaces.

That was the case, that is, until this past July, when a CMS data brief  appeared with a CSR Rosetta Stone wrapped in the middle. And I'm going to take a little credit for that, as well as drawing conclusions.

Last spring, I estimated the average weighted actuarial value obtained by marketplace enrollees at different income levels, in part to counter stereotypes of low-AV plans being the norm. That involved some inferences, explained in the post, about CSR takeup at each income level (total CSR enrollment was reported). The top line was encouraging -- the average AV for the marketplace as a whole is about 81%, comparable to employer-sponsored insurance. But there was a sharp divide at 200% FPL, where strong CSR fades out.

In July, CMS produced a similar analysis, replacing average AV with a more relatable measure, median deductible, and leaving out the AV cliff  or deductible cliff) at 200% FPL. In so doing, they published for the first time the percentage of enrollees (who comprise three quarters of all marketplace enrollees) enrolled in silver plans at each CSR level:

The percentages enrolled at each benefit level can be matched with HHS's earlier breakout* of enrollment at each income level to determine takeup of each of the three gradations of CSR. In the chart below, "Silver94" corresponds to CMS's "high CSR";  Silver87 to CMS's "medium," and Silver73 to "moderate."

CSR Takeup: states, 2016

in income
0-150% FPL
151-200% FPL
201-250% FPL
Silver 73

These figures are pretty close to my working estimates, which were helped by state data published by New York, Connecticut, California, and Rhode Island.  With occasional exceptions, the lower the income, the higher the CSR takeup.

There are a couple of wild cards here. First, the income breakout is based on the  9.6 million who had enrolled in plans via as of Feb. 1, 2016, as reported by HHS on March 10, 2016. The later CMS note references total enrollment as of March 31, by which point enrollment had dropped by 12%.  The percentages reported for each metal-and-CSR level may be based on the March 31 figures. I think they are (and I'm checking on this), since total silver takeup rounds up a couple of points higher (73% on than in the earlier report, and that's also the case in the effectuated enrollment snapshot for 3/31 (though that's for all states, not just states). [Update 1/9: CMS has confirmed that the percentages were taken from "current enrollees as of April."] The dropout rate may have been lower among CSR eligibles. Indeed, the CSR takeup derived from the CMS data note seems a tad high  -- about 2 points higher than reported immediately after open enrollment.

On the other hand, some reports from states running their own marketplaces show that at every income level, a small percentage of enrollees qualify for no subsidy at all -- whether because they have an offer of insurance from an employer, or report that they will not file a tax return, or for other reasons.  Thus the total number of CSR-eligible enrollees is slightly smaller (by perhaps 2 or 3 percent) than the total number in the right income range.

One final point to keep in mind. In states that refused to expand Medicaid, fully 36% of marketplace enrollees have incomes that would have qualified them for Medicaid had their states accepted the expansion. Among that large group (2.5 million immediately after open enrollment, probably about 2.1 million by mid-year), the takeup rate for CSR is probably around 90%, since premiums for a benchmark silver plan for enrollees up to 138% FPL are just 2% of income. While Medicaid is probably more appropriate for this group, CSR-enhanced plans do generally have deductibles in the $0-250 range and an actuarial value of 94%. Satisfaction among this red state enrollment subset is probably relatively high.


* One more caveat: HHS gives the income breakouts as a percentage of those enrollees for whom income data is available (8.86 million, 92% of total enrolllment), whereas the percentages at each deductible level in the July CMS data note are presumably percentages of total enrollment, including the 8 percent who did not report income.  The table above takes this difference into account, taking the total at each metal-and-CSR level as a percentage of total enrollment, and the total at each income level as a percentage of those for whom income is known. That's as of 2/1/16. Again, it seems that percentages shifted about 2 points in favor of CSR enrollment after the initial shakeout of no-pays.

Two major divides in the post-ACA individual market
ACA afflicted by a deductible cliff
Index of posts concerning CSR takeup

1 comment:

  1. One wonders. If marketplace enrollees, who would have qualified for Medicaid if their states had expanded, can afford the $250 deductible (assumed), could they also afford copays a la Indiana in an alternative universe? Its a relevant comparison if those who believe in CDHPs want to make it. Granted, there is a selection bias to those who maintain their enrollment, but given the high take up and maintenance we see at present, its a phenomena to observe.