Saturday, November 04, 2017

Free bronze or CSR-boosted silver? The choice in 5 top marketplace counties

Trump's cutoff of federal reimbursement to insurers for Cost Sharing Reduction (CSR) subsidies has led to two pricing anomalies in the ACA marketplace that have rightly gotten a lot of attention: gold plans that are cheaper than silver plans (or close to it) in some regions, and bronze plans that are free for large swaths of the subsidy-eligible population.

The gold and bronze discounts* available in many regions of the country are an unmixed blessing for subsidized buyers with incomes above 200% of the Federal Poverty Level (FPL), who are eligible either for no CSR or very weak CSR. The blessing is more ambiguous for buyers with incomes below 200% FPL, however, because for them CSR, which is available only with silver plans, remains a major secondary subsidy. For these buyers, silver plans are priced as if they have an actuarial value of 70% (that is, are designed to cover 70% of the average user's medical costs) but, enhanced by CSR, have AVs of 94% (for buyers up to 150% FPL)  or 87% (for those in the 150-200% FPL range). That translates to an average deductible of $255 (for 94% AV) or $809 (for 87% AV), compared to over $6,000 for bronze plans.

That bargain remains in place. But silver plans can be quite expensive for low income enrollees. The premium for a benchmark silver plan ranges from 2% of income for those in the 100-138% FPL income bracket to 6.3% for enrollees at 200% FPL. The benchmark premium at 200% FPL comes to $127 per month in 2018.

Will the outsized bronze plan discounts available in many places this year tempt a lot CSR-eligible buyers into bronze plans?**  In 2017, over 85% of enrollees with incomes up to 200% FPL selected silver plans and accessed CSR in the 38 states that use the HealthCare.gov federal exchange.

To gauge whether discount bronze is likely to take a big bite out of CSR takeup this year, let's look at the choices facing CSR-eligible enrollees in counties with the most marketplace enrollees. In 2017, these were

Miami-Dade, FL              387,848
Los Angeles, CA             380,520
Broward, FL                    240,984
Harris, TX (Houston)      240,064
Cook, IL (Chicago)         144,418

First look is at zip code 33012, Hialeah in Miami-Dade County --  the zip code with more ACA enrollees than any other in the nation (14,970 in 2017).  Here's how the choice between cheapest bronze, cheapest silver and benchmark silver stacks up for a 40 year-old with an income of $24,000 -- just under 200% FPL.


The starkest choice, of course, is between a premium of $0 per month and around $120 per month. Tilting somewhat further in the bronze plan's favor is its provision of some key services before the deductible is met.

This bronze-silver choice in the nation's largest market is radically different from that of 2017.  Here's what the options looked like this year for a 40 year-old with an income just under 200% FPL ($23,500 -- the FPL levels rise with inflation):



That's what you call a no-brainer. The bronze-silver spread is $20, compared to $118 in 2018.  I'd look for a fair number of Floridians in the 150-200% FPL range to switch to bronze in the coming year. In 2017, 72% of Florida enrollees accessed CSR. 19% of the state's enrollees were in the 150-200% FPL income range.

CSR is much weaker in the 200-250% FPL bracket, raising AV just 3 points to 73%, and reducing average deductibles from about $3,600 (for silver without CSR) to an average of around $2,900.  In that income range, people will likely leave silver in droves. In Hialeah, at income $25,000 (207% FPL). bronze is still free, while the cheapest silver plan is $130 with a deductible over $5k. Some in this income range  -- probably those who know they'll need substantial medical care -- may move to gold, available at $151 with a deductible of $940. When comparably priced, gold (80% AV) should trump low-CSR silver (73% AV).

HealthCare.gov offers a total cost estimator, requiring the user to estimate likely use of medical services as low, medium or high. In 2018, at medium use, which includes no hospital visits, the bronze plan is the clear winner in Miami-Dade for the 40 year-old at $24k income: estimated yearly costs are $1653, vs $2339 for cheapest silver and $2095 for the benchmark.  At high use, which includes at least one hospital visit, the script flips: total costs are $7350 for bronze vs. $3366 and $3961 for the two silver plans. An analytical buyer, then, will balance the likelihood of spending several hundred dollars more for CSR-enhanced silver against the possibility of spending $3-4,000 more for bronze if she has an accident or serious illness. Because CSR reduces the allowable out-of-pocket maximum to $2,450 at this income level, a silver plan will always save thousands compared to bronze for anyone who needs a hospital stay.

The zip codes I looked at in Broward County had the same offerings as those of Miami-Dade. It seems, based on my spot checks, that these two counties, accounting for 5% of all ACA marketplace enrollment nationwide, have the same plan offerings throughout.

The choice landscape is similar in Houston 77083, the zip code with the highest enrollment outside Florida in the 38 HealthCare.gov states (8,910). There, a 40 year-old at $24,000 income can get a bronze plan for free -- again, with doctor visits and generic drugs not subject to the high deductible. The cheapest silver is the same Ambetter plan on offer in Hialeah, for $116 per month, and the benchmark silver plan, from Molina, has a similar $0 deductible/$2,450 out-of-pocket max as Florida BCBS's benchmark plan.

In 2017 as in 2018, choices in Harris County TX were similar to those of Miami-Dade. At just under 200% FPL, the cheapest bronze plan was $78 per month and the cheapest silver, $118 -- a narrow spread. Again, there should be some migration to bronze this year.

Bronze less tempting at lower incomes

It should be noted that both Florida and Texas refused to expand Medicaid, and so both have a high percentage of enrollees with incomes in the 100-138% FPL range. In expansion states, those enrollees would be in Medicaid. They pay just 2% of income for a benchmark silver plan, as opposed to the 6.4% paid by the enrollee at 200% FPL, as above.

In Florida in 2016, an astounding  46% of all marketplace enrollees, over 800,000, were in this should-have-been in Medicaid income band. In Texas, 34%, over 440,000, were in this category. (While HHS did not break out that income category in 2017, the income breakouts we do have are broadly comparable. In Miami-Dade, 67% of enrollees had incomes between 100-150% FPL.)  For these enrollees, the premium spread between bronze and silver is less stark -- though a $20 per-month charge is a lot at that income level. Let's look at the choices, again, in Miami and Houston.

For a 40 year-old with an income of $12,100, just over 100% FPL, here's the lowdown in Hialeah:


In this case, the CSR discount for the cheapest silver plan compared to the benchmark plan may loom larger than at 200% FPL -- it's the same $8, but here that constitutes almost 40% of the premium. And at this income level, silver is hands-down winner on estimated costs for medium use. The bronze plan's total estimated cost is $2362, vs. $824 for cheapest silver and $539 for the benchmark.

The cheapest-silver Ambetter plan has a high deductible for this coverage level, offset by a low out-of-pocket maximum and all but free services not subject to the deductible. That flips the standings for a high-use enrollee, for whom total costs under the Ambetter plan would remain at a maxed-out $824, vs. $1493 in the Florida Blue plan. The "free" bronze plan would max out its $7,350 out-of-pocket limit, the highest allowed under the ACA, at the high use level.

At an income of $18,000, just under 150% FPL, the choice tilts a little further toward bronze, as an enrollee at that income level has to pay 4% of income for benchmark silver, rather than the 2% required for enrollees with incomes up to 138% FPL. The cheapest silver plan at this income level in Miami-Dade is $52 per month. The benchmark, with a zero deductible, is $60 per month. Bronze is of course free.

In LA, a narrower spread

In most areas of Los Angeles, a bronze plan is not free for a person with an income of $24,000. The county is so populous that it's split into two rating areas, and there are price differences even within those. In zip code 90639, the cheapest bronze plan is $31 per month, and the cheapest silver is $119, a slight discount from the benchmark. In zip 91343, cheapest bronze is $48 and cheapest silver offers basically no discount at $123.

California has standardized plan offerings at each metal level. Bronze plans have a medical deductible of $6,300, a drug deductible of $500, and just three doctor visits not subject to the deductible, at the high price points of $75 for a primary care visit and $105 for a specialist. Silver plans at this income level, the second-strongest CSR level, have a medical deductible of $650 and a drug deductible of $50 -- both basically 1/10 of their bronze counterparts. Doctor visits are just $5 and $10 for PC and specialist, and generic drugs are $5 per prescription.

One chunk of LA County, Avalon in zip code 90794, does have a significant CSR discount - and a major bronze discount.


The bronze-silver spread in all three of these areas within LA county is roughly similar, ranging from $75 to $90.  A medium-use enrollee will save about about $350-500 by choosing bronze, whereas anyone undergoing a serious illness or accident will save $4,000-5,000 with silver.

Bronze enrollment likely to rise in Cook County

In Cook County, Illinois -- home to Chicago, and the second most populous county in the nation after Los Angeles -- bronze this year is not free at 200% FPL, but it's pretty cheap. The cheapest silver plan offers a modest CSR discount:


The bronze plan has no services not subject to the deductible, however. To get doctor visits and generic drugs not subject to the deductible, you have to go up to $50 per month for a bronze plan.

In 2017, the Cook County choice was, as in Miami-Dade, a no-brainer for those eligible for strong CSR. The cheapest bronze plan at just under 200% FPL was $111, vs. $125 for cheapest silver.  The spread has thus widened from about $15 to just shy of $100. Migration is likely to be all the larger since in Cook County a relatively low share of enrollees with CSR have incomes under 150% FPL -- 30%, as opposed to 75% in Miami-Dade. That's because Illinois has expanded Medicaid, so eligibility for private-plan subsidies begins at 138% FPL rather than at 100% FPL. Ditto for Los Angeles, where 36% of CSR-eligible enrollees have incomes below 150% FPL.

In sum, in the ACA's largest current markets, free-to-cheap bronze is likely to lure a significant number of enrollees in the 150-200% FPL income range out of silver plans. This year, in HealthCare.gov states, over 80% of enrollees in this income range chose silver.  People in the 200-250% FPL range, of whom about 67% in HealthCare.gov states chose silver in 2017, should quite rationally migrate to either gold or bronze in large numbers. CSR enrollees with incomes below 151% FPL, who constituted 54% of enrollees with CSR in 2016, are likelier to stay put.

In a follow-up post, I'll look at how current CSR enrollees are distributed among these income groups in these 5 markets. Update, 11/7: Here's the followup post.

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*  These discounts are occurring because most states instructed or allowed insurers to load the unreimbursed cost of CSR, which is available only with silver plans, onto silver plans only. Since income-based premium subsidies are keyed to the benchmark (second cheapest) silver plan in each rating area, bronze and gold plans are now available at a discount, as subsidies have risen to cover the inflated cost of silver.

** The enlarged price spread between bronze and silver plans will in some cases be somewhat mitigated by what might be called a "CSR discount." This occurs when the cheapest silver plan in an area significantly undersells the benchmark (second cheapest) silver plan, against which subsidies are set. The larger the spread, the bigger the discount.  Instead of paying $125 per month for a silver plan with a deductible likely to be in the $500-1000 range, a person with an income of $23,000 might pay $100, or $80 -- or even, in one wacky case in California, $1. Large cheapest-silver-vs.-benchmark spreads are fairly rare, though.

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