Monday, January 08, 2018

Maryland ACA enrollment spotlights effects of Trump's CSR sabotage

Maryland announced late last week that its ACA marketplace enrollment for 2018 totaled 153,571, down 2.6% from 2017 -- a good result, given the shortened enrollment period, radically cut federal funding for enrollment outreach and advertising, and general confusion generated by administration sabotage.

Maryland reports, further, that African-American enrollment was up 12 percent, Hispanic enrollment up 10 percent, and enrollment in rural areas up around 10 percent. Those increases suggest that enrollment drop-off may be concentrated in the unsubsidized population, which has historically been high in wealthy Maryland -- 25% of on-exchange enrollment in 2017, compared to 16% nationwide.

That makes sense, considering that in Maryland a) premiums soared a weighted average 43.8%, according to Charles Gaba's blog, with much of the hike attributable to Trump's cutoff of CSR reimbursement, and b) Maryland insurers concentrated the added cost of CSR on on-marketplace silver plans, with cheaper silver plans available off-exchange.  Thus some unsubsidized 2017 enrollees may have been priced out by huge premium increases, and some may have moved off-exchange to find somewhat cheaper plans.

Steep as the average premium hikes were, the increase in the federal government's subsidy bill was even steeper, and that's worth looking at more closely:
For this month, 121,400 Marylanders will receive a total of $63.9 million in federal tax credits to lower their health insurance costs, equating to a savings of about $526 per household for the month. By comparison, last January, 94,858 Marylanders received a total of $29.8 million in tax credits, equating to average household savings of $314 for the month. Tax credits continue throughout the year.
A few notes about this:

1. That subsidy spike includes the cost of CSR, which until October 2017 the government reimbursed separately. In response to Trump's cutoff of CSR reibursement, CSR was priced directly into premiums, and so into premium subsidies.  In 2017, 57% of all Maryland enrollees and 75% of subsidized enrollees obtained CSR, which averages about $100 per month per enrollee nationwide,* or $75 per subsidized enrollee. So take that off the real difference in federal payments.

2. The cost of CSR is included in Gaba's 43.8% average premium increase, but the per-person subsidy increase is still way above that. The jump from $314 to $526 is a 67.5% increase (or about 35% if you factor in the likely cost of CSR in Maryland last year). Why? Two reasons (at least), as far as I can see:

a. Regardless of what happens to premiums, the enrollee's share of the cost of the benchmark silver plan is fixed, as long as income is constant (give or a take a couple of dollars for inflation adjustments). The government pays the whole difference in the cost of benchmark silver year-over-year, which means the percent increase in subsidy is higher than the percent increase in premium.

Take a rough hypothetical example that's fairly close to Maryland norms. A 2017 benchmark plan costs $400 per month, with a buyer paying $150.  In 2018, the benchmark premium goes to $560, up 40%. A buyer with the same income pays...$150. The subsidy rises from $250 to $410 -- a 64% increase.

b. At the same time, the benchmark silver plan in each area (2nd cheapest silver) likely went up more than 43.8% in much of the state. Louise Norris reports the average on-exchange silver plan increase for each of the participating insurers in the state:

  • CareFirst Blue Choice (HMO): 58.2 percent (versus the 60.1 percent average rate increase that CareFirst Blue Choice had proposed for on-exchange Silver plans)
  • CareFirst of Maryland/Group Hospitalization and Medical Services, Inc. (PPO): 76 percent (versus the 86.1 percent average rate increase that GHMSI had proposed for on-exchange Silver plans)
  • Kaiser (HMO): 43.4 percent (Kaiser initially proposed a 33.3 percent increase for these plans, but subsequently revised it higher to account for the expected migration of unsubsidized enrollees away from on-exchange Silver plans, since the price of those plans will be sharply higher. Maryland regulators noted that in Kaiser’s service area, Kaiser has the second-lowest-cost Silver plan..
Kaiser had 45% market share in the state, and its increases roughly jibe with our calculations above.  In populous regions where Kaiser participated, such as Montgomery County, it fielded both the cheapest and the benchmark silver plans, with a normal price gap ($20 per month for a 40 year-old) between them (with gold at a relative discount to the silver).

The huge premium increases in the Carefirst PPOs, however -- substantially steeper than the large increases in its HMOs -- led to some truly gargantuan subsidies in rural regions where the PPO is the benchmark silver plan. In Washington County, the cheapest silver plan is the CareFirst HMO, with a premium of $516 for an unsubsidized 40 year-old. The benchmark CareFirst PPO has a premium of $789 for the 40 year-old.

As David Anderson points out, that yawning silver gap creates major metal level arbitrage opportunities for rural county customers, explaining their increased enrollment. These bargains go far beyond the free bronze plans that CSR cutoff made available to large numbers of subsidy-eligible buyers nationwide. In Washington County, a single 40 year-old earning $24,000, the highest income at which strong Cost Sharing Reduction is available with silver plans, can get the cheap silver HMO for $3 per month -- compared to $110 per month for cheapest silver (from Kaiser) in Montgomery County. If she earns $25,000, an income at which CSR becomes almost negligible, she can get a gold plan for $2 per month. That partly explains the quadrupling enrollment in gold plans -- which were also available at a discount in regions dominated by Kaiser.

Maryland's results throw the effects of Trump's CSR sabotage into sharp relief: anomalous bargains for many subsidized buyers, a likely dropoff in unsubsidized enrollment, and a massive increase in government spending on the marketplace.

UPDATE: Two further posts on the Maryland marketplace, with new data:
Subsidized enrollment rose 2% in Maryland
Choosing a metal level in CSR-addled Maryland (breakout of metal level choice by income level)

* CSR may cost the federal government somewhat less per person in Maryland than nationwide, because Maryland has had unusually high enrollment in the weakest level of CSR, available to people in the 200-250% FPL income range -- at least through 2015, when I last checked.

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