Wednesday, March 28, 2018

A downside to silver loading: CSR takeup drops in Maryland

note 3/30 updated at bottom.

Maryland is one state that experienced beneficial effects from Trump's cutoff of federal funding for Cost Sharing Reduction (CSR) subsidies. In Maryland, insurers concentrated the cost of CSR into silver plans offered on-exchange only, creating dramatic discounts in gold and bronze plans for many subsidized buyers, as well as cheaper off-exchange silver plans for the unsubsidized (who nonetheless were stung by super-high premium increases). In January, I reviewed the bounty available to subsidized buyers:
Throughout the state, all subsidy-eligible* enrollees with incomes below 200% of the Federal Poverty Level (FPL) could obtain an bronze plan for under $20 per month. Most at this income level -- e.g., everyone over 30 -- could get a bronze plan for under $4 per month. In the state's most populous counties, subsidy-eligible buyers could get a gold plan for just a few dollars more than a silver one.  And in several rural counties, an enormously expensive benchmark (second cheapest) silver plan, which determines subsidy size, rendered silver and gold plans as well as bronze plans free for many enrollees.
Probably as a result of those discounts, subsidized enrollment in the state increased slightly over 2017, despite the shortened enrollment period and sharply reduced advertising and enrollment assistance funding from the Trump administration (overall enrollment was down slightly). Gold plan selection almost quadrupled.

Those were the benefits. But there was a downside as well. CSR,  available only with silver plans, makes silver plans roughly equivalent to platinum for enrollees with incomes up to 200% of the Federal Poverty Level (FPL). Among enrollees with incomes below that threshold, as with higher income enrollees, silver selection dropped significantly.

Today the Maryland Health Connection sent me a breakout of metal level selection by income for 2017, to go with the 2018 numbers they supplied in January.  Below, I've extracted the percentage changes in selection of each metal level among those eligible for CSR. Note aggregate numbers for all groups up to 200% FPL. At 200-250% FPL, CSR is available but negligible.  Switching to discounted gold and bronze makes sense for many in that income range.

Not surprisingly,  given the discounts in bronze and gold, there was a sharp drop-off in selection of silver plans in 2018. That makes sense for enrollees with incomes over 200% of the Federal Poverty Level. For them, the discounts in bronze and gold plans meant more actuarial value for their money. That's true for people in the 200-250% FPL bracket as well as for those at higher income levels.

But silver selection also dropped for lower income enrollees, those with incomes up to 200% FPL. For those buyers, the value of silver plans, enhanced by CSR, remains roughly equivalent to that of platinum plans. Gold plans below that income threshold have a lower actuarial value than silver plans, and in Maryland they remained more expensive than silver in most counties, a few rural ones excepted.

In the populous counties (e.g., Montgomery, Baltimore, Baltimore City) the cheapest silver plan, from Kaiser, has a $0 deductible and a $2400 out-of-pocket max. The two cheapest gold plans, also from Kaiser, are modestly more expensive and have deductibles of $1500 or $1000 and an OOP max of $6850. It's disturbing that gold selection went up more than 8 percentage points among those with incomes up to 200% FPL -- over 6,000 enrollees with incomes under 200% FPL bought gold.

While bronze plans were all but free to most buyers with incomes up to 200% FPL, their deductibles in Maryland range from $5500 to $6500, rendering them of limited value to most low income enrollees. Bronze selection rose four percentage points for enrollees with incomes up to 200% FPL in 2018.

CSR takeup was extraordinarily high in Maryland in 2017 -- 92% among those with incomes up to 200% FPL, about seven points higher than in the 39 states using Not knowing that in January, I had assumed a more modest drop-off in CSR takeup in Maryland in 2018 than the 13-point drop highlighted above. If CSR takeup had remained at 2017 levels, another 9,400 enrollees would have accessed plans with strong CSR.

A couple of anomalies should be noted in Maryland data. First, a high percentage -- 25,000, or about 1/6 of all enrollees in 2018 -- have incomes under 138% FPL, which qualifies citizens in Maryland for Medicaid. The exception is legally present noncitizens subject to the federal "5-year bar" for Medicaid eligibility: they are eligible for premium subsidies in the marketplace. Their percentage of the whole seems high.

Second, total enrollment listed for 2017 is about 17,000 above the total reported at the end of open enrollment. That suggests that rather than the usual attrition, enrollment in Maryland grew at some point during 2017.  I need to get clarification on that.

Here is the full breakout of metal level selection for the two years as supplied by the exchange. Enrollee decisions at higher metal levels are probably also worth a look. That's for another day.

  Metal Level Selection by Income - Maryland, 2017

FPL 2017CatastrophicBronzeSilverGoldPlatinumGrand Total
<100 td="">24512169581392217655
>=100 & <=1382253711832582012469
>138 & <=1502776310122591110982
>150 & <=2001153877331313825437559
>200 & <=2502704696167827448522577
>250 & <=300486395580278087313349
>300 & <=40051648788914115711615581
Grand Total4424316111293008301917174553

       Metal Level Selection by Income - Maryland, 2018

UPDATE, 3/3/18: David Anderson pointed out to me on Twitter that in states where gold plans are cheaper than silver (because of silver loading), gold can in some circumstances make sense for enrollees under 200% FPL. That's true in some states, but not in Maryland. Throughout the state, there were just two menus of plan offerings, both briefly described above. In the most populous counties, covering 90% of enrollees, Kaiser offered cheapest bronze, silver and gold. Cheapest silver was cheaper than cheapest gold and had a zero deductible, vs. $1500 for gold (or $1000 for a slightly more expensive gold plan); MOOP was $2400 vs. $6850. In the rural counties, it's true that a gold plan was literally pennies less than a silver one for buyers under 200% FPL ($1.85/mo vs. $2.25 for a 29 year-old with an income of $23k). But the same basic contrast of deductible/MOOP obtained -- $0 deductible vs. $1000, $2250 MOOP vs. $6500.

One caveat: some enrollees with incomes under 200% FPL could be unsubsidized, in which case gold would make sense. Maryland has a weirdly high enrollment population under 138% FPL, given that it's a Medicaid expansion state. In 2017, however, some 30,000 enrollees under 138% FPL had a silver selection rate over 95%. That was down to about 81% in 2018.

And a final thought: Per my prior post on the costs of restoring federal CSR funding: about 30,000 enrollees in Maryland with incomes in the 200%-400% FPL range got discounts on bronze and gold plans in 2018. The roughly 6000 enrollees under 200% FPL who bought gold (mistakenly, if they were subsidy eligible) need to be considered in that context.

1 comment:

  1. Just curious, how can a Silver plan have a $0 deductible? I quote plans all over the USA and have never seen this. In fact I thought it was illegal.