Rational choice in the ACA marketplace, Pennsylvania 2018 edition

Pre-script: Looking again at the first chart below, I fear this was one of my bury-the-lead days. In the three income brackets ranging from 200-400% FPL -- subsidized enrollees not eligible for strong CSR -- 42% bought gold plans. Forty-two percent! That is back-door CSR, statewide -- a significant boost in value available to those at the upper end of subsidy eligibility.
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While unsubsidized buyers of health insurance in Pennsylvania's individual market suffered from rate hikes north of 30%, subsidized enrollees got all kinds of  bounty as a result of the state's decision to "silver load" the cost of Cost Sharing Reduction (CSR) subsidies. That is, once Trump cut off federal reimbursement to insurers for CSR, Pennsylvania insurers priced it in to silver plans only, generating discounts in other metal levels  (see note at bottom for an explanation).

In the state's most populous counties, the individual insurance market is dominated either by Independence Blue Cross (Philadelphia and surrounding counties), Geisinger (e.g., counties just to the west of the Philly region) or UPMC (e.g., Allegheny, including Pittsburgh). Thanks to silver loading, Geisinger and UPMC offered gold plans that were cheaper than the cheapest silver available. Independence Blue Cross offered a gold plan that was priced a more or less normal range above the cheapest silver. But as explained in my previous post, thanks to a huge gap between the cheapest silver plan and the benchmark silver plan, that gold plan was free or very low cost to many subsidized buyers.

In fact in all counties except those clustered near Philadelphia and served by Independence BC, the cheapest gold plan was cheaper than the cheapest silver. And in Philly and the surrounding counties, the cheapest gold plan was cheaper than the benchmark silver plan, and so heavily discounted, as subsidies are set against the benchmark. (David Anderson has mapped cheapest gold vs. cheapest silver prices in all counties nationally here; you can select a Pennsylvania-only view.)

As a result, gold plan enrollment more than tripled in Pennsylvania in 2018. Enrollment in bronze plans, which were free to everyone over 30 with an income of $30,000 in large swaths of the state, more than doubled.

Silver plan selection among those eligible for CSR, which is available only with silver plans, has historically been very high in Pennsylvania; it dropped substantially in 2018. In the 200-250% FPL income range, where CSR is negligible, silver selection fell off a cliff -- quite rightly, given the bargains in gold and bronze.

Here is how metal level selection shook out by income in Pennsylvania in 2018 compared to 2017. CM S handled income categories slightly differently in the two years -- see the note at bottom for more information on this front.  All figures in this post are from state and county Public Use Files for 2018 and 2017.

Pennsylvania: Metal Level Selections at Different Income Levels (% FPL)

2018

                              Strong CSR      Weak CSR    No CSR

Metal level	100-150%	150-200%	200-250%	250-300%	300-400%	<100 nbsp=""> 400%	Un- reported	Total
bronze	4%	8%	13%	20%	23%	28%	41%	23%
silver	89%	78%	45%	35%	34%	47%	28%	57%
gold	6%	15%	42%	43%	43%	30%	22%	27%

2017

                              Strong CSR             Weak CSR      No CSR

Metal level	100-150%	150-200%	200-250%	250-300%	300-400%	Other*	Total
bronze	3%	5%	10%	14%	15%	27%	10%
silver	94%	91%	81%	69%	70%	58%	81%
gold*	2%	3%	8%	15%	13%	13%	8%

* Gold enrollment is estimated for 2017 (CMS broke it out in 2018, presumably to highlight the effects of silver loading). 1.3% of enrollees were in platinum and catastrophic plans. I assume that the percentage rises to about 2% at higher income levels.

It's noteworthy that silver selection dropped 14 to 15 percentage points in the 150-200% FPL income range, with most of the shift going to gold. In that income range, CSR-enhanced silver plans have an actuarial value of 87%, vs. 80% for gold. The starkest difference between gold and silver plans in this income range is in yearly maximum out-of-pocket (MOOP) costs, which are capped by law at $2450 for silver at this CSR level. Geisinger gold plans generally have MOOP of $7,350; UPMC's, $5,000.

For a 40 year-old with an income of $24,000 ( just under 200% FPL) in York County, the cheapest gold plan (from Geisinger) has a $0 premium but a deductible of $3,000. Silver is $18 per month with a $1,000 deductible. In Allegheny, at the same income level and age, gold is cheaper than silver ($106 per month vs. $119) and has a lower deductible ($800 vs. $1200), though a higher MOOP.

Here is how metal level selection shook out in the 11 Pennsylvania counties that had more than 10,000 enrollees,together representing 64% of total state enrollment. Counties in which the cheapest silver and gold plans are offered by Independence Blue Cross are marked in red; those where UPMC has cheapest silver and gold are in blue; and Geisinger territory (by the same measure) is in black.

Metal Level Selection by County (Enrollment over 10,000) - Pennsylvania 2018

In the southeast, gold selection is much lower than in the other counties, though still high by the standard of previous years, before Trump cut off federal CSR funding, inflating silver plan premiums in most states and therefore subsidies.  It's lowest in Philadelphia, probably because about 25% of enrollees in that county have incomes in the 100-150% FPL range, compared to about 16% in the surrounding Independence-dominated counties. Those with incomes up to 150% FPL are eligible for the highest level of CSR.

In general, the sharply altered metal level selection in silver-loading states in 2018 supports the premise that most marketplace enrollees get the most fundamental cost-related decision -- metal level -- right. While some enrollees eligible for strong CSR may have been lured in gold plans that provided less protection for the money than available silver -- or into bronze plans providing very little protection -- most seem to have responded rationally to discounts. And as the prior post indicates, even where silver seems the clearly superior choice, some may have good reasons for going for the gold.

A note on income categories 

In 2017, 15% of PA enrollees were in the "other" category, about 2/3 of whom did not report income, according to the "definitions" page of the Public Use Files. The rest is probably about evenly divided between those who reported income over 400% FPL and those below 100% FPL. In 2016, 3% of Healthcare.gov enrollees were under 100% FPL. That was the last year that this category was broken out separately. California reports that about 2/3 of enrollees under 100% FPL are subsidized.

In 2018, CMS separated those who reported income above 400%  FPL and below 100% FPL from those who did not report income at all -- but unfortunately, lumped those two income categories together. Silver plan selection is generally lower below 100% FPL than in the 100-200% FPL range because a significant number of enrollees under 100% FPL are unsubsidized. Those who are subsidized are legally present noncitizens who are time-barred from Medicaid -- the only category of people below the poverty line eligible for marketplace subsidies.

Note on Effects of CSR funding cut-off 

When Trump cut off federal reimbursement of insurers for the Cost Sharing Reduction subsidies they're legally required to provide to lower income ACA marketplace enrollees who select silver plans (57% of marketplace enrollees in 2017), most states allowed or required insurers to concentrate the cost of CSR in premiums for silver plans only. States in which 70% of individual market enrollees live concentrated the cost of CSR in on-exchange silver plans only, allowing for cheaper silver plans to be sold off exchange.

Since ACA premium subsidies are keyed to the price of the benchmark (second cheapest) silver plan in each rating area, subsidies rose to cover inflated silver premiums, generating often dramatic discounts in non-silver plans, i.e. gold and bronze (platinum availability and purchase is negligible). In many states, steep increases in silver plan premiums resulted in zero-premium bronze plans becoming available to many buyers (or nominal $1-3/month premiums), and gold plans that were either cheaper than silver or close in price.

Cheap gold plans were a particular boon to enrollees with incomes between 200% and 400% of the Federal Poverty Level (FPL). These buyers are not eligible for strong CSR, which makes silver plans roughly equivalent to platinum plans for buyers up to the 200% FPL threshold. Normally,  enrollees in the 200-400% FPL range would pay between 6% and 10% of their income (percentage rising with income) for a benchmark silver plan with an actuarial value of 70%, i.e. with an average deductible of around $3600). With CSR priced into silver plans in 2018, gold plans  (80% AV, with an average deductible of around $1100) came within reach of many in this income range.  Gold plan selection quadrupled in Maryland in 2018.

Related: A free silver plan with a $0 deductible: What' s not to like?

Update, 4/27: David Anderson makes better charts than I do. His quick take here.