Silver loading yields some gold dividends in Kansas

Quick: what changed in the Kansas ACA marketplace in 2018, besides a shortened enrollment period?

Metal Level Selection in Kansas, 2018 vs. 2017

2018

	Bronze	Silver	Gold	Catastrophic	Total
% of total enrollment	28%	50%	21%	1%	100%
Number enrolled	27,867	48,679	20,765	927	98,238

2017

	Bronze	Silver	Gold	Catastrophic	Total
% of total enrollment	26%	65%	8%	1%	100%
Number enrolled	25,412	64,735	7,816	817	98,780

Yup. For two thirds of enrollees, the cheapest gold plan was cheaper than the cheapest silver -- the exceptions being those in Johnson and Wyandotte counties (adjacent to each other), together home to two thirds of the state's marketplace enrollees.* Hence gold enrollment nearly tripled statewide, whereas gold takeup was half the statewide total in Johnson County (10.5%) and one third in Wyandotte (6.5%).*


The discounts in gold (and bronze) stemm from Trump's cutoff of federal reimbursement of insurers for the Cost Sharing Reduction (CSR) subsidies they are obligated to provide to qualifying enrollees. Kansas allowed insurers to concentrate the cost of unreimbursed CSR in silver plans only, resulting in discounts for subsidized enrollees who selected gold and bronze plans. See the note at bottom for a fuller explanation.

Now for a look at how metal level selection shook out at different income levels in Kansas.

Metal Level Selections at Different Income Levels in Kansas  (% 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	11%	20%	33%	44%	46%	48%	60%	28%
silver	84%	66%	31%	19%	13%	21%	12%	50%
gold	5%	14%	35%	39%	38%	22%	26%	21%

2017

                              Strong CSR            Weak CSR     No CSR

Metal level	100-150%	150-200%	200-250%	250-300%	300-400%	Other	Total
bronze	10%	18%	30%	44%	45%	45%	26%
silver	89%	79%	59%	39%	34%	27%	65%
Gold/cat*	1%	3%	11%	17%	22%	28%	9%

Source: Public Use Files, 2017 and 2018. See note at bottom regarding differences in the way income categories are defined in the 2017 and 2018 PUFs.

Some observations:

1. Bronze selection is high, but it ticked up only modestly since 2017. Most of the move away from silver is to gold.

2. Up to 200% FPL, silver plans have a higher actuarial value than gold: 94% for those with incomes up to 150% FPL and 87% for those in the 150-200% FPL range, versus 80% for gold. Nonetheless, for many in the 150-200% FPL the discount on the cheapest gold plan was enough to offset the lower FPL. 

For a solo 40 year-old with an income of $24,000,just under 200% FPL, the cheapest gold plan in Sedgwick County was $87 per month, versus $126 for cheapest silver (the plans have the same provider network). The silver deductible was $750, vs. $1500 for the gold, and the yearly out-of-pocket maximum (MOOP) was $1500, compared to $3500 for the gold. At both levels, doctor visits and generic drugs were not subject to the deductible. For a healthy person, the lower gold deductible was not a terrible bet. And at 201% FPL, gold vs. silver becomes a no-brainer, as AV for silver drops to 73%, raising the deductible to $2750 and MOOP to $5800. The choice menu in Sedgwick, the county with the second-most enrollees, is representative of much the state.

3. Bronze plans were free for many enrollees. In Sedgwick County, for a solo enrollee, the cheapest bronze plan was free up to (and a few hundred dollars beyond) these income levels at various ages:

• $25,000 for a 40 year-old
• $29,000 for a 50 year-old
• $33,000 for a 55 year-old
• $37,000 for a 60 year-old

4. That free plan has a deductible of $6500.  Other than the free preventive care and screenings mandatory for all ACA-compliant plans, all services are subject to the deductible. For $2 per month, a bronze plan is available in which generic drugs are not subject to the deductible. Another bronze plan has several core services not subject to the deductible, but its premium is within a few dollars of the cheapest gold plan. Bronze plans offer pretty much just catastrophic coverage to most enrollees Kansas (as in much of the country). Yet 28% of all enrollees, and almost half of enrollees with incomes over 200%,  FPL selected them.

Johnson County, the most populous county in the state, does have a bronze plan in which doctor visits and generic drugs are not subject to the deductible. For an unsubsidized 40 year-old, it's $47/month more expensive than cheapest bronze, and $75/month cheaper than the cheapest silver. So it is a conceivable choice.

5. While overall enrollment was down very slightly in Kansas in 2018 (98,238 vs. 98,780, gold enrollment was up by almost 13,000. That's pretty much a pure gain stemming from Trump's cutoff of federal reimbursement from CSR -- though perhaps most of the 1661 gold enrollees with incomes up to 150% FPL should have stayed in silver, as well as some of the 2699 in the 150-200% FPL range. In addition, bronze plans were cheaper for subsidized buyers because of the cutoff.

*          *          *

* The higher gold plan selection in Johnson than in Wyandotte is probably attributable to Wyandotte's higher percentage of enrollees with incomes ranging from 100-200% of the Federal Poverty Level (FPL). Those enrollees  are eligible for strong Cost Sharing Reduction, which is available only with silver plans. In Wyandotte, 62%  of enrollees have incomes in that range, vs. 43% in Johnson.

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.

Note on Income Categories in the PUFs

While CMS broke out gold enrollment by income level in the 2018 PUF, presumably to highlight the effects of silver loading, it did not do so in prior years. In 2017, just 817 enrollees in Kansas -- less than 1% -- enrolled in catastrophic plans, and there were no platinum plans available in the state. In the first chart above, in 2017, catastrophic enrollment could make up as much as a quarter of the "gold/cat" category in "other" income; it probably shaves no more than a point off the gold percentage in other income categories (perhaps two points at 300-400% FPL).

In 2017, 12% of KS enrollees were in the "other" category, about 2/3 of whom did not report income. The rest is 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 the state's enrollees under 100% FPL are subsidized; perhaps a roughly similar proportion can be assumed in other states. Those who are subsidized below 100% FPL are  legally present noncitizens time-barred from Medicaid, the only group eligible for marketplace subsidies below that threshold. In Kansas, low silver selection in  in the 'other' category suggests that most are over 400% FPL.