Friday, June 08, 2018

When ACA marketplace coverage is cheaper than Medicaid

In my last post, I noted that thanks to Virginia's decision to expand Medicaid, a bit over 100,000 current enrollees in the state's ACA marketplace (or people similarly situated next year) will be switching over to Medicaid in 2019.  Also, since the Republican-tinged expansion terms include premiums ranging from $1/month to 2% of income for people in the 100-138% FPL, some of these people will actually pay more for Medicaid coverage than they do now for marketplace plans.

David Anderson covered this ground in more detail:
A single 40 year old making 138% FPL who buys the benchmark Silver plan pays 2% of their income in premiums which translates to $28 per month. People who expect to be relatively healthy will often elect to buy the least expensive Silver. The APTC subsidy is fixed so the choice to buy a lower cost Silver plan means the a dollar for dollar reduction in out of pocket premiums. Significant portions of Virginia including greater Richmond, exurban NoVA and central Virginia between I-81 and I-95 have a Silver plan that is at least $28 less than the Benchmark Silver. This means that there is a $0 premium plan available for folks who will now be moving to Medicaid with a 2% premium.
A couple of points of elaboration: first, not everyone in the 100-138% FPL income band (the group that has been eligible for marketplace subsidies pre-expansion) will pay 2% of income. Second, a lot of people in this income range currently pay less than 2% of income but more than $0.  Some have $0 deductibles; some have small ones ($150). Yearly out-of-pocket maximums range from $900 to $2000 -- I imagine maximum OOP at least will be lower in Medicaid.

Let's go to the tape -- that is, CMS's  PUF files for 2018 -- and look at six Virginia counties that together are home to the just under half of Virginia enrollees who enrolled for 2018 in silver plans with the highest level of Cost Sharing Reduction, which boosts the actuarial value of a silver plan to 94%. These enrollees all have incomes under 150% FPL, and about 80% of them have incomes in the 100-138% FPL, which means that in 2019 they'll qualify for Medicaid, not marketplace subsidies.

Shows how many enrollees in top six VA counties have silver plans with AV 94%

Now let's look at what a 40 year-old with an income of $16,000 -- just under 138% FPL -- pays in the marketplace for the cheapest available silver plan this year, and what she gets for the money. As Anderson notes, she'll pay about $28 for benchmark (second cheapest) silver.

Here's the cheapest plan available in Fairfax and Prince William counties (courtesy of HealthSherpa, which makes it easiest to compare prices by changing a single term, such as zip code or income):

Shows cheapest silver plan for low income enrollee in Fairfax County VA

Here's the deal in Virginia Beach:

shows cheapest silver for 40 year old earning $16,000

And here's what's on offer in Henrico, Chesterfield and Richmond City counties (yes, there does appear to be a county called "Richmond City").

shows cheapest silver plan for 40 year old at $16,000 in Richmond

Premiums range from $0 to $17 per month; deductibles, $0 to $150; OOP max, from $900 to $2000. I wish I had the managed Medicaid plan terms to compare with these [update below]. I imagine they don't exist yet. I wonder, too, whether Medicaid managed care insurers are better at steering enrollees to in-network providers; presumably they have a lot of experience in this. On the other hand, marketplace enrollees don't have to deal with work requirements and their documentation.

120,898 Virginians enrolled in silver plans with this level of CSR in 2018; about 80% of them should be Medicaid eligible. The six counties spotlighted above enrolled 58,962 of them. For perspective, the Medicaid expansion is expected to add about 400,000 people to the Medicaid rolls.

P.S. At these low price points, age does not have a very large impact on premiums.

UPDATE, 6/10: Re the question of how out-of-pocket costs in Medicaid for those above the poverty level may compare to marketplace OOP for those with the highest level of CSR: Louise Norris points out that OOP is capped at 5% of income annually, or $800 at an income of $16,000.  Emma Sandoe provides documentation from, noting also that a state could seek a waiver to exceed these limits. Perhaps implicit: under a Trump HHS/CMS, which has invited work requirements in Medicaid, such a waiver request might be looked on favorably.

Virginia Medicaid expansion will cut marketplace enrollment by 100,000-plus
Virginia's CSR load will be cut by more than half in 2019

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