Thursday, July 26, 2018

Covered California's silver loading enrollment boost mirrors HealthCare.gov's

Recently I noted that 2018 enrollment losses among subsidized buyers on HealthCare.gov were concentrated at lower income levels, i.e., 100-200% of the Federal Poverty Level(FPL). At the upper range of subsidy-eligible incomes, 200-400% FPL, enrollment actually rose slightly -- or more precisely, dropped very slightly at 200-300% FPL, and rose significantly at 300-400% FPL.

The reason is not hard to find. Discounts in bronze and gold plans generated by Trump's cutoff of direct reimbursement to insurers for Cost Sharing Reduction (CSR) subsidies, available only with silver plans, made marketplace offerings more attractive to those in the 200-400% FPL range than in past years (see note below for an explanation of how this worked). For enrollees in the 100-200% FPL range, in contrast, CSR remained strong enough to outweigh those new discounts in other metal levels, so the marketplace value proposition remained more or less status quo ante. On HealthCare.gov, the percentage of enrollees in the 100-150% FPL income range who selected silver plans actually rose slightly, to from 89% to 90%, while at 150-200% FPL silver selection shrank fairly modestly, from 83% to 78%.

For enrollees in the 200-400% FPL range, improved affordability in metal levels other than silver seems to have largely offset the effects of a shortened enrollment period, radically reduced federal spending on marketing and enrollment assistance, confusion sewn by Trump's declaration that the ACA is dead, and pending repeal of the individual mandate (not effective until 2019 but very much in the news before and during open enrollment).  The 7.5% enrollment drop at the 100-200% FPL income level shows the more or less full imprint of those factors.

California's ACA marketplace, Covered California, is an alternative universe where different results might have been expected. In California, the marketing commitment remained strong, plan designs are standardized, regulatory oversight and competition are robust, premium increases in the last two years were about half the national average, and a highly structured silver loading strategy was put in place early and publicized.  Consequently, effectuated enrollment on Covered California as of March 2018 is up 4% over March 2017, whereas enrollment in the country as a whole is down 2%.*  Off-exchange enrollment stayed steady in California, whereas it dropped 20% nationally in 2017, according to CMS, and likely further in 2018, as unsubsidized enrollees bore the full brunt of premium hikes that reached about 50% in two years.

Nonetheless, subsidized enrollment in California shows a similar pattern to subsidized enrollment on HealthCare.gov. While the year-over-year change is better for California at every income level, showing improvement in all but one (150-200% FPL), the pronounced enrollment performance gap between those eligible for strong CSR and those who are not (and to whom gold and bronze discounts were therefore more consequential) more or less mirrors the gap in the HealthCare.gov.

Here is the over/under 200% FPL enrollment performance among the subsidized in the two markets.

Subsidized enrollment by income range, 2017 vs. 2018

39 HealthCare.gov states

Year
100-200% FPL
200-400% FPL
2017
5,258,797
2,851,601
2018
4,865,014
2,891,851
Change 2017-2018
-7.0%
+1.0%


California

Year
138*-200% FPL
200-400% FPL
2017
642,910
564,370
2018
635,180
602,000
Change 2017-2018
-1.0%
+6.7%

* In Medicaid expansion states such as California, eligibility for marketplace subsidies begins at 138% FPL, as Medicaid is available to adults with incomes below that threshold. In 18 nonexpansion states using HealthCare.gov, marketplace subsidy eligibility begins at 100% FPL, and nearly 2 million enrollees are in the 100-138% FPL range.

In the two markets, the spread between enrollment change above and below the 200% FPL threshold is nearly identical. In both markets, it would appear that inflated silver plan premiums and subsequent non-silver discounts boosted enrollment in the 200-400% FPL income range by about 8%.

It did so in two ways. First, via the aforementioned discounts in non-silver plans. In California, gold plan enrollment among those in the 200-400% income range more than doubled, from 39,640 to 91,310; bronze enrollment also increased at the expense of silver. Gold plans in LA's two rating areas were not cheaper than silver, but they were close in price; in some markets, gold was cheaper (see this post for a sampling)

Second, steep premium hikes rendered many people with incomes under 400% FPL who were previously ineligible for subsidies subsidy-eligible.  At 300-400% FPL, subsidies become available if the benchmark silver plan premium exceeds 9.56% of the buyer's income; at 250-300% FPL, if it exceeds between 8.1% and 9.56% of income (the threshold rises within that income range). The discounts in non-silver plans enhance the value of newly available subsidies.

In California in 2018, subsidized enrollment in the 250-400% FPL income range rose 9%, from 325,500 to 355,270, while unsubsidized enrollment in that income range fell 9%, from 8,480 to 7,640.

On Covered California as on HealthCare.gov, CSR takeup dropped modestly among those with incomes up to 200% FPL, the threshold for "strong" CSR. At 138-150% FPL, silver selection dropped from 90% to 88%, and at 150-200% FPL, it dropped from 78% to 74%. Gold and platinum took up much of the slack: at 150-200% FPL, gold selection rose from 2% in 2017 to 5% in 2018, and platinum went from 1% to 2%. Again, the near-flat enrollment in this nearly stable environment gives an indication of what overall enrollment might have been had there been no discounts stemming from the CSR funding cutoff.

Here is a breakout of enrollment change by income level in the two markets, 2017-2018 (forgive the formatting difference; perhaps I'll come back and remake the hc.gov chart).

Enrollment by income level, 2017 vs. 2018

HealthCare.gov 

Year
Total enrollment
≥100% to ≤150% FPL
>150% to ≤200% FPL
>200% to ≤250% FPL
>250% to ≤300%  FPL
>300%- ≤400%  FPL
Other FPL*
2017
              9,201,805
       3,208,242
                        2,050,555
         1,312,520
       752,403
   786,678
     1,091,407
2018
              8,743,642
       2,979,236
            1,885,778
         1,277,488
       747,165
   867,198
            986,777
Change
-5.0%
-7%
-8%
-3%
-1%
+10%
-10%


* "Other FPL" is comprised mostly of unsubsidized enrollees. About one quarter are likely enrollees with incomes under 100% FPL, most of whom are likely legally present noncitizens time-barred from Medicaid, who are subsidy-eligible.


California
by percent of FPL

Year
total
0-138%
138-150
150-200
200-250
250-400
> 400
Unsubsidized application
2017
1,389,740
38,360
215,390
427,520
230,390
333,980
57,160
86,940
2018
1,437,410
38,580
216,700
418,480
239,090
362,910
61,030
82,530
Change
+4%
+1%
+1%
-2%
+4%
+9%
+7%
-5%

A few observations:

In both markets, the sharpest drop among the subsidized is at 150-200% FPL, where CSR-enhanced silver coverage is both more expensive and less comprehensive than it is for those up to 150% FPL. The steepest rise is in the highest bracket of subsidy eligibility, where more people became subsidy eligible this year.

In California, gains among those who reported an income over 400% FPL almost exactly offset  losses among those who did not apply for subsidies, indicating that more people were close enough to subsidy level to report income. Those who do so can report an income change if income drops and so become subsidy-eligible.

The flat enrollment in the combined over-400% FPL and "unsubsidized application" categories mirrors Covered California' reporting that enrollment is basically flat off-exchange. That achievement is all the more impressive compared to the 10% drop in the "other FPL" category on HealthCare.gov, which is mostly composed of the unsubsidized, and in light of CMS's report that off-exchange enrollment fell 20% in 2017.

Note: how Trump's CSR cutoff generated bronze and gold plan discounts

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 also allowed insurers to sell cheaper silver plans off-exchange, with no CSR cost attached.

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 came within reach of many in this income range. Gold plan selection more than tripled in Pennsylvania and Maryland, for example.

-------------
* In 2018, attrition from the end of open enrollment to the March tally of effectuated enrollment was less than in 2017 on both HealthCare.gov and CoveredCA.  At the end of open enrollment, plan selections in the country as a whole were down 4% from 2017 and up 3% on CoveredCA.


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