Thursday, July 12, 2018

No, CMS, ACA marketplace enrollment isn't up this year, and doesn't justify navigator funding cuts

To justify gutting funding for the navigators who help low income people enroll in health insurance subsidized by the ACA (Medicaid as well as marketplace), CMS is turning a bogus talking point it concocted last year inside out. Here's the current claim, as reported by KHN's Phil Galewitz:
CMS also notes that after last year’s navigator funding was reduced, the overall enrollment in Obamacare plans increased slightly (when counting people who paid their first month’s premiums) to 10.6 million people.
Comparing 2017 and 2018 totals at the end of open enrollment  (before many enrollees have paid their first premium), total ACA marketplace enrollment was down 4% this year. CMS's comparison above uses the totals from the "effectuated enrollment snapshots" from 2017 and 2018, which tracked how many people were enrolled (and had paid their first premiums) as of February in each year. The reported total at that point was 10.3 million in 2017, vs. 10.6 million this year.

As Charles Gaba pointed out last year (and revisits here), however, the 2017 "snapshot" exaggerated early attrition by failing to take into account the fact that those who enrolled between 1/15 and 1/31 (the final day of OE in 2017) did not have payments due until March 1.  There were 539,352* enrollees in that time frame.  None of them could effectuated their coverage for February, which is the population counted in the "snapshot." If those enrollees effectuated coverage at the same rate as enrollees before 1/15 (88.5%), there were 10.8 million who had effectuated or would soon effectuate as of the time of CMS's tally. That total outstrips this year's by 2% .**

So what? In one sense this doesn't matter, leaving aside that last year CMS talked up early enrollment attrition*** even as their methodology exaggerated it (the real dropout percentage as of February was about 11.5% as opposed to the 15.5% their numbers implied). Enrollment this year was either slightly above or slightly below that of 2017 -- in fact, slightly below, though early attrition was lower this year.

But in another sense, it matters a lot. The Trump administration did everything it could to depress admission this year: radically cut advertising as well as enrollment assistance; denigrate ACA programs and (via Trump himself) declare them dead; keep insurers in suspense over Cost Sharing Reduction (CSR) reimbursement, then cut it off -- all while a Republican Congress came within a whisker of repeal. As it turned out, the most egregious act of sabotage -- the CSR funding cutoff -- had a paradoxical though long-predicted effect, as priced-in CSR, concentrated in silver plans, created large discounts for subsidized buyers in bronze and gold plans (see explanation in note below). About 2 million enrollees took advantage of those discounts, which likely increased enrollment by several hundred thousand, partly offsetting the effects of sabotage efforts that included the prior round of cuts to navigator funding.

CMS is thus effectively using the "CSR backfire" to justify cutting federal funding for navigators to a negligible $10 million -- down from $36 million last year and $63 million the year prior -- which will hurt low income prospective enrollees. At the same time, they're repurposing last year's lowballing of effectuated enrollment through February to take credit for the relatively good 2018 enrollment totals they did everything in their power to depress -- touting 2018 as "our most cost effective and successful open enrollment to date." That's governance under Trump.

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*   See Sheet 4 in the 2018 state-level public use file
** In 2018, about 65,000 people enrolled after 1/15, according to Charles Gaba's estimate
*** The 2017 snapshot emphasizes in the first paragraph, "It is important to note that this number is significantly lower than the 12.2 million (-1.9 million) individuals, as reported in the March Open Enrollment Report." Again, they exaggerated the attrition by almost 500,000.

Note: How Trump's CSR funding cutoff created discounts for subsidized enrollees

To review briefly: 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. Nearly 2 million enrollees with incomes in the 200-400% FPL range obtained discounted gold or bronze plans.

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