Thursday, July 12, 2018

Some CMS-y data for the ACA marketplace

The Public Use Files for ACA marketplace enrollment published annually by CMS provide useful detailed breakouts of enrollment in various categories, but they're not error-free.

Having recently compared the rates at which subsidized and unsubsidized enrollees dropped out early in 2018 (mainly by never paying their first premium), I thought I'd look at the attrition rate for those who obtain Cost Sharing Reduction (CSR) subsidies. And I happned on a large error in the reported total of CSR enrollees in California.

According to the 2018 state-level PUF, 939,688 of California's 1,521,524 enrollees as of the end of Open Enrollment obtained CSR. That's a high but not impossible percentage. But...only 853,787 California enrollees are listed as having chosen silver plans. And CSR is available only with silver. I am told by Covered California, the state's ACA exchange, that CoveredCA submitted the incorrect data figure for that cell to CMS and is working to correct it.

I stumbled on this because the Effectuated Enrollment Snapshot of enrollment paid up through February 2018 lists CSR enrollment for California at 625,663. That would suggest that 314,025 (33%) dropped out -- impossible, as overall CA enrollment dropped by just 115,820 (7.6%), to 1,405,714.

So what was the initial CSR enrollment total? Statistics published by Covered California, the state's ACA exchange, provide a basis for estimate. According to CoveredCA's Active Member Profile for March 2018 (available here), total CSR enrollment was 633,380, or 78.3% of total silver enrollment, 808,770. Applying that percentage to the PUF's count of silver plan enrollees in CA (assuming attrition at equal rates among those with silver plans of all kinds) suggests CSR enrollment of 668,557 as of the end of Open Enrollment.

CMS's overcount of (probably) more than 270,000 CSR enrollees has a real impact on the national picture, as the erroneous count for California was added to the national total.  In fact national CSR enrollment (assuming no other major errors on this front) was likely about 6 million rather than 6.3 million ( 6,031,062 rather than 6,302,193, to continue my over-precise estimate), and CSR enrollment was 51.3% percent of total enrollment rather than 53.6% (or 54% as rounded by CMS in its Open Enrollment Period Final Report). That percentage is the lowest ever -- as was 54% -- and compares with 58% in 2017.

It would appear that discounts in bronze and gold plans lured a higher percentage of low income enrollees out of CSR-enhanced silver plans than has been recognized. Given the discounts in bronze and gold plans generated by Trump's cutoff of direct federal reimbursement to insurers for CSR (see note below), a switch out of silver was perfectly rational for enrollees with incomes in the 201-250% FPL range, where the CSR boost is negligible and gold and bronze plans were significantly discounted against silver. Silver selection plummeted in that income band, from 67.6% in 2017 to 53.4% in 2018, while gold selection doubled to 10% and bronze selection rose from 27.1% to 36.5%. Silver selection also fell off a bit in the 151-200% FPL income band, where CSR is much stronger and silver plans are worth considerably more than gold. I've charted those shifts here.

Also contributing to the overall drop in CSR enrollment: as I noted recently, enrollment dropped more steeply at the income levels where strong CSR is available (100-200% FPL) than at the upper range of premium subsidy eligibility (201-400% FPL). At the higher income levels, the discounts in gold and bronze plans made marketplace offerings more attractive than they'd been in past years, whereas for those eligible for strong CSR, it was pretty much status quo ante in terms of offerings.

Update, 7/12: While CSR enrollment was down to 51% of total enrollment as of the end of OE, it was back up to 53% in the effectuated enrollment report, i.e. as of February. That's probably because attrition was concentrated in the unsubsidized.

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.

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