NHIS puts individual market angst in perspective

The Kaiser Family Foundation reports that individual market enrollment dropped by about 2 million from the first quarter of 2017 to the first quarter of 2018. Medicaid/CHIP enrollment is down by about 1 million in the same period, to 73.8 million in April of this year (preliminary count*).

Together those reported drops, if accurate, would account for about 1% of the U.S. population under age 65.  Yet according to the preliminary results of the National Health Interview Survey (NHIS) for the first quarter of 2018, released this week, the uninsured population has not changed significantly since 2017.  In fact, the percentage of the total population that is uninsured has downticked from 9.1% to 8.8%, and among the under-65 population from 10.7% to 10.3%, though those changes are not deemed statistically significant.

Small enrollment shifts are not so small: Zooming in from the GAO's 30,000 foot view of the ACA marketplace

It struck me, looking at the big-picture breakouts of 2017-2018 enrollment in healthcare.gov states presented in the GAO report, that shifts that I have puzzled over under a microscope look small in aggregate.

Viewed the other way round, changes that look small in aggregate mask some significant shifts among enrollees in ethnicity, income and age. A few examples below, mostly from the healthcare.gov states that the GAO focused on (while exposing HHS's willful management failures). I'm leaving aside a not-so-small shift in metal level selection that I've pretty much beaten to death, e.g., yesterday.

1. Subsidized vs. unsubsidized enrollment 
                                                                                                   2017                                       2018        

A one-point drop in the overall share of enrollees who are unsubsidized doesn't sound like much. But viewed in itself, unsubsidized enrollment was down 9.7% on healthcare.gov in 2017, compared to 5% for all enrollment. For many of the unsubsidized, moreover, the sticker shock triggered by premium increases in excess of 30% seems to have struck late. Among the unsubsidized, effectuated enrollment in all states as of March 15 was a stunning 29% below the tally as of the end of open enrollment. For the market as a whole, the drop was 9.4%; for the subsidized, it was just 5.5%. Year-over-year, effectuated enrollment  among the unsubsidized for all states as of March was down 17% .

GAO highlights the silver load offset to HHS sabotage

The GAO's report on HHS's performance in managing Open Enrollment for 2018 on HealthCare.gov hits HHS hard for dereliction of its duty to maximize enrollment in the ACA marketplace. The report lambastes HHS for using bad data to gut navigator funding; for ignoring performance data while constructing a bogus rationale for gutting advertising; and for refusing to set enrollment targets that would enable the agency to target efforts where performance was lagging.

These failures, the report asserts in measured bureaucratese,

could affect HHS's ability to meet its objective, such as its objectives of improving Americans' access to healthcare.

Unspoken is that policies instituted by HHS leadership did advance Trump's goal: to highlight and exacerbate the flaws of a program created by Democrats.

The report also includes stats that highlight the effects of "silver loading" the cost of Cost Sharing Reduction (CSR) after Trump cut off direct reimbursement of insurers for that mandatory benefit, forcing them to price it into premiums. Since CSR is available only with silver plans, most states allowed insurers to price it into silver plans only. Since premium subsidies are keyed to a silver benchmark, silver loading increased subsidies, creating discounts in bronze and gold plans. Here is a graphic representation of the discounts thus created:

Alex Azar's poison pitch to the unsubsidized uninsured

Charles Gaba is out with a magisterial take-down of HHS Secretary Alex Azar's op-ed touting the Trump administration's promotion of  medically underwritten 'short-term" health plans (now with terms of up to 364 days, renewable twice) as a solution for those who have been priced out of the ACA marketplace.

Gaba points out that in decrying the high cost of ACA-compliant plans for the unsubsidized, Azar ignores:

• The extent to which various forms of Trump administration sabotage have driven the huge premium increases of the past two years.
• The premium growth trend in the pre-ACA individual market.
• The average actuarial value of pre-ACA plans compared to ACA-compliant plans.
• The likely impact of a barely-regulated short-term market on the ACA risk pool.
• The gross inadequacies of short-term plans now on the market.

I want to focus on two other major sleights of hand Azar indulges in. The first concerns the target market potentially served by short-term plans, and the second, the source of their affordability.

Tom MacArthur gutted ACA protections for people with pre-existing conditions. Can Andy Kim make the charge stick?

Axios offers an interesting first look at a battle that will play out in a lot of Congressional districts defended by Republicans who voted for the ACA repeal bill, the American Health Care Act (AHCA) as amended by Tom MacArthur (NJ-3).

Democrats will say the incumbent voted to gut protections for people with pre-existing conditions -- that is, the ACA rules forbidding insurers in the individual market to base premiums on an applicant's medical condition or history. Incumbents -- e.g. MacArthur, who introduced the amendment that opened the door to medical underwriting -- will say not so:

Sen. Heidi Heitkamp of North Dakota, one of the most vulnerable Democrats up for re-election this year, is out with a new ad that claims her opponent, Rep. Kevin Cramer, voted to gut protections on pre-existing conditions. Axios' Caitlin Owens has the lowdown:

• Naturally, Cramer doesn't like the ad. The North Dakota GOP accused Heitkamp of telling "repeated lies" about his stance on pre-existing conditions.

Good News in New Jersey: CMS approves state reinsurance waiver

Some good ACA news out of New Jersey: CMS has approved the state's reinsurance waiver proposal, designed to reduce premiums by 15% in 2019.

The bill mandating pursuit of this waiver was paired with a bill establishing a state individual mandate, which according to the state Dept. of Banking and Insurance reduced requested rate increases by about 7%.  Taken together, the mandate and reinsurance program will push 2019 premiums more than 20% below where they would have been absent these two programs and down an average of about 9% from this year. That in the wake of average increases of 22% for 2018.

It's worth tallying the various ways New Jersey has girded its individual market against Republican sabotage.  The state

Surprise! ACA marketplace sabotage hit the most vulnerable hard

I fear I buried the lead somewhat in yesterday's look at how ACA enrollment losses were distributed among income groups in states that refused the ACA Medicaid expansion.

The distribution in the 18 nonexpansion states that use HealthCare.gov looked a lot like the distribution in all 39 HealthCare.gov states -- not surprising, since 69% of HealthCare.gov enrollees are concentrated in those states -- a fact kind of astonishing in itself. But enrollment is inflated in nonexpansion states because, thanks to a lucky ACA drafting error, eligibility for subsidies in those states begins at 100% of the Federal Poverty Level (FPL), whereas in expansion states it begins at 138% FPL. Those below that threshold in expansion states are eligible for Medicaid.

As I did note in the prior post, fully 36%* of enrollees in nonexpansion states, about 2.2 million as of the end of Open Enrollment, have incomes that would qualify them for Medicaid if their states accepted the expansion (as Virginia has for 2019, and as Maine has, though still blocked by Governor LePage's obstruction). Within that population, or rather, within the somewhat wider 100-150% FPL band broken out by CMS, enrollment dropped 6% in those states in 2018. That's a loss mainly among people who should be in Medicaid, and who are likely to be uninsured if they pass up marketplace enrollment, and for whom the marketplace is a relatively affordable deal -- premiums capped at 2% of income for CSR-enhanced plans with a 94% actuarial value. (Ironically, the Medicaid work requirements imposed by some expansion states will likely uninsure more people than the cuts in enrollment assistance and outreach in the marketplace.)

More broadly, the relatively modest top line of ACA on-exchange enrollment loss in 2018 -- about 4% -- shouldn't blind us to the fact that the loss was close to double that among people with incomes in the 100-200% FPL range (7.5% in HealthCare.gov as a whole). For that population, the core marketplace offering hasn't changed much, although fixed actuarial values mean a bit more out-of-pocket expense every year, and reduced competition may reduce quality of choice in many markets.

Silver loading vs. sabotage in non-expansion states

This post continues the story of how, where and to what extent silver loading offset all the factors pushing ACA marketplace enrollment down in 2018: the shortened enrollment period, massive cuts to advertising and enrollment assistance, Trump screaming the ACA is dead, huge premium spikes turbo-charged by CSR cutoff and yearlong uncertainty, etc. etc.

In previous posts I noted that silver loading, which created discounts in bronze and gold plans for subsidized buyers (see note at bottom), seems to have boosted enrollment by about 8 percentage points in the 200-400% FPL income range, both in 39 HealthCare.gov states and in California.

Enrollment losses were concentrated first and foremost among the unsubsidized, off- and on-exchange, and next among those at the lower income range of subsidy eligibility (100-200% FPL), where the CSR benefit still outweighed the bronze and gold discounts. They were partly offset at 200-400% FPL, where negligible or no CSR is available, and where in many locations, the discounts created by silver loading meant more value for less money was on offer than in previous years.

Here we'll take a look at the 18 states using HealthCare.gov that had not accepted the ACA Medicaid expansion as of 2018* (one more expansion state, Idaho, has a state-based exchange, and the enrollment breakouts we're looking at here are not available there).

Unsubsidized on-exchange enrollment is also shrinking fast

Off-exchange enrollment in ACA-compliant plans is contracting sharply. The Kaiser Family Foundation reports that average monthly enrollment in off-exchange ACA-compliant plans was down 25% from 2016 to 2017. Further, all off-exchange enrollment (including in grandfathered and grandmothered pre-ACA plans) was down 38% from the first quarter of 2017 to the first quarter of 2018. It's not yet possible to break out the drop in ACA-compliant off-exchange plans alone, but it's likely close to that 38% top line.

Wow.  The Kaiser study also shows that the average individual market premium rose from $339 in 2016 to $490 in 2018 -- a 45% increase* over two years. That's driving a lot of unsubsidized people out of the market.

It's known, but has not been much emphasized, that the drop in unsubsidized enrollment through the ACA exchanges, is also sharp. Kaiser shows a drop from 1.6 million to 1.4 million in effectuated enrollment from March 2017 to March 2018. And as I noted recently, Kaiser chose not to estimate an undercount in CMS's report of effectuated enrollment in 2017 (the undercount is acknowledged in an endnote).

Did CMS just bless silver loading? Or prepare to end it?

Last week, CMS released a bulletin that openly invited insurers in the ACA-compliant individual market to offer off-exchange plans that are free of the CSR load:

To address increases in premiums of qualified health plans (QHPs) on account of the cessation of federal funding for cost-sharing reduction (CSR) payment to issuers, or “loading,” and its effect on unsubsidized enrollees, the Centers for Medicare & Medicaid Services (CMS) is encouraging states to allow Exchange issuers to offer individual market plans that do not include this load, and that will only be available outside the Exchange. Thus, CMS encourages the offering of unloaded silver plans outside the Exchange in states where the issuer has placed the load on silver QHPs on the Exchange, and encourages the offering of unloaded plans of all AV levels outside the Exchange in states where the issuer has placed the load on all AV level plans.

Psst, red states, want to destroy your ACA-compliant market? Set strict standards for short-term plans

Most discussion of the Trump administration's finalized rule allowing short-term health plans to be sold for a term of up to one year and renewed for up to three years spotlights not only the likely damage to risk pools in the ACA-compliant market, but also the dangers to enrollees posed by far-from-comprehensive insurance.

The Kaiser Family Foundation, for example, analyzed current short-term offerings available in 45 states. The report emphasized the impact of medical underwriting, exclusions for pre-existing conditions, medical loss ratios averaging 67% (and 50% for the two largest carriers) -- and the holes in coverage:

Of the short-term products offered on eHealth and/or Agile Health Insurance across all states, 43% do not cover mental health services, 62% do not cover services for substance abuse treatment (both alcohol and other drugs), 71% do not cover outpatient prescription drugs, and no plans cover maternity care. In seven states, none of these four benefit categories are covered in the short-term policies offered.

The plans on offer on eHealth.com do look pretty bad. I looked at one that does provide "prescription drug coverage" -- with a relatively low deductible of $1000 -- but with this caveat:

Covered after plan deductible when prescribed on an inpatient basis for a covered Injury or Sickness. Outpatient not covered; discount only.

As for the hospital where you have to get that covered drug prescription: benefits are capped at $1000/day.

When reading about such Swiss-cheese coverage, I've wondered: what if the federal government or a state required these medically underwritten plans to meet ACA standards, or something close to them? -- e.g., cover Essential Health Benefits, offer actuarial value of at least 60%, perhaps meet a minimum MLR of, say 75%? Or: what if insurers decided to take advantage of a new market opportunity and offer ACA-comparable plans in the noncompliant market?  Suppose they offered EHBs and a relatively high actuarial value, but with a yearly benefit cap?

I suspect that the public policy impact might be worse than under current rules, which allow plans to exclude pretty much whatever they want.

Unsubsidized, but in subsidy range, in the ACA marketplace

One useful feature of the ACA enrollment statistics published by Covered California: the state breaks out unsubsidized and subsidized enrollees in every income category.

Within ordinary subsidy range (138-400% FPL), the percentage of unsubsidized enrollees is appropriately small: 1.2% (15,170 out of 1,222,010).

The situation is different at very low incomes, 0-138% FPL, at which level people should be eligible for Medicaid, as California is an expansion state. The exception is legally present noncitizens subject to a federal 5-year bar on Medicaid eligibility -- they are eligible for marketplace subsidies. In California this year, there are 38,580 enrollees with incomes under 138% FPL, and 10,850 of them (28%) are unsubsidized. That substantial unsubsidized low income population has been a constant in California enrollment reporting. But again, in normal subsidy range, the numbers of unsubsidized enrollees are low.

The story is quite different in the 39 states that use HealthCare.gov. There, 85% (7,463,080) received subsidies of some kind,* whereas 90% (7,756,865) have incomes in ordinary subsidy range, 100-400% FPL (the lower threshold is 100% FPL in the 18 HC.gov states that have not expanded Medicaid eligibility).

Shifts in the enrollment population in the ACA marketplace in 2018

Recently I've spotlighted the extent to which silver loading boosted ACA marketplace enrollment among those with incomes between 200% and 400% of the Federal Poverty Level (FPL) - -that is, those at the higher end of subsidy eligibility. The boost occurred both in the 39 HealthCare.gov states and in California.

"Silver loading" refers to discounts in bronze and gold plans for subsidized marketplace enrollees generated by Trump's cutoff last October of direct federal reimbursement for the Cost Sharing Reduction (CSR) subsidies insurers are obligated to provide to low income enrollees who select silver plans. See note at bottom for an explanation.

The discounts proved more attractive to those with incomes over 200% FPL, because for most buyers below that income level, the value of CSR outstripped that of the bronze/gold discounts on offer.  Compared to 2017 enrollment levels, 2018 enrollment in both HealthCare.gov states and California at 201-400% FPL outperformed enrollment below 200% FPL by about 8 percentage points.

The concentration of that enrollment boost has modestly shifted the income distribution of ACA enrollees. Historically, a majority of enrollees nationally have been eligible for the strong CSR available to those with incomes up to 200% FPL, and that's still the case. But the majority is a bit smaller.

Here is the shift in income distribution among the subsidized in HealthCare.gov states and California in 2018.