Sunday, August 05, 2018

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).

As in California, the subsidized enrolled on HealthCare.gov also include a number of legally present noncitizens with incomes under 100% FPL, but CMS hasn't broken out this income category since 2016, when 3% of enrollees were reported  below the 100% FPL threshold. On that basis, and taking into account the substantial number of unsubsidized low income enrollees in California, I'd estimate that about 175,000 subsidized enrollees on HealthCare.gov are under 100% FPL. That would raise the ranks of those with incomes in subsidy range (including those eligible under 100% FPL) to 7.91 million, or about 90.5% of all enrollees.

In all, about 444,000 enrollees on HealthCare.gov -- 5% of all enrollees -- have incomes in subsidy range but are unsubsidized. Why?

I would guess that most of them have incomes in the 300-400% FPL range. Even if your income is below 400% FPL, subsidies only kick in if a benchmark silver plan in your area costs more than 9.56% of income (in 2018). As benchmark silver premiums have soared over 60% in two years, there are presumably a lot fewer unsubsidized enrollees with incomes under 400% FPL than there used to be. In California, however, only 7,640 out of 362,910 enrollees who reported incomes between 250% and 400% FPL are unsubsidized, which seems surprising.

On HealthCare.gov, enrollment in the 300-400% FPL range was up 10% in 2018, to 867,198, while enrollment overall was down 5%. That's probably because a lot of people in this income category became newly subsidy eligible, and those just over the line were able to take advantage of discounts in bronze and gold plans triggered by silver loading, an unintended (though far from unpredictable) side effect of Trump's malevolent cutoff of direct federal reimbursement to insurers for CSR subsidies (see this post for an explanation and a look at the effects).

I have always assumed that most of the unsubsidized whose incomes qualified them for subsidies had an offer of insurance from an employer, which disqualifies one for subsidies. That too has become harder to imagine as premiums have soared. Via Twitter, Mitchell Stein suggests that some who are unsure their income will remain below the subsidy threshold delay taking the subsidy until they file their taxes.  Jon Walker provides a useful summary of that and other possibilities:

The question remains, however, why unsubsidized enrollment by those with incomes in subsidy range is so much higher in HealthCare.gov states than on CoveredCA.

Update, 8/6 Some further hypothesizing as to where the unsubsidized pop with reported incomes in 100-400% FPL range comes from, courtesy of Texas-based broker Jenny Chumbly and  West Virginia-based navigator KT:

With respect to not taking the subsidy until tax time next year

And then there are those who abjure subsidies out of conscience -- and sometimes, I'll add, recalling past reports by Louise Norris among others, out of ideological hostility to the ACA:



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