Saturday, August 25, 2018

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 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 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 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% .

2. Household income

Here too, small aggregate shifts hide substantial shifts within subgroups. First of all, it appears that in 2018 a fair number of enrollees who were unsubsidized 2017 (or those comparably situated) became subsidized. While unsubsidized enrollment, as noted above, was down 10%, enrollment at 300-400%, as I've noted elsewhere, was up 10%.

How did that happen? An enrollee with an income of 300-400% FPL is eligible for a subsidy if the premium for the benchmark silver plan in her area costs more than approximately 10% of income. As silver premiums soared last year, the ranks of the subsidy-ineligible at 300-400% FPL dwindled. At the same time, silver loading (explained in note at bottom) increased the value of what might otherwise have been a slight subsidy, and people in this income bracket poured into bronze and gold plans.

Also significant here is the one-point percentage shift from enrollees in the 100-250% FPL bracket to those in the 251-400% FPL bracket. I would use a different break point: 201% FPL. That's the point below which the value of Cost Sharing Reduction (CSR) mostly outweighs the value of discounts triggered by Trump's cutoff of direct federal CSR reimbursement and the subsequent "silver loading" of the cost of CSR into silver plan premiums (see note below). At 201% FPL, CSR fades to insignificance, and this year's bronze and gold discounts loom large. Hence, the enrollment losses that the GAO report implicitly blames on HHS's outreach sabotage were concentrated mainly in the 100-200% FPL range as well as among the unsubsidized. Among those in the 100-200% FPL income bracket, enrollment dropped 7.5% in 2018. From 200-300% FPL, enrollment barely dropped at all compared to 2017, and at 300-400% FPL, it spiked 10%. More on those shifts here.

3. Age
                                                                                                      2017                                            2018

Enrollees over 55 gained 2 percentage points' share at the expense of those below age 26. This shift seems in line with shift toward the upper income brackets of subsidy eligibility (200-400% FPL). Or so I argued here.

4. Latino enrollment
                                                                                                       2017                                        2018

Latino enrollment increased its share of total enrollment by two percentage points: it was up 8% while overall enrollment was down 5% and not-Latino enrollment was down 6.5%. Self-reported ethnic data is somewhat dicey, but this is the second straight year that the tally of those identifying as Latino is up substantially. More here.

While the marketplace enrollment population in 2018 does not look radically different from past years, various groups responded to incentives and disincentives thrown up by our turbulent politics: multiple forms of sabotage from the Trump administration and Republicans in Congress, partly, accidentally offset by the silver-loaded discount lode that Trump accidentally triggered.

Note: What's silver loading and how does it work?

President Trump accidentally created a windfall for many subsidized ACA marketplace enrollees last fall when he cut off direct reimbursement of insurers for Cost Sharing Reduction (CSR) subsidies they are required to provide to qualifying ACA marketplace enrollees, forcing insurers to price the CSR benefit into premiums. Most states allowed or encouraged insurers to concentrate the CSR cost in silver plans only, since CSR is available only in silver plans (and in many cases to offer silver plans free of the CSR load off-exchange). Since  the ACA's premium subsidies are income-adjusted and set to a silver benchmark, "silver loading" created discounts in other metal levels, varying considerably by state and rating area, but substantial in most states.

Updated 8/27 - shifted bullet sequence.

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