Thursday, November 29, 2018

In ACA marketplace, more discount counties -- but which counties count?

Taking the country as a whole, are ACA marketplace offerings more or less attractive to prospective enrollees, subsidized and unsubsidized, in 2019 than in 2018?

The question takes on urgency as a lag in on-exchange enrollment persists into week 4 of Open Enrollment for 2019. In the 39 states using, enrollment is down 11% compared to this time last year. If plan offerings are roughly equal in value to last year's, depressed enrollment could easily be accounted for by repeal of the individual mandate penalty, establishment of a parallel lightly regulated, medically underwritten "short-term plan" market, and further drastic cuts to federal spending on enrollment assistance and advertising. Still, in 2018 the windfall bargains generated by silver loading (see note at bottom) partly offset the prior round of Trump administration sabotage, and the question lingers whether something similar may happen this year.

Some top-line facts may suggest that marketplaces are offering better value to more people in 2019 than in 2018. Unsubsidized premiums are down slightly on average. More states are silver loading, creating discounts in bronze and gold plans and/or encouraging insurers to offer off-exchange silver plans with no CSR load. The number of counties where a gold plan is available for less than the benchmark silver plan has increased from 595 in 2018 to 1136 in 2019. And the Kaiser Family Foundation reports that free bronze plans are available to subsidized enrollees at every subsidy-eligible income level in more counties in 2019 than in 2018.

There are counties and counties, however. One county may have 10 million people; another, 95. The Kaiser report includes a map that color-codes counties where free bronze is available to a 40 year-old with an income of $30,000 for the first time in 2019  A mouseover reveals that most of those counties are rural.

At the same time, the report shows modest but not insignificant increases in average premiums for the cheapest bronze plan available to people at different income levels, reaching $9 per month for a 40 year-old with an income of $35k, and $12 per month at the same age with an income of $40k.*  Benchmark premiums dropped slightly more than bronze premiums, according to Kaiser, which would tend to narrow spreads between cheapest silver and bronze. The wider the spread, the cheaper the bronze plan, since the benchmark determines subsidy size.

All of which is to say that bronze plan discounts may not be richer on net in 2019 than in 2018. Kaiser's Cynthia Cox, one of the report's authors, confirms this possibility in a tweet:
Nationwide, 9.2M people are enrolled in counties where v. low-income enrollees will be eligible for a $0 bronze premium in 2019. Slight drop from 9.5M in 2018. BUT we don't know income dist of enrollees by county so it's hard to say whether this translates to +/- ppl w/ $0 bronze.
Cox kindly provided me with more fine-grained data regarding the county breakdown of free bronze availability. For perspective, keep in mind that while 63% of the 3,143 counties in the U.S. are non-metro, just 15% of the U.S. population lives in non-metro counties. I asked for the data on free bronze availability for people with incomes over 200% FPL, because the shift to bronze (and gold) plans triggered by silver loading in 2018 occurred almost entirely in 200-400% FPL income range. Below 200% FPL, most enrollees stuck to silver plans, because the value of Cost Sharing Reduction, available only with silver, outstripped the value of bronze and gold discounts.

For a 40 year-old earning $30k, Kaiser analysis shows, free bronze plans were available in 488 counties in 2018 and 659 counties in 2019. The percentage of non-metro counties in which free bronze was available at this age/income jumped from 15% to 25% year-over-year. But the percentage of metro counties offering this bounty dropped from 17% in 2018 to 14% in 2019.

My own spot checks of the U.S. counties with the most marketplace enrollees support the premise that bronze discounts in populous regions in 2019 may be somewhat weaker than in 2018.  In separate posts on November 4, 2017 and October 30, 2018 I looked at offerings for a 40 year-old earning $24k in Los Angeles (so big that it's split into two rating areas), Miami-Dade/Broward (which have the same offerings), Harris County, TX (home of Houston), and Cook County, IL (home of Chicago). Here are the zip-to-zip comparisons for cheapest bronze. Unfortunately I didn't include gold in 2017.

Metal level price spreads (solo premium per month), 2018 vs.  2019
Single 40 year old, income $24,000

Zip code
Cheapest bronze 2018
Cheapest bronze 2019
Los Angeles, CA (R. 15)
Los Angeles, CA  (R. 16)
$ 9
Miami-Dade & Broward, FL
$ 0
Harris, TX
$ 0
Cook, IL
$20 (zip uncertain*)
Cook, IL


* I neglected to specify the zip I used in Cook the 2017 post. There is some variation within large counties, but rarely more than two plan menus.

Recently, too, I compared offerings in populous and rural parts of Texas -- and there, too, steep discounts, this time in gold plans, are available in rural areas but not in the most populous counties. Bronze discounts were also biggper in the rural counties.

In rural Texas, the discounts are provided by a monopoly insurer, BCBS Texas. An insurer that has a marketplace to itself can manipulate spreads from the benchmark to create dramatic discounts at any metal level -- and some, though not all monopoly insurers do so.

I asked Cynthia Cox about the core premise here. She responded:
I think it’s fair to say that the silver loading benefits have eroded a bit for metro enrollees, while holding mostly constant for rural enrollees. This probably has to do with there being more insurer participation in metro areas, but I haven’t set up the dataset in a way that it would be easy for me to compare insurer participation to areas with free bronze plans.
The ACA was built on the premise that competition would hold down premiums and healthcare spending. Marketplace experience teaches that what's good for unsubsidized enrollees is often disadvantageous for subsidized enrollees, and vice versa. That wouldn't matter so much if ACA subsidies were adequate to the task, but they're not. Discounts generated by silver loading haphazardly patched some affordability holes.

* While Kaiser attributes the modest premium increases largely to slight upward adjustments in the percentage of income that enrollees at different income levels are required to pay for the benchmark silver plan, perhaps they also indicate that average spreads between the benchmark and cheapest bronze plans have narrowed slightly.

Note: What is silver loading?

Silver loading refers to concentrating the cost of Cost Sharing Reduction subsidies (footed by the federal government as stipulated by the ACA until Trump stopped payment in October 2017) in the premiums of silver plans, since CSR is available only with silver plans. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans. And in states that allowed insurers to offer silver plans off-exchange with no CSR load, unsubsidized enrollees were protected from CSR costs, theoretically at least.

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