Tuesday, December 11, 2018

Silver loading improves with age

I have noted before that ACA marketplace enrollment in 2018 was stronger at the upper income levels among those eligible for subsidies.

That's because the discounts in bronze and gold plans created by silver loading (see note below) are chiefly relevant to those who earn too much to qualify for strong Cost Sharing Reduction (CSR), which is available only with silver plans. Also, the huge spike in benchmark silver premiums in 2018 rendered more people in the 300-400% FPL subsidy-eligible than in previous years.

I just stumbled on a breakout I never used that shows a corollary: enrollment as a percentage of 2017 enrollment also rose with age This is in HealthCare.gov states:

This correlation makes sense. Unsubsidized premiums rise with age, so that an unsubsidized 64 year-old pays three times as much as a 21 year-old. But subsidized enrollees of all ages at a given income pay the same percentage of income for a benchmark plan (the second cheapest silver plan). At an income of $24,000, any solo enrollee will pay $129 per month. But if the subsidy for a 25 year-old is about $150 a month, it will be more like $700 a month for a 64 year-old. That inflated subsidy covers more of the spread between the benchmark plan and cheaper plans -- which, thanks to silver loading, sometimes included gold as well as bronze plans (and the cheapest silver plan).

As the income chart above indicates, the 34% average increase in benchmark premiums in 2018 pushed a lot more people in 300-400% FPL income range into subsidy eligibility, as a subsidy was only available at this income level in 2018 if the benchmark plan cost more than 9.56% of income.  The value of those subsidies increases with age for those who choose a plan cheaper than the benchmark. The silver loading discounts apparently lured in a higher percentage of older enrollees, both because their discounts are larger and because they're likelier to be in the income bracket (201-400% FPL) where the silver loading discounts outstrip the value of CSR.

The over-65 category is interesting, if small. Marketplace subsidies are available to over-65s who are legally present in the U.S. but lack the 10 years' work history that qualifies a person for Medicare. Whether the outsized enrollment spike in that age group is significant I couldn't say.

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.
Nagging memory update: I have used the enrollment-by-age chart before, in a post surveying that and other shifts in the enrollment population.

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