Friday, January 11, 2019

One more offset from silver loading

It seems clear that the discounts in bronze and gold plans created by silver loading -- the pricing in of Cost Sharing Reduction into silver plans only after Trump cut off direct reimbursement for the benefit* -- have partly offset enrollment losses in the ACA marketplace caused by other forms of sabotage, e.g., the gutting of federal funding for advertising and enrollment assistance and repeal of the individual mandate penalty. Silver loading may have boosted enrollment by 3-4% in 2018.

The effects of silver loading are likely more intense in states that have rejected the ACA Medicaid expansion. Roughly a third of enrollees in those states would be Medicaid-eligible had the state expanded, and about 90% of enrollees in the should-have-been-in-Medicaid income range (100-138% FPL) select silver plans and so access the strongest form of CSR, available up to 150% FPL.  As noted in my last post, more intense silver loading in nonexpansion states may very well be a major factor in why enrollment losses were smaller in nonexpansion states on than in expansion states on the platform (though expansion states with their own marketplaces have done better than both).

Silver loading may provide a second form of "offset" to nonexpansion states. In 2016, a CMS analysis concluded that premiums in Medicaid expansion states were about 7% lower than in nonexpansion states,, controlling for various other factors. That's presumably because this lowest income cohort (100-138% FPL) has more intense health needs on average than enrollees at higher income levels.

Silver loading primarily benefits those at the upper range of subsidy eligibility, 201%-400% FPL. For enrollees up to 200% FPL, the value of CSR, a free benefit available only with silver plans, mostly outstrips the value of discounts in bronze and gold generated by silver loading. That's particularly true at incomes up to 150% FPL, where silver selection on actually rose slightly in 2018. At the same time, enrollment losses were concentrated at incomes below 200% FPL, at which level the marketplace offered pretty much status quo ante.  In states, enrollment dropped 7.5% in 2018 at incomes in the 100-200% FPL range, while it rose at 200-400% FPL.

That means that the income distribution shifted upward, as I've noted before:

Income distribution of subsidized enrollees:, 2017-2018

Number enrolled at 0-200% FPL*
Percent enrolled at 0-200% FPL
No. enrolled at 201-400% FPL
Percent enrolled at 201-400% FPL

In nonexpansion states, the percentage of enrollees in 100-150% FPL range dropped from 43.5% in 2017 to 42.7% in 2018. About 85% of that cohort is within Medicaid-eligible range, 100-138% FPL, (which CMS broke out separately only once, in 2016). Enrollment at 200-400% FPL rose from 26.3% to 28.3%.

Viewed another way, enrollment at 100-150% FPL dropped 6% in nonexpansion states in 2018, by a total of 163,421, which suggests about 140,000 dropping out at Medicaid incomes (as defined in expansion states). It rose 6.7% at 250-400% FPL, up a total of 58,055 in that income range. It also dropped 11% among people who didn't seek subsidies, however (by 68,875), most of whom are at higher incomes (not all - about a quarter may be under 100% FPL).

Reduced marketplace enrollment at 100-138% FPL, when not caused by a belated Medicaid expansion, is bad for low income people and public health, but it's probably good for the risk pool. Enrollment gains at 250-400% FPL, meanwhile, may have roughly canceled out losses at over 400% FPL. Risk scores in nonexpansion states may therefore have improved somewhat in nonexpansion states.

* Silver loading refers to concentrating the cost of CSR subsidies (directly reimbursed to insurers 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. 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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