Wednesday, January 09, 2019

Why 2019 ACA enrollment drops were concentrated in Medicaid expansion states on HealthCare.gov, Take 3

I have been trying to figure out why (if there is any why) the overall 3.8% enrollment loss in HealthCare.gov states in 2019 was concentrated almost entirely in states on the platform that have enacted the ACA Medicaid expansion. Enrollment in the 21 HealthCare.gov states that have expanded Medicaid (excluding Virginia and Maine, where expansion was in progress or pending) is down 7% in 2019. It's down less than 1% in the 16 nonexpansion states.

David Anderson, while focused elsewhere, may have provided an answer:

The "silverloads" Anderson refers to are the byproduct of Trump's October 2017 cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are required to provide to low income marketplace enrollees who select silver plans. Faced with the cutoff at the brink of open enrollment for 2018, most state insurance departments allowed or encouraged insurers to price CSR into silver premiums only. 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. The effect is further concentrated when insurers offer off-exchange silver plans with no silver load. In 2019, more states green-lighted silver loading -- 45 at last count -- and more switched to on-exchange-only silver loading.

In states that have refused to expand Medicaid, silver loads are larger, because eligibility for marketplace subsidies begins at an income of 100% of the Federal Poverty Level (FPL), as opposed to 139% FPL in expansion states. More than one third of enrollees in nonexpansion states have incomes below 139%, which qualifies them the for highest level of CSR -- and close to 90% in this income range select silver plans. Hence the estimated cost of CSR, priced into silver plans, should be higher, rendering bronze and gold plans relatively cheaper.

Silver loading has been in effect for two years. If bigger silver loads in nonexpansion states account for the enrollment gap, we'd expect that gap to be larger over two years than one.

Indeed, that's the case. In nonexpansion states on the HealthCare.gov platform, enrollment in 2019 was 95% of enrollment in 2017.  In expansion states on the platform, it's 87%.

In 2017, the first year in which enrollment dropped (triggered by the incoming Trump administration's abrupt cutoff of advertising in the final week of enrollment), the gap was much narrower. Enrollment dropped 5.2% in nonexpansion states and 6.2% in expansion states.

Here's the state-by-state breakdown of enrollment in the silver loading era for nonexpansion and expansion states, with 2019 vs. 2017 on the far right.



      Source: Charles Gaba, my calculations

Has silver loading in fact produced steeper discounts on average in nonexpansion states than in expansion states on HealthCare.gov? That remains to be determined. It's complicated, as price spreads often vary radically within a state as well as between states. Insurer rate filings, which sometimes specify how much impact they attribute to the CSR price-in, may provide a clue.

A secondary question is whether changes in those spreads from 2018 to 2019 had a large overall impact -- it certainly had an impact in some states (regions surrounding Philadelphia, for example, lost great deals in 2019). A further complicating factor is the ability of monopoly insurers in some regions to manipulate price spreads from the benchmark to create discounts, with or without benefit of silver loading (some do, some don't). Yet another factor is whether the effect of a belated Medicaid expansion (as in PA, IN, LA, AK and MT) plays out over more than one year. And of course multiple other factors affect enrollment in each state -- e.g., the infrastructure for enrollment assistance.

It should be noted, too, that the superior enrollment performance in states that operate their own marketplaces is all the more impressive in light of the fact that 11 out of 12 of those states have expanded Medicaid. Given the apparent silver loading advantage in nonexpansion states, that performance pretty clearly indicates that a state commitment to marketing and outreach -- radically cut in HealthCare.gov states, funded by exchange fees in states that operate their own -- has a significant impact.

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* Re asterisks in the charts above, Gaba explains:


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