Tuesday, August 13, 2019

ACA marketplace enrollment is down at low incomes as well as at high ones

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[Update, 8/15: CMS data on average monthly enrollment in each year appears to suggest that apparent year-over-year enrollment drops among the subsidized as of the end of Open Enrollment may have evaporated (in 2018, and perhaps 2019) as the year progressed. See this post.]

CMS is out with a report highlighting, not to say gloating over, a steep decline in unsubsidized enrollment in the ACA-compliant individual market from 2016 to 2018.  Nationally, while subsidized enrollment was up 1.3% in that period, unsubsidized enrollment crashed 40%, from an average monthly enrollment of 6.27 million in 2016 to 3.77 million in 2018.

That's not surprising, given premium increases averaging 21% in 2017 and 26% in 2018, and the obvious fact that the ACA marketplace was under-subsidized from the start and essentially unaffordable for many people with incomes modestly above the 400% FPL subsidy cutoff, as Urban Institute scholars Linda Blumberg and John Holahan pointed out in 2015:


Here I'd like to add a corollary: Enrollment since 2016 has declined not only at the top of the income scale, among those with incomes above 400% FPL, but at the bottom, among those with incomes up 200% FPL. It's shifted toward the upper end of subsidy eligibility, into the 200-400% FPL income range. The percentage of enrollees with incomes in that range has risen from 29.5% in 2016 to 34% in 2019 in HealthCare.gov states, and from 40.4% to 44.1% in California.
Income distribution of enrollees with incomes in subsidy range
HealthCare.gov, 2016-2019

Year
Number enrolled at 0-200% FPL*
Percent enrolled at 0-200% FPL
No. enrolled at 201-400% FPL
Percent enrolled at 201-400% FPL
2016
5,904,770**
60.8%
2,884,370**
30.0%
2017
5,507,246
59.8%
2,851,601
31.0%
2018
5,092,349
58.2%
2,891,851
33.0%
2019
4,947,619
58.8%
2,863,824
34.0%
Source: CMS State-Level Public Use Files, 2016-2019


Income distribution of enrollees with incomes in subsidy range
Covered California, 2016-2019

Year
Number enrolled at 0-200% FPL
Percent enrolled at 0-200% FPL
No. enrolled at 201-400% FPL
Percent enrolled  201-400% FPL
2016
698,890
50.5%
558,960
40.4%
2017
681,710
49.0%
564,530
40.6%
2018
663,920
46.8%
594,230
42.2%
2019
636,370
45.9%
610,830
44.1%
Source: Covered California Active Member Profiles, March of each year

This shift occurred in spite of the fact that strong Cost Sharing Reduction subsidies are available only to enrollees with incomes up to 200% FPL, and that enrollees with incomes below that level -- still a majority of on-exchange enrollees -- are almost the only enrollees able to obtain plans with deductibles under $1000 for an individual.

Among the likely causes of this shift:

1. As premiums rose, more people with incomes in the 250-400% FPL range became subsidy eligible.  ACA premium subsidies kick in if a benchmark silver plan in a given area costs more than about 10% of income for those in the 300-400% FPL range, and 8.4% of income at 250% FPL. In early years, a large number of prospective enrollees with incomes as low as 250% FPL were subsidy-ineligible (more often in the 300-400% FPL range). Enrollment increases in recent years are concentrated in the 300-400% FPL range.

2. "Silver loading," which began in 2018, has made ACA marketplace plans more attractive to enrollees in 200-400% FPL range. Silver loading is 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, inflated silver premiums create discounts for subsidized buyers in bronze and gold plans.

These discounts mostly appeal to enrollees in the 200-400% FPL income bracket. At 200-400% FPL, silver loading has clearly boosted enrollment.  Below that level, the value of CSR usually outstrips the value of the bronze/gold plan discounts generated by silver loading. For those with incomes up to 200% FPL, the marketplace has mostly offered status quo ante -- except that out-of-pocket costs keep rising as the overall cost of care keeps rising. That is, while CSR-enhanced silver plans maintain a static actuarial value (covering 94% or 87% of costs for enrollees with incomes up to 200% FPL), enrollees pay a fixed percentage of higher costs each year.

3.  CMS's gutting of federal funds for advertising (cut 90% since 2016) and enrollment assistance (cut more than 80%) probably disproportionately affected low income enrollees, who generally require more assistance.  Enrollment at incomes up to 200% FPL did also drop in California, which as a state-based exchange maintains its own advertising/outreach budget -- though not as much (6.6% since 2017, compared to 10.1% in HealthCare.gov states).

4. The Trump administration's vicious new interpretation of the public charge rule -- long pending, finalized this week, and scheduled to go into effect in two months -- has likely had some chilling effect on enrollment at lower incomes. Under the revised rule, immigrants can be denied a green card if they have used or are deemed likely to use public benefits such as food stamps or Medicaid.  The revised rule does not include marketplace subsidies in the benefits that can count against obtaining a green card or citizenship. But the rule does count Medicaid enrollment as a "public charge" that can damage immigration status, and ACA applicants often don't know when they start the application process which benefit they will qualify for. It is probably a factor in recent reductions in Medicaid and CHIP enrollment as well as marketplace enrollment at low incomes.

After two years of  premium increases averaging north of 20% in 2017 and 2018, marketplace premiums dipped slightly in 2019 and are up an average of less than 1% this year. The bleeding in unsubsidized enrollment may have slowed or stopped -- though the zeroing out of the individual mandate, coupled with Trump administration's promotion of medically underwritten, lightly regulated short term plans, may continue to have a corrosive effect. The hard fact remains, though, that the marketplace failed from the outset to make coverage with manageable out-of-pocket exposure affordable for too many -- and that's not going to change in most states until or unless a Democratic administration and Congress have a chance to revise or replace the law.
 ----
UPDATE, 8/14: the next post illustrates an aspect of the upwards income shift among subsidized enrollees:

Changes in CSR enrollment at 0-200% FPL & bronze/gold enrollment at 200-400% FPL
HealthCare.gov states, 2017-2019

Year
Total enrollment
Strong CSR  enrollment
(94% or 87% AV)
Bronze enrollees 200-400% FPL
Gold enrollees 200-400% FPL
Gold+Bronze enrollees 200-400% FPL
2017
9,201,805
4,630,986*
   969,190
  303,989
1,273,179
2019
8,411,614
3,913,893
1,428,582
  629,651
2,058,233
2019 v. 2017
 -790,191
  -717,090
 +459,392
+325,662
+785,054
Source: CMS state-level public use files

*  A few notes on enrollment estimates:
1. CMS stopped reporting enrollment at income under 100% FPL separately in 2017 -- combining it with income over 400% FPL (and, in 2017, with unreported income) at "other income." In 2016, enrollment under 100% FPL in HealthCare.gov states was reported as 3% of enrollees who reported income, or 2.8% of overall income. I have accordingly added 2.8% of total income to the 0-200% FPL totals from 2017-2019.
2. Percentages but not totals are provided for 2016 in HealthCare.gov states because a) Kentucky was not on the platform in 2016 (the state ran its own exchange until 2017); b) HHS did not break out enrollment by income for Kentucky in 2016, and c) enrollment by income was reported in percentages of overall income in 2016.
3. Covered California "active member profiles" for March of each year are revised later in the year. The numbers cited here are somewhat different from numbers cited in other posts that report 2017 and 2018 figures.
4. [added 8/14]: I sucked it up and added Kentucky to the 2016 totals to get absolute number estimates of enrollment at the different income brackets. Since Kentucky joined Hc.gov in 2017, there's an income breakout for that year. I added 15% to get 2016 estimates, since enrollment was 15% higher in Kentucky in 2016 than in 2017, and added the KY totals to the Hc.gov totals.

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