Sunday, October 27, 2019

Silver loading 2020 update: The sky isn't falling

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Last week I noted that the discounts for subsidized ACA marketplace enrollees generated by silver loading (see explanation at bottom)* are likely to be somewhat reduced in 2020, given that a) average unsubsidized premiums are down 3-4%, b) and average premiums for the benchmark silver plan are down more sharply (-4%) than average premiums for the cheapest plan at each metal level (-3%).

Let's see how price spreads and discounts at each metal level have changed in the counties with the highest marketplace enrollment nationwide. Together, these 9 counties hold 16% of all on-exchange ACA marketplace enrollment.

Counties with highest ACA marketplace enrollment, 2019
As of the end of Open Enrollment 2019*

Miami-Dade, FL
Los Angeles, CA
387,040 (~ 420,000 as of end of OE)
Broward, FL
Harris, TX
Orange, FL
Palm Beach, FL
Orange, CA
133,470 (~145,000 as of end of OE)
Cook, IL
Sources: CMS Public Use Files; Covered California Active Member Profile, March 2019

* California county enrollment is as of March 2019 and so reflects first-month attrition (8.5% statewide)

In these counties, the silver loading sky hasn't fallen.  The chart below compares the lowest cost plan (LCP) at each metal level in 2019 and 2020 for a 40 year-old with an income of $24,000 per year. That's a bit under 200% of the Federal Poverty Level (FPL), qualifying the enrollee for strong Cost Sharing Reduction (CSR) if she selects a silver plan.

At that income, a benchmark silver plan cost $123 per month, regardless of age or location.  Silver loading may be assumed to have had a significant impact if the gold LCP is less than about $160 per month, and if the bronze LCP is below about $50/month.

LCPs that are lower in 2020 than in 2019 are marked green; those that are higher are marked in red.

As the chart below reflects, a) Los Angeles county is split into two rating areas; b) Miami-Dade and Broward counties in FL have the same offerings, and c) offerings differ in areas within Cook County, IL.

Metal level price spreads (solo premium per month), 2019 vs. 2020
Single 40 year old, income $24,000

Zip code
Cheapest bronze 2019
Cheapest bronze 2020
Cheapest silver
Cheapest silver 2020
Cheapest gold
Cheapest gold
Miami-Dade & Broward, FL
$  1
Los Angeles, CA (R. 15)
Los Angeles, CA  (R. 16)
$ 9
Harris, TX
Orange, FL
$ 0
$  7
$  97
Palm Beach, FL
$ 8
$  8
Orange, CA
$ 1
Cook, IL
Cook, IL

 Sources: and Covered California

It's a wash: 11 LCPs are higher in 2020, and 11 are lower. Three are essentially unchanged. In most cases, differences are fairly modest.

A cornucopia of caveats is in order.  As always in the ACA marketplace, premiums, and year-to-year premium changes, vary widely. In California, new supplemental state subsidies (integrated in the premiums quoted above) reduce premiums for those with incomes below 400% FPL by an average of $12 per month.  In Florida, Oscar is offering a $0 premium bronze plan (with a $3,000/day inpatient hospital copay) that may lure a significant chunk of the state's 1.2 million silver plan enrollees, most of whom qualify for strong CSR, out of silver. That's an extreme case illustrating the fact that deductibles, copays, out-of-pocket maximums vary widely within metal levels -- as does network size and quality. This year, CMS is introducing quality ratings into the marketplace, which may lead some enrollees to focus less on premiums than in previous years.

Finally, hard number indicate that bronze and gold discounts will in fact be significantly reduced in 2020. David Anderson notes that the number of counties in which a gold plan is available at a premium below that of the benchmark is down from 1136 in 2019 to 937 in 2020, and estimates that the percentage of people with incomes under 400% FPL who will have access to such a gold plan will drop from 26% to 20%. CMS projects a drop in the percentage of current enrollees who will pay less than $75/month for their plans, from 73% in 2019 to 69% in 2020, if enrollees stay within their current metal level.  Lower premiums also mean that more people at the upper end of subsidy eligibility will find themselves subsidy-ineligible, because the unsubsidized benchmark plan will cost less than about 10% of their income.

All that said, this county snapshot suggests a relatively stable menu of offerings.

Counterpoint: Charles Gaba notes tales of "benchmark down, subsidized premiums up," via broker-bloggers Jenny Hogue in Texas and Louise Norris in Colorado, who tell their own tales here and here.
* 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 (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans. When the benchmark silver premium drops more than other plans, those plans become more expensive for subsidized enrollees.

Silver loading and 2019 enrollment: A compendium
Silver loading goes into reverse in 2020
Silver loading 2019: What's on offer in the nation's highest-enrollment counties

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