In Health Affairs: Silver loading goes into reverse, cont.

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A Health Affairs blog post by David Anderson, me, and Coleman Drake probes the likely impact of reduced silver loading effects in the ACA marketplace this year. In brief, there are fewer counties nationwide where plans below the benchmark are free to many enrollees, and fewer counties where gold plans cost less than benchmark silver. 

One profound impact may be where potential spreads are narrowest: between benchmark silver and the cheapest silver plan in each region.

The reduced silver spread, while small in dollars, may have a profound impact. At incomes up to 200 percent of poverty, the value of CSR—a free added benefit—exceeds the value of most bronze and gold plan discounts generated by silver loading. Accordingly, enrollees with incomes in the 100–200 percent of poverty range—56 percent of all enrollees in HealthCare.gov states in 2019—have mostly stuck to silver plans: According to Aron-Dine, 84 percent of enrollees in this income bracket selected silver in 2019, down slightly from 87 percent in 2017. In that same period, enrollees with incomes in the 200–400 percent of poverty range, for whom CSR is unavailable or negligible, took broad advantage of discounts in bronze and gold plans, reducing their silver selection from 60 percent in 2017 to 35 percent in 2019.

Those discounts appear to have boosted enrollment, offsetting negative factors such as repeal of the individual mandate penalty and reduced federal spending on advertising and outreach. While enrollment at 200–400 percent of poverty has increased slightly from 2017 to 2019 (less than 1 percent), enrollment at 100–200 percent of poverty has fallen 10 percent in the same period. Low-income enrollees may be particularly vulnerable to CMS’s 90 percent reduction in advertising and 84 percent reduction in enrollment assistance since 2017.

In 2020, a county with median lowest-cost and benchmark silver premiums would not make a zero-dollar premium silver plan available to subsidized enrollees. In that county, a single 40-year-old individual earning $12,500 in 2020, who is subsidy eligible in states that have not expanded Medicaid, would pay $21 per month for the benchmark plan. The smaller average silver spread significantly decreases the probability that this individual will be able to enroll in a zero-dollar premium silver plan. In 2019, zero-dollar premium silver plans were available in 1,484 counties to such enrollees. In 2020, 1,140 counties have a zero-premium silver plan available. Since spreads increase with the enrollee’s age, reductions in the spread will have a larger impact on older buyers.

As this was drafted a in late October, I would add a few caveats. First, despite the slightly larger drop in average benchmark premiums than in lowest-cost premiums at each metal level, the Kaiser Family Foundation forecasts that on average, the lowest-cost plans at each metal level will go down slightly for subsidized enrollees. That's due to slight changes in the subsidy calculation formula. It's worth keeping in mind in that context that counties vary enormously in population, so while a year-over-year county count comparison is instructive, it's not a count of people exposed to various price changes.

Finally, while week-by-week enrollment counts from CMS give an impression this year, like last, that enrollment is lagging significantly behind the previous year, that impression is likely once again misleading to a degree, as the enrollment calendar foretells an illusory surge in the final week for a second straight year.

My best guess is that enrollment will be virtually flat in 2020, or up slightly, when all chips are counted. And the chips won't really be fully counted until the year is done.