Sunday, December 22, 2019

Assessing 2020 ACA marketplace enrollment? Don't forget Virginia's 2-year Medicaid expansion shakeout

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In assessing total ACA marketplace enrollment for 2020, it's important to keep in mind that the fallout from Medicaid expansion expansion in Virginia continued into a second year.

As I've noted before, that's generally been the case in states that have enacted belated Medicaid expansions after the ACA's core programs launched in 2014.

Marketplace enrollment drops when a state implements the Medicaid expansion (rendered voluntary to states by the Supreme Court in 2012) because the lowest-income marketplace enrollees become eligible for Medicaid -- and therefore no longer eligible for marketplace plans, at least theoretically.

In expansion states, people with incomes up to 138% of the Federal Poverty Level (FPL) are eligible for Medicaid -- and so, not for marketplace subsidies. In states that have refused the expansion (e.g., Virginia until Jan. 2019), eligibility for marketplace coverage begins at 100% FPL.

For those in nonexpansion states who "should have" been Medicaid-eligible, with incomes in the 100-138% FPL range, marketplace coverage is relatively affordable: a benchmark silver plan with strong Cost Sharing Reduction (CSR) costs 2% of income.  At incomes up to 150% FPL, CSR raises the actuarial value of a silver plan to 94%, which translates to a deductible averaging about $200.

In Virginia in 2018, about 27% of enrollees, or 108,000, had incomes in the 100-138% FPL range. Medicaid enrollment for 2019 began on Nov. 1, 2018. I forecast that marketplace enrollment in the wake of Medicaid expansion would drop by a bit over 100,000.

In 2019,  marketplace enrollment in Virginia dropped by just 72,000, and enrollment at 100-150% FPL dropped by just 39,000. A bit over 80% of those in the 100-150% FPL range, the breakout CMS provides, were likely in the 100-138% FPL range, i.e, Medicaid-eligible.* Auto-enrollment may have kept some Medicaid-eligible people in place, and others may have exercised, um, flexibility in income reporting (on both ends, as those with incomes below 100% FPL in nonexpansion states get no ACA help whatsoever).

The shakeout continued in the open enrollment period for 2020, which ended on December 18. The table below provides final tallies for 2018 and 2019, which include breakouts by income bracket and plan type (e.g., the strongest type of CSR-enhanced silver, available up to 150% FPL). Also included: the rough total as of the end of open enrollment for 2020, posted by CMS this past Friday.

Virginia: Enrollment in ACA marketplace as of end of Open Enrollment, 2018-2020
Total enrollment
100-150% FPL
CSR silver – 94% AV
Source: CMS state-level Public Use Files; CMS Week 7 enrollment snapshot, 2020**
              2020 totals updated 4/9/21 (100-150% FPL and CSR-94 not available at first post)

Total enrollment in Virginia dropped by 57,000 in 2020 after the 72,000 drop in 2019. In the other 37 states using the federal platform,, enrollment was flat for the year. Premium differences from 2019 to 2020 for subsidized enrollees in Virginia are a mixed bag; the cheapest plan at each metal level is higher in some counties, lower in others. The enrollment drop is almost surely mainly due to further movement to Medicaid.

Medicaid expansion probably has a mixed effect on a state marketplace. On one hand, marketplace enrollment obviously goes down. On the other hand, the lowest-income enrollees tend to be the sickest: CMS estimated in 2016 that all other factors being equal (i.e., controlled for), Medicaid expansion reduces premiums by about 7%. On the other-other hand, Medicaid expansion reduces the potential for premium discounts in bronze and gold plans generated by silver loading -- the pricing of CSR directly into silver plans only, which began after Trump cut off direct payments to insurers for CSR in late 2017. I explored the possible impact of Medicaid expansion on silver loading in Virginia last year, in this post.

On yet another hand, insurers' pricing of bronze and gold plans relative to silver often does not accurately reflect the real actuarial value of silver plans in a given market, which varies according to the percentage of silver enrollees who obtain strong CSR. Bear in mind that silver plans provide benefits comparable to platinum plans at incomes up to 200% FPL. In nonexpansion states, the vast majority of silver plan enrollees are below that income threshold.


* In 2016, the one year in which CMS broke out the 100-138% range separately, 82% of Virginia enrollees in the 100-150% FPL band proved to be in the narrower "should-have-been-in-Medicaid" range -- 100-138% FPL.

** The Virginia enrollment total for this year is a rough cut, which CMS will adjust in coming weeks. The change likely will be minor.

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