Tuesday, December 10, 2019

Forget free bronze plans: millions of uninsured are eligible for CSR silver

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The Kaiser Family Foundation is out with an analysis estimating that 4.7 million uninsured Americans are eligible for free bronze plans in the ACA marketplace. That's a bit less than half of the uninsured who are eligible for marketplace subsidies, according to a 2017 Kaiser estimate.

These estimates have emerged as a Kaiser tradition in the Trump era , which in ACA terms is the silver loading era. "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. One result is $0-premium bronze plans available to millions.

Arguably, "free bronze" is useful chiefly as a marker of the extent of bronze plan discounts, which are more popular at the upper income end of ACA subsidy eligibility, 200-400% of the Federal Poverty Level (FPL) than at the lower end, 100-200% FPL, which still accounts for the majority of on-exchange enrollees. At upper income levels, bronze plans are likelier to be cheap than free.

In 2019, 89% of enrollees with incomes in the 100-150% FPL range in the 39 states using HealthCare.gov  selected silver plans. At 300-400% FPL, just 24% selected silver, vs. 58% for bronze and 17% for gold. Cheap bronze is more of a lure than free bronze. At low incomes, the value of CSR outstrips the value of bronze discounts generated by silver loading.

While Kaiser does not break out what percentage of those eligible for free bronze have incomes below 200% FPL -- a significant break point for bronze plan selection, as we'll see -- in another analysis Kaiser estimates that while free bronze is available to a 40 year-old with an income of 200% FPL in 55% of counties, the percentage drops to 19% of counties at 240% FPL.  While counties vary tremendously in population, this indicates that a majority of those eligible for free bronze have incomes under 200% FPL (free bronze is available to a 40 year-old at 160% FPL in 85% of counties).

Kaiser quite rightly points out that "many people eligible for a $0 bronze premium would also be eligible for significant cost-sharing assistance [CSR] by instead purchasing a silver plan." For people with incomes up to 200% of the Federal Poverty Level (FPL), the value of CSR generally outstrips the value of the bronze discount generated by silver loading. As Kaiser notes, bronze plan single-person deductibles average a horrific $6506. Deductibles for CSR-enhanced silver plans average $209 for enrollees with incomes up to 150% FPL ($18,735 for a single person) and $762 for those with incomes in the 150-200% FPL range (up to $24,980).

Premiums for the benchmark (second-cheapest) silver plan for those eligible for strong CSR (100-200% FPL) range from about $20/month to about $135/month at 200% FPL. In some markets, the cheapest silver plan may cost significantly less than the benchmark, offering a discount on CSR.

A weak version of CSR is available to those with incomes in the 200-250% FPL range. The average deductible at this level is $3268.  Accordingly, 200% FPL has been a break point above which there's been a stampede into bronze plans (and, at higher incomes, into gold plans as well).

At incomes below 150% FPL, where the strongest CSR is available, silver selection has held steady throughout the silver loading era at just under 90%.  At 150-200%, there's been a significant  flow to bronze plans, accelerating at 200-250% FPL.

Bronze plan enrollment at 150-250% FPL, HealthCare.gov states, 2017 vs. 2019

Year
Bronze enrollment 150-200% FPL
Bronze enrollment 200-250% FPL
% selecting bronze 150-200% FPL
% selecting bronze 200-250% FPL
2017
296,691
  356,029
14.5%
27.1%
2019
369,495
  509,099
20.6%
40.9%
2019 vs. 2017 change
+72,804
+153,070


2019 vs. 2017
Percent change
+25.5%
+43.0%


Source: CMS State-level Public Use Files

The gains in bronze enrollment partly offset an overall drop in enrollment at low income levels.

Total enrollment at 150-250% FPL, HealthCare.gov states, 2017 vs. 2019
Year
Enrollment at 150-200% FPL
Enrollment at 200-250% FPL
2017
2,050,555
1,312,520
2019
1,797,501
1,243,762
2019 vs. 2017 change
 - 253,054
   - 68,758
2019 vs. 2017 % change
  -12.3%
   - 5.2%
Source: CMS State-level Public Use Files

At higher subsidy-eligible income levels, the shift out of silver is larger, and overall enrollment – apparently spurred by silver loading discounts –is higher in 2019 than in 2017 (11% higher at 300-400% FPL).

The prevalence of free bronze is enticing to those who entertain visions of auto-enrolling the subsidy-eligible uninsured. Who would object (or opt out of) a health plan that costs nothing, includes free preventive, and caps yearly out-of-pocket costs at a maximum of $7,900? Enrollment patterns suggest, however, that the bulk of those who might be expected to opt in would be likelier to opt for silver, which is not free and has not had its cost discounted by silver loading. The more salient fact is that a probable majority of the 4.7 million uninsured who are eligible for free bronze are also eligible for CSR-enhanced silver -- and have remained on the sidelines nonetheless.

Of the subsidy-eligible uninsured, many don't know what's on offer, some are probably still ideologically opposed to the ACA, and some find even "strong" CSR silver -- at, say, $130/month with an $800 deductible -- too expensive.  

P.S. By Kaiser's estimate as of 2017 (per p. 9 here), 6.8 million uninsured people in this country -- 2.4 million children and 4.4 million adults -- are eligible for Medicaid, which is generally free and covers 100% of costs. All told, about half of the legally present uninsured are eligible for subsidized or free coverage more comprehensive than that offered by most employer-sponsored plans, with actuarial value ranging from 87% (for second-strongest CSR) to 100% (for Medicaid).

Related: CSR takeup bends slightly under the silver load at incomes up to 200% FPL
(enrollment changes by year, broken out by income)

P.P.S. With respect to how much silver loading has changed metal level selection, charts from the post linked to just above seem worth a paste:

Metal Level Selections at Different CSR-eligible Income Levels (% FPL)
HealthCare.gov states

                              2017

                              Strong CSR                     Weak CSR                
Metal level 
100-150%
151-200%
201-250%
bronze
 9.2%
14.5%
27.1%
silver
89.3%
83.2%
67.6%
gold
 <  1%
 1-2%
  4-5%


                              2018

                              Strong CSR                     Weak CSR                
Metal level 
100-150%
151-200%
201-250%
bronze
 9.9%
18.2%
36.5%
silver
89.7%
78.4%
53.4%
gold
  0.09 %
  2.5%
  9.5%

                              2019

                              Strong CSR                    Weak CSR                
Metal level 
100-150%
151-200%
201-250%
bronze
10.4%
20.6%
40.9%
silver
88.3%
76.3%
45.9%
gold
 1.1%
 2.9%
12.6%



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