Juice it, Jersey: What silver loading anemia looks like

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I have noted before that New Jersey's implementation of an individual mandate and a reinsurance program in its ACA marketplace in 2019 illustrates the tradeoffs involved in reducing premiums in the ACA marketplace. In brief: unsubsidized premiums down, subsidized premiums up.

I have also noted that in New Jersey, silver loading is underpowered -- that is, it has produced weaker-than-average discounts in bronze plans and no discounts in gold plans, which accounted for an anemic 2% of enrollment in 2019.

Last week, David Anderson and Coleman Drake published a study indicating that the widespread availability of free bronze plans, a major byproduct of silver loading*, has had a particularly strong impact on enrollment.  The authors noted that this effect is conspicuously lacking in Jersey, and suggested a reason:

New Jersey restricts cost-sharing variation within metal levels. In 2019 New Jersey bronze plans were required to have an actuarial value of 64 percent—higher than the 58.5 percent minimum allowed by federal law. This regulation limited the financial exposure of existing enrollees by preventing them from selecting plans with higher cost sharing. However, it also limited the premium spread between the benchmark silver plan and bronze plans, which reduced the availability of zero-dollar premium plans in the state and thereby reduced enrollment. A trade-off thus exists between reducing enrollees’ financial exposure by increasing minimum actuarial value levels and increasing insurance coverage via the zero-price effect.

Anderson and Drake find that in the 39 HealthCare.gov states, 70% of 25 year-olds in the 150-200% FPL bracket had access to free bronze in 2019. In New Jersey, none did. A single 25 year old with an income just over 150% FPL ($19,000) would come close, paying just  $3 per month, but at $20,000 income the premium would rise to $20/month, and at $24,000 (192% FPL), to $58/month. Free bronze was available to many NJ enrollees, but to a smaller percentage than the national average.

Because I would like to see New Jersey regulators take positive action to improve affordability for subsidized shoppers in the state marketplace, here I want to peer deeper into the evidence that the lack of bronze and gold discounts in the state is hurting enrollment.

Anderson and Drake calculate that in 2019, the widespread  availability of free bronze triggered by silver loading bolstered enrollment in the 150-200% FPL income bracket by about 200,000. NJ enrollment in that income bracket was down 19% from 2017-2019. It was down nationally as well, but less so. All figures below are drawn from CMS's state-level public use files.

Enrollment by Income  2017-2019 - Subsidy-eligible Income Levels

New Jersey

Year	Total enrollment	100-150% FPL	150-200% FPL	200-250% FPL	250-300% FPL	300-400% FPL	Other  FPL
2017	295,067	45,158	77,316	49,422	30,975	37,236	54,960
2019	255,246	37,683	62,459	41,884	26,623	35,877	50,750
Change 2017-19	-13%	-17%	-19%	-15%	-14%	-4%	-8%

Enrollment by Income  2017-2019 - Subsidy-eligible Income Levels

HealthCare.gov States

Year	Total enrollment	100-150% FPL	150-200% FPL	200-250% FPL	250-300%  FPL	300-400%  FPL	Other  FPL
2017	9,201,805	3,208,242	2,050,555	1,312,520	752,403	786,678	1,091,407
2019	8,411,614	2,914,593	1,797,501	1,243,762	749,637	870,425	835,696
Change 2017-19	-9%	-9%	-12%	-5%	Flat	+11%	-23%

Bronze deductibles are a monstrosity, averaging over $6000; I don't blame NJ for mandating lower-than-average thresholds -- $3,000 for ordinary bronze plans; $3,500 for HDHP bronze plans. Those deductibles are impossible at an actuarial value below 64%, whereas CMS allows bronze plan AV to go as low as 56%.  But there's a tradeoff involved. Anderson and Coleman's research suggests that $0-premium bronze also stimulates people to enroll high-CSR silver.  Marketers know that an enticing lowest price often brings in customers who select a more expensive option.

Perhaps the state could create a bargain-bronze category while mandating that insurers that offer it also offer at least one bronze plan with the lower deductible currently mandated.

As for gold plans, thanks to silver loading, gold enrollment more than doubled nationally in percentage terms from 2017-2019, from 4% to 8.3% of total enrollment (from 494,000 to 959,000). In Jersey, gold is priced out of reach, and gold enrollment has collapsed from 10,226 in 2017 to 4,588 in 2019 - less than 2% of total enrollment. This despite the fact that average AV in NJ for all silver plans sold on-exchange is 80%, the same as gold. And it should be higher, because more people who aren't eligible for strong CSR should have switched out of silver. The state could require that plans at each metal level be priced more in accord with their actual AV.

Nationally, enrollees at 201-400% FPL (i.e., subsidized enrollees ineligible for strong CSR) have taken advantage of silver loading to switch out of silver in droves, and enrollment in this income range was up slightly.  Below is the movement in HealthCare.gov states.

Enrollment by Metal level at 201-400% FPL, 2017-2019

HealthCare.gov states

Year	Total bronze	% bronze	Total silver	% silver	Total gold	% gold	Total
2017	969,190	34%	1,706,780	60%	173,881	6%	2,851,601
2019	1,428,582	50%	986,957	35%	427,824	15%	2,863,824

In New Jersey, there was some shift out of silver, but it was far more modest, and enrollment was down at 200-400% FPL.

New Jersey: Enrollment by Metal level at 201-400% FPL, 2017-2019

Year	Total bronze	% bronze	Total silver	% silver	Total gold	% gold	Total
2017	25,988	21%	84,467	72%	4,090*	3%	117,633
2019	33,041	32%	68,746	66%	1,836	2%	104,384

* In 2017 CMS did not break out gold enrollment by income. The figure provided is an estimate, taking the same percentage of total gold enrollment (10,226) that the 200-400% FPL bracket accounted for in 2019.

Nationally, silver loading partly offset factors depressing enrollment, such as the Trump administration's massive cuts to enrollment assistance and advertising; repeal of the individual mandate; premium increases for the unsubsidized; shortening of the enrollment season; and expansion of the availability of lightly regulated short-term plans. In Jersey, silver loading hasn't pulled much weight --except perhaps for off-exchange, where silver plans free of the silver load became available in 2019.

Not to overstate NJ's enrollment losses: in 2019, off-exchange enrollment increased, and retention in the first two quarters improved. Enrollment at the end of Q2 2019 for the entire individual market was higher than at the end of Q2 2018. The mandate and reinsurance doubtless helped boost unsubsidized enrollment. But reinsurance likely also depressed subsidized enrollment, as spreads below the benchmark were reduced in 2019 (they upticked this year).

In the coming year, New Jersey is scheduled to complete its transition to a state-based marketplace -- a jolt that will probably depress enrollment in the short term, as it seems to have in Nevada this year, where enrollment is down 7.2% after the launch of the state marketplace. As the state takes more complete control of its marketplace, it should investigate means to boost silver loading effects.

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* 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. The effect is further concentrated when insurers offer off-exchange silver plans with no silver load, as AmeriHealth did in New Jersey starting in 2019.