Six years later: Some stuff we've learned (or think we've learned) about the ACA marketplace

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The ACA marketplace is in its seventh year -- not a baby any more. I was just musing about some things we've learned, or think we've learned. Some are well understood, some are little recognized, some are tentative hypotheses. In no particular order:

• The marketplace came of age during a period of steadily rising employment. That's good news for the country, but has constituted a steady headwind for enrollment. ACA subsidies are on standby as a shock absorber for the next recession (if the courts don't kill the law).


• Since 2018, silver loading* has partly offset factors depressing enrollment, including massive cuts to outreach and advertising, rising incomes and employment, and rising premiums (in 2017-18) and out-of-pocket costs. As of 2019 silver loading had probably boosted enrollment by about 500,000.


• Those out-of-pocket costs have risen relentlessly. That's inevitable in a system where a fixed percentage of income buys a fixed actuarial value, since healthcare costs continue to rise far faster than inflation.  In 2014, the top allowable out-of-pocket maximum for a single enrollee was $6,350.  In 2021, it will be $8,550. The average silver plan deductible (for those who don't qualify for CSR) was $2,425 in 2014 and $4,544 in 2020.


• Coincidentally or not, retention has improved since silver loading* began in 2018, rendering an apparent 10% drop in on-exchange enrollment nationally at least partly illusory. Possible causes: a) A shorter enrollment period draws fewer ambivalent or marginal enrollees; b) advertising and outreach, severely cut since 2016, draws in more marginal enrollees;  c) silver loading discounts have produced a cohort of enrollees less likely to drop coverage; d) a maturing marketplace builds a cohort of people who rely on individual market coverage.


• Getting word out about new programs and provisions is hard. In 2020, California added state premium subsidies to supplement federal subsidies, including for people who earn to much to qualify for federal subsidies. The state also enacted a state "individual mandate" penalty for remaining uninsured. Throughout open enrollment, Covered California, the state marketplace, has been issuing warnings that much of the population remains unaware of these new marketplace features, despite strong state-funded advertising and outreach efforts.


• Turmoil in the ACA marketplace -- a product of its design flaws, Republican stonewaling precluding fixes, shakeouts in an untested market, and straight-out multi-front sustained Republican sabotage -- has hurt unsubsidized enrollees more obviously than subsidized. Subsidized enrollment is probably at its highest level ever (barely) in 2020; unsubsidized enrollment was halved from Q1 2016 to Q1 2019.  At the same time, we don't know to what extent Republican hostility, including refusal to publicize and support enrollment assistance, coupled with disinformation out of elected officials' mouths, impeded subsidized enrollment from the start. 


• State efforts to improve their marketplaces are bedeviled by a paradox: reducing base premiums tends to raise premiums for subsidized enrollees -- more specificaly, to reduce discounts in plans that cost less than the benchmark (second cheapest) silver plan. Initiatives like state-sponsored public options and federally funded reinsurance programs thus entail tradeoffs that state officials need to think hard about. New competition in a given market also tends to reduce or eliminate existing discounts.


• Most of the coverage gains effected by the ACA are a result of Medicaid expansion -- a more cost effective and income-appropriate service than the private plan marketplace.

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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.