ACA marketplace 2021: Cheap gold proliferates

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In October 2017, when Trump cut off direct federal reimbursement of ACA marketplace insurers for the Cost Sharing Reduction subsidies they are obliged to provide to low income enrollees who select silver plans, he boasted that he'd destroyed Obamacare. The likely effect, however, had been anticipated at least since January 2016: inflated silver premiums triggering deep discounts in bronze and gold plans, stimulating enrollment. 

Briefly: CSR raises the actuarial value of a silver plan from its baseline 70% to 94% for enrollees with incomes up to 150% of the Federal Poverty Level and to 87% at incomes from 150-200% FPL. Gold plan AV is 80%. When CSR, available only with silver plans, is priced into silver plan premiums, that inflates subsidies, which are set to a silver plan benchmark and designed so that the enrollee pays a fixed percentage of income. That creates discounts for subsidized buyers in bronze and gold plans.

The prophets of silver loading, however, expected deeper discounts in gold plans than we've gotten so far. Here's what Linda Blumberg and Matt Buettgens of the Urban Institute anticipated in January 2016:

In addition, as discussed, the increase in silver plan premiums means that the premium for silver plan (70 percent actuarial value) coverage becomes higher than the premium for gold plan (80 percent actuarial value) coverage. This means that individuals above 200 percent of FPL can obtain higher-value plans at a lower cost if they shift from silver to gold plans. Consequently, virtually all tax credit–eligible individuals with incomes above 200 percent of FPL move to gold plans; their tax credit, computed using the second-lowest-cost silver plan, goes further when used for a gold plan.

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CBO followed suit in August 2017:

...in the agencies’ set of illustrative examples for 2026 under the policy, a 40-year-old with income at 225 percent of the FPL could pay a net premium of $1,150 for a bronze plan or $3,050 for a gold plan. (A silver plan would be available with a net premium of $3,350—more than the cost for a gold plan with a higher actuarial value.)  

Since 2018, gold plans have been available at premiums below the silver benchmark in some ACA states and regions in some years. In general, though, insurers have stubbornly priced gold plans well above silver.  (One explanation: CMS's formula for risk adjustment, which adjusts insurers' compensation according to  the collective risk profile of their enrollees, continues to favor silver plans.) 

Gold plan enrollment has doubled in the silver loading era, from 4% in 2017 to 8% in 2020. But the shift to bronze plans at incomes above 200% FPL has been bigger. Silver loading has bolstered marketplace enrollment chiefly by making free or near-free bronze plans widely available.

Enrollment by metal level at 201-400% FPL in HealthCare.gov States

Year	Total bronze	% bronze	Total silver	% silver	Total gold	% gold	Total
2017	969,190	34%	1,706,780	60%	135,235	5%	2,851,601
2018	1,299,845	45%	1,251,385	43%	337,995	12%	2,891,851
2019	1,428,582	50%	986,957	35%	427,824	15%	2,863,824

 Source: CMS  state-level public use files.***

That may change in 2021. CMS reported yesterday that on average, premiums for lowest-cost gold plans in each market have dropped 6%, while premiums for lowest-cost silver and bronze are down 1%. Look at the change in the average spread between lowest-cost silver and lowest-cost bronze:

The average lowest-cost silver-gold spread is down from $52/month to $33/month since last year, or 37%. It's down from $93 in 2017, or 65%.  At the same time, bronze-silver spreads are apparently declining: the percentage of enrollees who have access to a plan with a premium below $10/month is down from 36% last year (and 39% in 2019) to 30% in 2021.

We don't know yet how the average change in silver-gold spreads will be distributed. Soon we'll probably have maps from the Kaiser Family Foundation and David Anderson showing the prevalence of gold plans priced below silver. It should be at the highest level since the silver loading era began.

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