Wednesday, October 28, 2020

Cheaper gold in the ACA marketplace's high-enrollment counties

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Last week, CMS reported that in 2021, average premiums in states are dropping for the third straight year. I noted that since lowest-cost gold plans were dropping an average of 6%,  compared to a 1% drop for lowest cost silver and bronze, we should see steeper discounts in gold plans this year. 

Perhaps, that is, the markets will move a bit closer to the gold-cheaper-than-benchmark-silver norm envisioned by the prophets of silver loading prior to Trump's cutoff of direct CSR funding in October 2017 (see this post for an explanation). 

That appears to be the case, to judge by premium changes in the ten U.S. counties with highest marketplace enrollment in 2020. Enrollment in these 10 counties accounts for 17% of all enrollment nationally.

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Counties with highest ACA marketplace enrollment, 2020
As of the end of Open Enrollment 2020

Source: CMS Public Use Files; Covered California Active Member Profile, March 2020
California county enrollment is as of March 2020 and so reflects first-month attrition (3.8%)

Charted below are premiums net of subsidy for the lowest-cost bronze, silver and gold plans in these counties in 2020 and 2021 for a single 40 year-old with an income of $24,000.  Premium quotes are courtesy of the fastest plan shopping tool in the west (and east), Healthsherpa.

First, a caveat: Since the Federal Poverty Level adjusts for inflation every year, $24,000 represents 192% FPL in 2020 and 188% FPL in 2021.  At 192% FPL in 2021 ($24,518), premiums are $6/month higher for a 40 year-old, except where the subsidy wipes out the bronze premium at both income levels. I've accordingly only flagged cheapest-gold premium changes in excess of $10/month.

On further note: while Los Angeles, CA, encompasses two rating areas with different plan menus, Miami-Dade and Broward counties in Florida have the same plan offerings. 

Lowest-cost bronze, silver and gold plans in high-enrollment counties
Premiums for solo 40 year-old, income $24,000/year

Pricing in populous counties tends to be more stable and predictable than in smaller ones. More dramatic discounts, as well as more sharply limited plan offerings, are more common in less populous counties and states. That's in part because monopolies are concentrated in rural states and areas, and monopoly insurers can manipulate spreads between the benchmark and cheaper plans as they please. It would be worthwhile to take soundings from mid-size and small, not to say tiny counties, to check gold spreads further. David Anderson will probably spotlight some of the more dramatic markets.

Nonetheless, the shift toward cheaper goal reflected above is substantial. Gold enrollment has doubled since 2017, the last year in which silver loading was not in play. It should rise further this year.

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