Monday, April 19, 2021

Can free silver close much of the "upper coverage gap" in nonexpansion states?

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Update, 5/4/21: New data via the CMS state-level public use files for 2021 shows that enrollment at100-138% FPL in nonexpansion states increased dramatically in 2021. See this post for an update.

The principle harm wrought by states that refused to enact the ACA Medicaid expansion after the Supreme Court rendered expansion optional is well known. More than 2 million people with incomes below 100% the Federal Poverty Level (FPL) in the fourteen states that have not yet enacted the expansion are uninsured and eligible neither for Medicaid nor for ACA marketplace subsidies, according to KFF estimates.

A secondary, less recognized harm is imposed on nonexpansion state residents whom the ACA intended to be at the upper end of eligibility for Medicaid, those with incomes in the 100-138% FPL range. In nonexpansion states, residents in this income category are eligible for marketplace subsidies. Until the American Rescue Plan Act (ARPA) was enacted last month, a benchmark silver plan with strong Cost Sharing Reduction would cost enrollees in this income range 2% of income, or a maximum of $29 per month for a single person with an annual income of 138% FPL (currently $17,609). Thanks to ARPA, benchmark silver is now free for enrollees in this income range (and up to 150% FPL).

On paper, even the pre-ARPA offering doesn't sound like a bad deal. The actuarial value of silver in this income bracket is 94%; the average deductible is around $200, and the average annual out-of-pocket maximum is about $1100. But takeup, as I noted in my last post, has been poor. Recent KFF estimates of the uninsured in this income range in nonexpansion states, set against actual enrollment at this income level in 2020, suggest that only about 53% of those eligible have actually enrolled. Take Florida out of the equation, and the takeup rate drops to 43%. 

In this post I'd like to flip the script: what if we make Florida the equation, rather than taking it out? Something in the state's marketplace is going relatively right, and has since the launch of the ACA marketplace.  In Florida, to the extent KFF's estimates of the uninsured are on target, 72% of subsidy-eligible people in the 100-138% FPL bracket are enrolled. That exceeds takeup at 100-138% FPL in the other 11 nonexpansion states tracked by KFF* by almost 30 percentage points. If those states attained Florida takeup rates, the ranks of the uninsured in this category would drop by over 700,000 -- about half of them in Texas (Figure 1).

Figure 1: If other nonexpansion states achieved Florida's enrollment rates at 100-138% FPL

ACA enrollment in nonexpansion states (100-138% FPL)

Sources: CMS State-level Public Use Files, 2020 (enrollment); KFF (uninsured estimate); estimate at 100-138% FPL via Charles Gaba (see this post for details).

On one level, it's flip to posit enrollment gains to be had "if only" other nonexpansion state markets could achieve "Floridian" takeup rates. Florida's marketplace is atypical or unique in several key aspects. Florida is the nation's third largest state by population, second among nonexpansion states (though takeup is very poor in Texas, the largest nonexpansion state). Size matters a lot in health insurance markets, as the difficulty of attracting insurers to rural areas of states nationwide illustrates. Florida's dominant health insurer, Florida Blue, with market share over 50%,  is committed to the individual market and from the beginning incentivized brokers adequately to sell into it -- to the point of being sued (unsuccessfully) for anticompetitive behavior, as since 2018 it has required exclusivity from brokers who sell its products.** Florida Blue has thousands of agents in the state, including a good number of Spanish speaking agents.  The company was also a pioneer in working with the federal exchange,, to develop an online direct enrollment platform enabling the company to credit federal subsidies to enrollees. (Many insurers nationwide, including in nonexpansion states, now offer such "enhanced direct enrollment" (EDE).) In the Miami area in particular, a network of storefront health insurance brokerages developed in the ACA's early years. 

Florida also has a robust nonprofit enrollment assistance infrastructure, centered in the University of Southern Florida's Florida Covering Kids and Families program, the hub of a statewide 40-member consortium with extensive connections to hospitals, churches, business, schools, elected officials, etc. Director Jodi Ray says that "it's taken 20 years to develop this infrastructure" -- pre-ACA, FL-CKF was providing enrollment assistance for other public health insurance programs. (Ray described to me the challenges of providing enrollment assistance under the Trump administration's budget cuts here.)  

All that said, since its launch in the fall of 2013 the ACA marketplace has suffered both from weak outreach and advertising -- sabotaged in many red states from the beginning, and by the Trump administration from 2017 through 2020 -- and from under-subsidization that left many subsidy-eligible enrollees feeling that the coverage on offer was too expensive, both in premiums and out-of-pocket costs. The extent to which poor takeup has been attributable to ignorance (and stigmatization in red states) on one hand and inadequate subsidization on the other has never been clear. 

Via ARPA, Congress and the Biden administration have delivered a massive (albeit potentially temporary) boost to subsidization and will commit major new resources to outreach and enrollment assistance, mainly for the 2022 enrollment year. In this new world, perhaps 72% takeup for free, high-AV coverage is not too much to expect. 


* KFF left Oklahoma and Missouri out of its analysis of the coverage gap, as both were presumed to be primed to enact the expansion in July 2021 as mandated by referendums. The Missouri legislature recently balked at funding that referendum, however, notwithstanding that the referendum changed the state Constitution to require Medicaid eligibility in keeping with expansion criteria. 

** In 2018, Oscar sued Florida Blue, including subsidiaries Health Options and Florida Health Care Plans, for prohibiting brokers who sold its plans from selling competitors' plans. A federal district court judge ruled the exclusivity requirement lawful, and Oscar dropped its appeal this year. Given Florida Blue's market dominance, active broker network and direct enrollment platform, it's likely that a large portion of the state's individual market enrollees do not see often-cheaper options offered by competitors Avmed, Celtic (Centene), Cigna, Health First, Molina and Oscar.

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1 comment:

  1. This brings up an old question:

    Why did so many states discourage insurance agents from getting involved in the ACA?

    I watched this happen in MN and I am sure it happened elsewhere/

    I assume that the carriers wanted to save a little money by not paying commissions, and the states were desperate to keep carriers in the mix. The insurance agent commissions never came from taxpayers.