Tuesday, May 04, 2021

How much will free benchmark silver plans boost ACA marketplace enrollment in nonexpansion states?

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An Urban Institute brief estimates that if the premium subsidy increases for the ACA marketplace enacted through 2022 in the American Rescue Plan are made permanent, marketplace enrollment will increase by 5.1 million, and the uninsured population will decrease by 4.2 million.

That's somewhat higher than the increase of 3 million that KFF's Cynthia Cox floated to me as a soft estimate. A lot depends on the effectiveness of outreach and possible future improvements to the enrollment process, Cox stressed. Both estimates are pretty modest, given the magnitude of the subsidy boost, outlined below. By KFF's estimate, about 10.6 million uninsured are eligible for subsidies under the new schedule.

Here I want to focus on the category* in which Urban foresees minimal change: enrollment at 100-138% FPL in states that have refused the ACA Medicaid expansion. In those states, eligibility for marketplace subsidies begins at 100% FPL, whereas in expansion states, adults** with incomes up to 138% FPL are eligible for Medicaid. Under ARPA, benchmark silver coverage is free at this income level, and in fact up to 150% FPL. And up to that threshold, Cost Sharing Reduction boosts the actuarial value of the free silver plan to 94%, well above the average for employer-sponsored coverage. According to CMS, the average deductible for silver plans at this income level is just $69 in HealthCare.gov states (e.g., all nonexpansion states). While even modest out-of-pocket costs appear to be a barrier at near-poor incomes -- Medicaid logs higher satisfaction ratings than high-CSR marketplace coverage in surveys -- this is a very valuable free benefit.

The Urban Institute analysis estimates that ARPA will reduce the uninsured population at incomes below 138% FPL by only 312,000. The authors do not provide an estimate of the subsidy-eligible population at 100-138% FPL -- but as I noted in early April, the Kaiser Family Foundation does provide such estimates for 12 nonexpansion states.*** In those 12 states together, 1.8 million people with incomes in the 100-138% FPL range were uninsured in 2019, according to KFF's estimate.  

In that prior post, I set Kaiser's estimates of the uninsured at 100-138% FPL  next to enrollment in this income bracket as of the end of Open Enrollment for 2020 (see that post for how I derived enrollment at 100-138% FPL from enrollment at 100-150% FPL, which CMS reports). 

   Takeup of ACA marketplace coverage at 100-138% FPL in 12 nonexpansion states: 2020

Sources: CMS State-level Public Use Files, 2020 (enrollment); KFF (uninsured estimate); Charles Gaba (enrollment at 138% FPL).

By this measure, takeup under the current subsidy schedule looks low -- 53% overall, and just 43% in states other than Florida, which has uniquely high takeup. But all the parts are moving parts. Since I posted that chart, CMS has published public use files for 2021, which break out enrollment by income. And as I noted yesterday, while total enrollment nationwide increased by just 5% as of the end of Open Enrollment for 2021, enrollment in the 100-150% FPL category in nonexpansion states fairly exploded. 

Enrollment at 100-150% FPL in nonexpansion states: 2020 vs. 2021

Enrollment increases at 100-138% FPL compared to CMS's 100-150% FPL breakout are likely to be proportionate, if not larger, as premiums as a percentage of income are lower at 100-138% FPL (2% of income for the benchmark plan) than at 138-150% FPL (2-4% of income).  

The enrollment increase at 100-138% FPL in nonexpansion states in 2021 likely exceeds Urban's estimate for further increase if the ARPA subsidy boosts are made permanent. Urban's analysis takes this year's enrollment surge into account, I'm told.

Can we estimate current takeup of marketplace coverage at 100-138% FPL in nonexpansion states based on 2021 Open Enrollment totals? Once again, there are a lot of moving parts. First, attrition: effectuated enrollment as of February each year is usually about 10% below "plan selections" as of the end of OE -- though that attrition has been shrinking, and the drop in 2020 from end of OE to February was just 6.5%. Attrition usually continues year-round: in 2019, the last year for which full-year figures are available, average monthly enrollment was 14% below end-of-OE enrollment.  But this year we are in the midst of an emergency Special Enrollment Period that's effectively serving as an Open Enrollment period running through August. That may offset the normal attrition entirely. 

Most important, we don't know to what extent the pandemic may have affected the uninsured population.  Several analyses have suggested that the uninsured rate has not risen dramatically; it may even have decreased, thanks largely to a pause in Medicaid disenrollments effected by the Families First Act of March 2020. Medicaid enrollment has increased by about 10 million nationally during the pandemic.

All that said, below I've set 2021 enrollment totals at 100-138% FPL in nonexpansion states against KFF's uninsured estimate, as well as against a second estimate of the uninsured: KFF's, minus half of the enrollment increase at this income level in each state.  That is, the measure in the far right column posits that for every two new enrollments, the uninsured population drops by one. That suggests a takeup rate of 60% overall, and 49% in nonexpansion states other than Florida. 

Takeup of ACA marketplace coverage at 100-138% FPL in 12 nonexpansion states

Sources: CMS State-level Public Use Files, 2020, 2021 (enrollment); KFF (uninsured estimate); Charles Gaba (enrollment at 100-138% FPL).

Viewed in light of this enrollment surge in these states at this income level, Urban's estimate that the uninsured population would drop by 312,000 at incomes below 138% FPL if the subsidies are made permanent does not seem so inconsequential. 


* Urban envisions the largest reduction in the uninsured population  --2.4 million -- coming from the 200-400% FPL income band, a 31% drop in that cohort. The next largest drop in the uninsured -- 823,000 -- would be among people with incomes over 400% FPL, many of whom would be become newly subsidy-eligible, reducing uninsurance among the relatively affluent by 21%. Third is the 138-200% FPL category, where Urban sees uninsurance dropping by 639,000, a 14% reduction. 

** Legally present noncitizens with incomes  who are subject to the federal "5-year bar" on Medicaid eligibility (or even more stringent state bars) are eligible for marketplace subsidies regardless of income. In 2016, CMS reported that 3% of enrollees in HealthCare.gov in states who reported income had incomes below 100% FPL.

*** KFF excludes Missouri and Oklahoma, which were slated to enact the expansion this summer. Missouri's legislature has balked, defying a Constitutional amendment passed by referendum and refusing to fund the scheduled expansion. 

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