Open enrollment 2022! Marketplace loaded for bear, but bear traps remain

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Open enrollment in the ACA marketplace begins tomorrow. This will be the first OE season - -and hopefully, not the last - -in which the enhanced subsidies created by the American Rescue Plan (ARPA) are in place. It's a season of hope -- and also worry. Some thoughts below.

1. All systems go? The marketplace, which never reached half the enrollment projected by CBO in 2010, is in some senses loaded for bear this fall. Thanks to ARPA, silver plans with strong Cost Sharing Reduction (CSR) are now free for people with incomes up to 150% FPL ($19,320 for an individual); cost no more than 2% of income at incomes up to 200% FPL; and cost no more than 8.5% of income (without CSR) for any enrollee who lacks access to other affordable insurance. 

Navigator organizations, which operated on a shoestring (if at all) during the Trump years, their federal funding cut from $63 million in 2016 to $10 million in 2018 and years following, have been granted $80 million for 2022. Florida's chief navigator organization, Florida Covering Kids and Families, started with 120 navigators in 2013 but was down to 50 in OE for 2020, with just 25 in the off-season. This OE, they've got 200 navigators in place. (Federal navigator funding, derived from user fees charged to insurers selling in the marketplace, only applies to the 33 states still using HealthCare.gov, the federal exchange. State exchanges fund their own outreach through user fees they retain.)

Albuquerque vs. Miami, or platinum vs. silver benchmark in the ACA marketplace

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A week ago, I put a spotlight on ACA marketplace plan offerings for 2022 in New Mexico, which has essentially implemented a platinum benchmark. That is, regulators have instructed insurers to price silver plans as if all enrollees have incomes below 200% of the Federal Poverty Level. Below that threshold, silver plans, enhanced by Cost Sharing Reduction (CSR) do have actuarial values comparable to those of platinum plans. Under these new pricing guidelines, some half-dozen gold plans are priced well below the benchmark (second cheapest) silver plan, and no one with an income above 200% FPL should buy silver.

While New Mexico is a very small market, this pricing scheme could and should be implemented nationwide. That possibility has implications -- or should have implications -- for Democrats' negotiations over the healthcare provisions to be included in the Build Back Better bill. 

Today, then, I want to compare what's available to buyers with incomes above 200% FPL in Albuquerque and in a market with a more typical pricing structure. Miami fits that bill. There, the lowest-cost gold plan is priced 8% above the benchmark silver plan. That's right at the average spread between lowest-cost gold and benchmark silver nationally during the silver loading era (2018-2021), according to KFF.

If Democrats fail to enhance the ACA or remove the coverage gap, what can the Biden administration do?

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As the extent to which Senators Manchin, Sinema, and other corporate Democrats will eviscerate the original outline of the Build Back Better bill sinks in, it's time to consider the once-unthinkable: what if Democrats fail to extend the enhanced ACA marketplace subsidies enacted in the American Rescue Plan Act (ARPA) in March?  And what if -- which was always uncertain -- they fail to plug the coverage gap in states that have refused to expand Medicaid?

New Mexico models a platinum benchmark for the ACA marketplace

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I'd like to delve a bit deeper into the metal level pricing in New Mexico's 2022 marketplace (discussed in the previous post), since it's a potential model for the whole country. Plans available for 2022 can now be previewed on New Mexico's new state-based exchange, bewellnm.

For 2022, the state's insurance department instructed insurers to price silver plans as if they have platinum value. That's because, for enrollees with incomes up to 200% FPL, silver plans do have platinum value, thanks to the Cost Sharing Reduction (CSR) subsidies available to low income enrollees, which attach to silver plans only. Most silver plan enrollees in New Mexico have incomes below 200% FPL, and the pricing instructions are meant to be a self-fulfilling prophecy: if gold plans cost less than silver, then no one with an income over 200% FPL will buy silver plans. Since premium subsidies are set to a silver benchmark, gold will be available below benchmark, i.e. below the level deemed affordable by ACA criteria.

bewellnm launches with *really* cheap gold plans; some confusion at low incomes likely

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New Mexico's newly minted state-based ACA exchange, bewellnm, has launched plan preview shopping for 2022.

What's noteworthy: uniquely, the New Mexico Office of the Superintendent of Insurance has instructed insurers selling in the state individual market to price silver plans on the assumption that no one who does not qualify for strong Cost Sharing Reduction (CSR)-- that is, no one with an income above 200% of the Federal Poverty Level -- will buy silver.  In other words, silver plans must be priced more or less as if they're platinum* -- since they are in fact platinum-equivalent at incomes below 200% FPL.  Platinum plans (which are almost nonexistent) have an actuarial value (AV) of approximately 90%. CSR brings silver plan AV to 94% for enrollees with income up to 150% FPL, and 87% for those in the 150-200% FPL income range.

This is meant to be a self-fulfilling prophecy: if gold plans (approximately 80% AV) are priced below silver plans, no one who doesn't get the high CSR value should buy silver. Silver plans for enrollees who don't qualify for CSR (income above 250% FPL) have an AV of 70%; those who qualify for negligible CSR (income 200-250% FPL) get an AV of 73%.   Why buy silver if it offers a lower AV than gold -- -but costs more?

In Albuquerque in 2022 (zip code 87107), gold is priced well below silver, as planned. For a 40 year-old ineligible for subsidies (income $100,000**), the lowest-cost gold plan costs $288 per month; the lowest-cost silver plan is $320 per month. Six gold plans, with deductibles ranging from $750 to $2300, are cheaper than the cheapest silver plan, which has a deductible of $5450.  The second cheapest (benchmark) silver plan, at $337/month, has a deductible of $4250. Who would buy silver in these circumstances?

In which the Kaiser Family Foundation moves to quell a PhRMA disinformation campaign

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The Kaiser Family Foundation (KFF) appears to have taken steps prevent PhRMA from using its polling in a disinformation campaign. 

In response, PhRMA has accused KFF of politicizing its research. That's like Donald Trump accusing an opponent of lying to the public (or rigging the vote count).

What KFF did do -- amend its survey questions about empowering Medicare to negotiate prescription drug prices -- is interesting. Let's step back and review how KFF typically structures questions regarding public policy options.

In its questionnaires, KFF will ask whether a respondent favors an initiative -- say, subsidizing children's lemonade stands. 90% approve! It will follow up with a question that raises the possible negative effects -- say, increasing neighbors' likelihood of developing Diabetes from all that liquid sugar.  Approval will drop, a little or a lot.

Wonder of wonders: National balance billing protection for consumers that (probably) won't increase healthcare costs

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The federal government* delivered some rare good news on the healthcare cost control front with release last week of the second part of interim final rule governing implementation of the No Surprises Act, which will protect Americans from the most egregious forms of balance billing (excepting ground ambulances!) beginning on January 1, 2022. The No Surprises Act was part of the broad-based bipartisan budget deal signed into law by Trump in late December 2020.

The good news concerns the ground rules for arbitration of out-of-network bills, which either the provider or the insurer can initiate if they can't agree on a price within 30 days. As in New York, New Jersey and other states that have passed laws protecting patients from balance billing, it's "baseball arbitration," in which the arbitrator must rule in favor of one party's proposed price, rather than splitting the difference. What matters is the standard by which the arbitrator must judge the competing bids. A summary published by CMS provides the upshot: