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.
The table below shows premiums, deductibles, and annual maximum out-of-pocket costs (MOOP) for the benchmark silver plan (against which income-adjusted subsidies are set) and the two lowest-cost gold plans in Miami and Albuquerque. The lowest-dollar option among the three plans in each category is marked in green. Premiums are shown for a 40 year-old and a 60 year-old with an annual income of $34,000 -- a bit too high to qualify for CSR (264% FPL).
Albuquerque
vs. Miami: Benchmark silver vs. two lowest-cost gold options
Monthly premium/deductible/MOOP
Single 40 year-old, income $34,000/year
|
City |
Benchmark
silver |
LC gold |
2nd
gold |
|
Miami |
$128/$4000/$8700 |
$166/$2850/$5500* |
$169/$1000/$8700 |
|
Albuquerque |
$133/$4250/$8700 |
$86/$2300/$8250 |
$96/$750/$8700 |
Single 60 year-old, income $34,000/year
|
City |
Benchmark
silver |
LC gold |
2nd
gold |
|
Miami |
$128/$4000/$8700 |
$206/$2850/$5500* |
$213/$1000/$8700 |
|
Albuquerque |
$137/$4250/$8700 |
$37/$2300/$8250 |
$45/$750/$8700 |
* The lowest-cost gold plan in Miami is an HSA-linked plan, which means that all
services except free preventive care are subject to the deductible. Hence the
low MOOP.
A few notes:
1. For a 60 year-old, bronze plans are available free in Miami and for $1/month in Albuquerque. For a 40 year-old, bronze premiums begin in the $40s/month in Miami and in the $30s in Albuquerque -- another effect of the required high pricing of silver in New Mexico. (The wider the spread between the premium for the benchmark silver plan and for plans that cost less than the benchmark, the bigger the discounts.)
2. With regard to maximum out-of-pocket costs, gold plans usually offer only a modest advantage, as reflected above. In Albuquerque, though (and throughout most or all of New Mexico), Blue Cross offers a gold plan with a relatively low MOOP of $4500 for just a few dollars more than the lowest-cost gold plan. In general, marketplace plans have terribly high MOOP for anyone who doesn't qualify for strong CSR (and even with strong CSR, the caps are high in proportion to the low incomes that qualify). In fact, enrollees with incomes over 200% FPL who know that they will need significant care are often best off in an HSA-linked bronze plan, which has a statutory MOOP of $7,000 -- lower than that of many if not most silver and gold plans.
3. The estimates for benchmark silver provided on bewellnm, the state's new exchange, appear to be a bit off.* Benchmark silver premiums do not vary nationally, or by age for a single person -- they are a fixed percentage of income, varying with size of income (unless they are below the required percentage of income without subsidy). At an income of $34,000, the benchmark plan should cost $128/month in 2022.
Now, as to the implications of New Mexico's pricing scheme for pending legislation. It's long been taken as a given that Democrats will extend the large, temporary boosts to ACA subsidies provided in the American Rescue Plan Act last March (including ARPA's removal of the income cap on subsidy eligibility). But in the current Hunger Games imposed by Manchin and Sinema, Democrats are reportedly considering extending the subsidies for just three years -- apparently gambling, with no apparent basis in reality, that either they will retain control of Congress or that Republicans won't dare let the increased subsidies expire.
One way to fund a permanent extension would be to restore the direct reimbursement to insurers for the value of CSR that Trump cut off in October 2017. That cutoff led to CSR being priced into silver plans only in almost all states, since CSR is available only with silver plans. Anticipating the Trump cutoff, the Congressional Budget Office estimated that such "silver loading" would cost the Treasury $194 billion over 10 years. That estimate is quite close to CBO's current estimate of the cost of making the ARPA subsidy boosts permanent -- $209 billion over 10 years.
But CBO anticipated that silver loading would lead to gold plans being priced consistently below silver. That hasn't happened; the effect has been partial and haphazard, and the cost so far surely well below what CBO anticipated (premiums, after a large jump in 2018 only partially influenced by Trump's long-anticipated cutoff of direct CSR reimbursement, have been all but flat from 2019-2022). In the 33 states that use HealthCare.gov, just 820 counties (out of about 2500) price gold plans below benchmark. Still, the estimated savings from mandating direct CSR payments could fund permanent ARPA subsidy extension -- while ending silver loading.
Conversely, though, silver loading taken to the max, as in New Mexico, might be almost as valuable to marketplace enrollees as the ARPA subsidy boosts. The chief difference would be that the ARPA boosts are particularly strong at low incomes, rendering high-CSR silver either free (to 150% FPL) or very low cost ($43/month for benchmark silver at 200% FPL). New Mexico's de facto platinum benchmark, conversely, primarily benefits enrollees with incomes over 200% FPL -- though if ARPA subsidies lapsed, it would also offer a strong lower-cost alternative to those eligible for strong CSR (which, pre-ARPA, cost an enrollee at 200% FPL about $135/month).
I would like to see** a both/and outcome: permanently fund ARPA subsidy boosts, and implement New Mexico's CSR pricing factor (price silver at 1.44 times what it would be priced at its baseline 70% AV) nationally. If that's off the table, though, paring back ARPA subsidies might be preferable to extending them for a mere three years, as rumored. Maintaining ARPA's elimination of the income cap on subsidy eligibility would seem to be essential, as Democrats were pounded politically for years by the unaffordability of marketplace plans for those with incomes above the old cutoff, 400% FPL. But somewhat higher percentages of income for benchmark silver might be offset by New Mexico-style silver loading -- which might cost just as much but would not require new appropriations from Congress. Also, maximizing silver loading would enable a future Democratic Congress to trade that practice for a larger subsidy boost, without increasing spending for the new subsidies above the current law baseline.
Silver loading, as implemented so far and as it could be augmented, should be part of the equation as Democrats continue to struggle over which pounds of flesh to carve out of their one shot at transformative legislation.
--
* Bewellnm has at least one serious bug to work out: erroneous estimates of total costs "in a bad year" provided for each plan. Those estimates roll together the unsubsidized premium and the MOOP, rather than the premium the prospective enrollee will actually pay net of subsidy, plus the MOOP.
** What I'd really like to see: the ACA marketplace replaced by a program that pays government rates to providers and passes the savings on in the form of higher benefits. But that's about as likely at present as the U.S. adopting Danish as the national language.
Photo by Cup of Couple from Pexels
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