When the premium subsidy enhancements for the ACA marketplace that became law when the American Rescue Plan passed were first published in early February of this year, my first thought was that no one with an income below 200% FPL should ever buy a bronze plan again:
If the subsidy enhancements become law while the emergency SEP [Special Enrollment Period, running from Feb. 15 to Aug. 15 on HealthCare.gov] is still open, bronze plan enrollment at incomes under 200% FPL should go to zero. At incomes up to 150% FPL ($19,140 for a single person), silver coverage will be free. At 200% FPL ($25,520 for a single person), benchmark silver will cost $43 per month. That expense doesn't feel like nothing at that income, but the average deductible for silver at that income level ($800) is about one ninth of the average bronze deductible ($6,921). The out-of-pocket maximum for bronze plans is usually close to the highest allowable, $8,550 for a single adult. For silver at incomes up to 200% FPL, it's $2,850, and usually well below that, averaging $1,189 at incomes up to 150% FPL and $2,528 at 150-200% FPL.
Well, those subsidy boosts did go into effect during the emergency SEP, helping to drive a major surge in off-season enrollment. Nationally, 2.8 million people newly enrolled in ACA marketplace plans from Feb. 15 to Aug. 15, 2.1 million of them in the 36 states using the federal exchange, HealthCare.gov. And while selection of plans at metal levels other than silver at low incomes did not go zero during the SEP, it did go way down, reversing a troubling trend. The ARPA subsidies are reducing underinsurance.
As I noted in April, silver plan selection at incomes in the 100-200% FPL income range, where CSR adds major value to silver plans at no extra cost to enrollees, dropped from 87.0% in the Open Enrollment period for for 2017 to 77.6% in OE 2021. The drop was mainly concentrated in the 150-200% FPL range, where, before ARPA was enacted, a benchmark silver plan premium topped out at about $135 per month for a single enrollee -- a hard swallow at an income of about $25,000 per year. At 150-200% FPL, silver plan selection dropped from 83.2% in 2017 to a pretty dismal 66.8% in 2021.
Source: CMS state-level public use files (also for all OE stats below)Why the drop in CSR takeup? In the April post I posited:
The wide availability of free bronze plans since 2018, thanks to the silver loading* that began that year after Trump cut off direct reimbursement to insurers for CSR costs in October 2017, has eaten into silver selection at low incomes. More than half of enrollees with incomes up to 200% FPL are likely eligible for free bronze plans (see KFF estimates by income and county here). During Open Enrollment for 2021, benchmark silver plan premiums were $29/month for those with incomes up to 138% FPL, $64/month at 150% FPL, and about $135/month at 200% FPL. (The benchmark plan, against which subsidies are set, is the second cheapest silver plan. In some markets, the cheapest silver plan is significantly cheaper.)
The final enrollment report for the emergency SEP provides incomplete evidence that ARPA did in fact stop the slide in silver plan selection at incomes below 200% FPL, possibly raising CSR takeup below that income threshold to record levels.
In HealthCare.gov states, 54% of all new SEP enrollees obtained one of the two highest levels CSR (raising actuarial value to 94% or 87%), available only at incomes below 200% FPL. In Open Enrollment for 2021, by comparison, 46% of all enrollees in HealthCare.gov states enrolled in silver plans at those CSR levels (3,828,040 out of 8,251,703 total enrollees).
If 54% of enrollees in HealthCare.gov states in Open Enrollment 2021 had obtained "CSR94" or "CSR87" silver plans, that would have meant an additional 628,000 high-CSR enrollees. CSR takeup at incomes in the 100-200% FPL range** would have been 90% rather than 77.5%.
A simpler calculation is available for SEP enrollees with incomes up to 150% FPL, where silver coverage is free. In HealthCare.gov states, 45% of enrollees had incomes below 150% FPL during the SEP (including 3% below 100% FPL), and 41% obtained silver plans with an actuarial value of 94%, available at incomes up to 150% FPL. That's 91%. But a small percentage of enrollees in this income range, perhaps 1-2% (see second note below), are subsidy-ineligible, kicking likely CSR takeup at incomes below 150% FPL to perhaps 93%. Silver plan selection generally runs several points higher at incomes below 150% FPL than at 150-200% FPL (about six percentage points higher when takeup was at its highest).
Enrollees during the SEP may have had slightly lower incomes on average than enrollees in OE -- or differently distributed incomes. Unfortunately, the SEP enrollment report does not break out enrollment in the 150-200% FPL range, as CMS does after every OE in public use files. But the report does break out income at 100-150% FPL: it was 42% of all enrollment on HealthCare.gov. During OE 2021, 41% of enrollees in HealthCare.gov states had incomes in that bracket. So, pretty close.
Enrollment skews toward lower incomes in HealthCare.gov states than in the states running their own exchanges (15 in 2021, 18 in 2022) because all the states that have refused to enact the ACA Medicaid expansion use HealthCare.gov, and in those states, eligibility for marketplace subsidies begins at 100% FPL rather than at 138% FPL, the threshold for Medicaid eligibility in expansion states. In 2021, nonexpansion states accounted for about three quarters of all enrollment on HealthCare.gov, and in those states, about 42% of all SEP enrollees would be eligible for Medicaid if their state had enacted the expansion. For almost all those enrollees, silver plans with CSR raising the actuarial value to 94% are now free, and were during the SEP -- as they are for almost all the 40+% of all enrollees on HealthCare.gov with incomes below 150% FPL.
During the current Open Enrollment for 2022, one factor, auto-enrollment, will likely reduce CSR takeup relative to the emergency SEP. In 2021, 21% of all enrollees on HealthCare.gov were 2020 enrollees who did not update their information and were consequently auto-enrolled in their existing plans. As the most passive enrollees are also likely the least sophisticated (with regard to plan selection, that is), a fair number who can now obtain free or very low-cost silver plans may remain in bronze plans.
In a somewhat different context, healthcare scholars Petra W. Rasmussen and David Anderson recommend, in an article published this past July, that "passive" enrollees whose plan in one year is "dominated" by a plan at a higher metal level in the next year be auto-enrolled in the higher-value plan rather than in their current plan. The context was regions in which silver loading rendered gold plans less expensive than silver plans; the domination occurs only at incomes above 200% FPL, as at incomes below that threshold, silver plans (enhanced with CSR) have higher actuarial value than gold.
In any case, the same principle applies to low income bronze enrollees who are now eligible for free silver plans, or silver plans at the same or lower premium than their current bronze plans. No one who is subsidy-eligible and has an income under 150% FPL should be in bronze. The same holds for nearly all enrollees with income in the 150-200% FPL range.
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* Silver loading is a premium pricing practice that began in 2018 in response to Trump's abrupt cutoff in October 2017 of direct reimbursement to insurers for CSR. State regulators responded by permitting insurers to price CSR into silver plans only, since CSR is available only with silver plans. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans. Those discounts in turn have been (rightly) driving upper-income enrollees out of silver plans.
** A small percentage of enrollees in CSR94 have incomes below 100% FPL, as legally present noncitizens who are time-barred from Medicaid eligibility are eligible for subsidized marketplace coverage at incomes down to zero. They are roughly offset, however, by enrollees in the 100-200% FPL range who are not eligible for subsidies, usually because of an "affordable" offer of insurance from an employer. The California exchange reports that at incomes below 138% FPL, the Medicaid eligibility threshold for all but noncitizens time-barred from Medicaid, 21% of enrollees were unsubsidized (as of March 2021; in prior years the percentage was over 30%). At incomes between 138% FPL and 200% FPL, 1% are unsubsidized. In total, 2.3% of enrollees with incomes below 200% FPL in California are unsubsidized (see Active Member Report, March 2021, available here). CMS does not provide similar subsidized/unsubsidized breakouts at different income levels for HealthCare.gov states.
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