Ever since the American Rescue Plan Act's boosts to premium subsidies in the ACA marketplace came online last March (and even before), a chief interest of mine has been whether the enhanced subsidies will reduce underinsurance as well as boosting enrollment (and so reducing uninsurance).
The chief source of reductions in underinsurance would be improved takeup of silver plans with Cost Sharing Reduction (CSR) at incomes up to 200% FPL* ($25,760 for a solo enrollee). CSR is available only with silver plans. As boosted by ARPA, a benchmark (second cheapest) silver plan is now free at incomes up to 150% FPL and costs 0-2% of income at 150-200% FPL. At 200% FPL, benchmark silver used to cost about $135 per month for a single person; it now tops out at $43/month. More than half of ACA marketplace enrollees have income below 200% FPL.
As noted in this post, silver plan selection among low-income enrollees had been sliding since 2017, but ARPA did apparently reverse the trend during the emergency Special Enrollment Period that ran from Feb. 15 to Aug. 15 last year in HealthCare.gov states, and for varying periods in the 18 state-based exchanges. Below, we'll get a point of comparison from California.
In the Open Enrollment Period for 2017, 89.3% of enrollees with income in the 100-150% FPL range selected silver plans; in OEP for 2021, 82.7% chose silver. The slide was more pronounced at 150-200% FPL, from 83.2% in 2017 to 66.8% in 2021.
As to why silver is almost always the best choice at incomes up to 200% FPL, and why silver selection has been sliding since 2017, see, again, this post, or the note at bottom.
While enrollment stats for the emergency SEP period are less comprehensive than those released yearly after OEP, it seems that about 93% of enrollees with income up to 150% FPL in HealthCare.gov states chose silver plans, and probably about 90% of all enrollees with income up to 200% FPL. In brief: according to the SEP report, 45% of HealthCare.gov enrollees had incomes below 150% FPL, and 41% of all enrollees obtained the highest level of CSR, available to enrollees with incomes up to 150% FPL. A small percentage of enrollees below that threshold are generally ineligible for subsidies, so perhaps 44% of enrollees were subsidy-eligible and had income below 150% FPL.
CSR takeup in California in 2022
Now (as of Feb. 23) it's possible to look at another data source: Covered California, the state-based exchange for the golden state, which accounts for about 12% of all marketplace enrollment. CoveredCA provides detailed annual statistics both for new enrollment and total enrollment. Generally, silver plan selection is somewhat lower among new enrollees than among all enrollees, suggesting that retention is higher among silver plan enrollees.
The best basis for comparison in the Covered California tables with the emergency SEP figures for HealthCare.gov states is perhaps new enrollment in 2022. The best match for comparing long-term trends is total enrollment (new and re-enrollment). On the other hand, from Feb. 15, 2021 forward, some 339,000 Californians enrolled during the emergency SEP, and more changed plans. Thus a hefty percentage of current enrollees, including many re-enrollees, have chosen plans from a menu reflecting the ARPA subsidy boosts.
Below are the annual low-income silver selection figures for subsidized new enrollees with income up to 200% FPL since 2019. I omit prior years because CoveredCA did not separate out unsubsidized enrollees in its tabulations of new enrollees until 2019.
Silver plan selection did improve substantially in the 150-200% FPL bracket, and modestly at incomes under 138% FPL -- where, it should be noted, CoveredCA has had persistently low silver selection (this may be true of all ACA exchanges; only CoveredCA provides detailed breakouts at incomes below the normal threshold for subsidy eligibility). There is no obvious improvement at 138-150% FPL, except compared to 2021, which in CoveredCA as in HealthCare.gov was a nadir for silver plan selection.
Subsidy-eligible enrollees at incomes below 138% FPL, the Medicaid eligibility threshold, are by definition legally present noncitizens time-barred from Medicaid, who are subsidy-eligible at incomes starting at $0. As high-CSR silver coverage is now free at this income level (and at 138-150% FPL), it's hard to see a rationale for selecting other metal levels.
One potential motive was suggested to me by Cynthia Cox, ACA program director at the Kaiser Family Foundation: Silver plans from Kaiser Permanente, probably the nation's foremost provider-run HMO and the state's dominant insurer, with 34% market share among new enrollees in 2022, are priced well above those of the lowest-cost insurers in much of the state. In LA County, at an income of $19,000 (slightly under 150% FPL), silver plans from L.A. Care and Anthem are available for free, while the Kaiser silver plan costs $46 per month for a single 40 year-old.** While 21.5% of Anthem's enrollees obtained the highest level of CSR and so had incomes below 150% FPL, just 9% of Kaiser enrollees did. Some low-income enrollees may choose bronze plans to get free or lower-cost access to Kaiser or more expensive plans (e.g., broader-network PPOs) offered by other insurers. [Paragraph updated, 3/7]
The plan selection tools, as on HealthCare.gov and most state exchanges, invite users to enter the names of specific doctors, hospitals and drugs and identify plans in which those providers participate and those drugs are covered. That information might lead some enrollees to rationally choose a lower metal level to obtain a preferred network or formulary. Under the current ARPA-boosted subsidy schedule, however, at incomes under 200% FPL it seems unlikely that those who have cause to closely consider questions of network and formulary wouldn't be better off paying relatively modest premiums than subjecting themselves to the much higher out-of-pocket costs required by bronze plans (see note below for details).
Further, in 2022, 10.2% of subsidized enrollees with incomes below 138% FPL chose gold or platinum plans, and those plans simply offer less value for far more money than silver plans at that income level. In health insurance parlance, they are "dominated" plans, i.e., inferior by any measure.
Silver selection for all California enrollees (including renewals) below 200% FPL
Below are the silver selection percentages for all enrollees with income up to 200% FPL, new and renewing, from 2017-2022. For all years but 2022, these numbers show effectuated enrollment as of March, the first month tallied. For 2022, we must rely so far on "net" enrollment as of February -- that is, effectuated or pending enrollments, with early dropouts purged from the total.
Sources: Covered California, Open Enrollment and Renewal Gross Plan Selection Profile, 2022, and March Active Member Profiles, 2017-2021***
While up from the 2021 nadir, silver selection at low incomes in California by this measure has barely budged from the pre-ARPA era overall; the ARPA subsidy boosts have not yet had much effect on CSR takeup. Pre-ARPA, silver selection at low incomes in California did not show the steady decline experienced in HealthCare.gov states.
Here is the full metal level breakout for all subsidized*** *enrollees with income up to 200% FPL in California in 2022.
To what extent does Covered California point low-income enrollees toward obtaining CSR? At incomes up to 150% FPL, the CoveredCA plan preview tool puts silver plans at the top of the menu of available plans. At incomes in the 150-200% FPL range, the tool shows bronze plans first to those who estimate that their use of medical services will be light; those who estimate medium use or higher are shown silver plans first. Information about CSR is presented, but not prominently.
It seems to me that silver selection below 200% FPL in California should be higher. Reader, if you have any insight on this front, I'd like to hear it.
A note on CSR value and metal level selection factors at low incomes
Cost Sharing Reduction raises the actuarial value of a silver plan from a baseline of 70% (silver with no CSR) to 94% at incomes up to 150% FPL and 87% at incomes in the 150-200% FPL range. Deductibles average below $200 for 94% AV CSR and $800 for 87% AV CSR. The latter 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.
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.)
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* A weak form of CSR is available at 200-250% FPL, but so negligible as to be eclipsed in value in many if not most locations by the discounts in bronze and gold plans generated by silver loading (see note above).
** In San Francisco, KP's silver plan is just $8/month, but it's $58/month in San Diego and $39/month in Fresno.
***In the chart of total CoveredCA enrollment, the "under 138% FPL" category is left blank in 2017 because subsidized enrollees were not broken out in the cross-tabs (e.g., metal level by income) in that year, and 35% of enrollees in that income bracket were unsubsidized (subsidy status was broken out in totals enrolled at each income level). In the higher brackets shown for 2017, unsubsidized enrollment was 1% or less of the total, and so barely affects the overall silver selection percentages.
**** Unsubsidized enrollment at low incomes has shrunk radically in California. At below 138% FPL, it's down from 35% in 2017 to 3.7% this year. At 138-200% FPL it's just a fraction of a percentage point.
Update, 3/8/22: I thought I had killed off these annoying McAfee pop-ups (I'm told I don't need this protection). Seems not. But I had also thought when I wrote this piece that I'd like to use it to illustrate the level of warning the exchanges should arguably use when an enrollee with income up to 150% FPL, and possibly even 200% FPL, moves toward selecting a non-silver plan.
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