Auto-upgrading in Covered California

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Back in early March, looking at Covered California's enrollment breakouts before CMS released detailed marketplace enrollment data for all states, I expressed some disappointment that the enhanced subsidies provided by the American Rescue Plan  Act did not have a stronger impact on silver plan selection at low incomes. 

Under ARPA, the two cheapest silver plans in any rating area are free at incomes up to 150% FPL. At incomes up to 150% FPL, Cost Sharing Reduction (CSR), available only with silver plans, reduces the silver plan single-person medical deductible to $75 in California's standardized plans, compared to $6,300 for ordinary bronze plans (with a $500 drug deductible) and $7,000 for HDHP bronze. The out-of-pocket maximum for silver plans at this income level is $800, versus $8,200 for bronze and $7,000 for HDHP bronze. Silver benefits at this income level. are also superior to gold plans (OOP max $8,200) and platinum plans (OOP max $4,500).

In Open Enrollment 2022, 10% of California enrollees* in the 138-150% FPL category chose metal levels other than silver.  While that may seem like a modest percentage, it's not when you consider the extent to which CSR at this income level increases silver plan value beyond that of plans offered at any other metal level, including platinum. In California in 2022, silver selection at this income level was three percentage points higher than in 2021 and just one percentage point higher than in 2020.

The lack of a strong increase in silver plan selection when silver plans were available free is all the more surprising in light of a fact I didn't know when I wrote the prior post. In advance of Open Enrollment for 2022, Covered California, the state exchange, implemented a new policy, enabled by the ARPA subsidy boosts, whereby

Bronze enrollees eligible for the highest level of cost-sharing subsidies are autorenewed in a silver plan — allowing them to access cost-sharing assistance — with the same insurer and provider network for a $0 premium, if available.

Notwithstanding this initiative, 6% of renewing subsidized enrollees in the 138-150% FPL bracket selected (or passively remained in) bronze plans, and another 3% chose (or remained in) gold or platinum plans.  

Metal level selection at 138-150% FPL, Covered California, OEP 2022
Gross plan selections - -subsidized enrollees

Metal level	All enrollees	% at metal level - All	New enrollees	% at metal level - New	Re-enrollees	% at metal level- re-enr
Bronze	16,990	6.6%	3,470	20.4%	13,420	6.1%
Silver	232,650	90.1%	31,540	86.0%	201,110	90.8%
Gold	5,190	2.0%	950	2.6%	4,240	1.9%
Platinum	3,300	1.2%	700	1.9%	2,600	1.2%
All	258,130		36,660		221,420

Source: CoveredCA:  2022 Open Enrollment and Renewal Gross Plan Selection Profile

Given the new autoenrollment policy, how could 20,000 re-enrollees in this income category, all eligible for free CSR-enhanced silver coverage, have ended up bronze, gold or platinum plans? Well, the policy requires some squinting. Autoenrollment only switches metal levels if the insurer with whom the client was already enrolled offered a $0 premium silver plan.  In each area, only the cheapest and second-cheapest (benchmark) silver plans are zero-premium. 

In Los Angeles (zip code 9006), for example, at an income of $19,000 for a single 40 year-old, the two free plans are offered by L.A. Care (2 stars in the marketplace's 5-star rating system) and Molina (2 stars). Kaiser Permanente's silver plan (5 stars) costs $37 per month -- and its bronze plan is free. That KP plan is $58/month in San Diego and $39/month in Fresno. As Cynthia Cox of KFF pointed out to me in the last post, Kaiser Permanente is a highly valued brand in California. In 2021, when subsidies were smaller and silver plans were not free at any income level, bronze offerings from higher-valued insurers may have looked attractive to more low-income enrollees.

In California, according to the CMS Public Use Files, more than half of enrollees in the 100-150% FPL income bracket were auto-enrolled. If  10% of those roughly 146,000 were in metal levels other than silver, how many may have been auto-enrolled into silver plans? A few thousand, perhaps. That would be consistent with the uptick in silver selection of about three percentage points at this metal level from 2021 to 2022 (recorded in my prior post).

While selection of all metal levels other than silver in this income bracket was higher among new enrollees than among re-enrollees, that is in keeping with longstanding patterns recorded by Covered California. It seems that retention is higher among high-CSR silver enrollees than among low income enrollees in other metal levels.

Let's widen the lens to include subsidized enrollees with income below 138% FPL -- for citizens, the threshold for Medicaid eligibility. This snapshot is from the Gross Selection Profile linked to above:

Subsidized enrollees at incomes below 138% FPL by definition are legally present noncitizens subject to the federal 5-year bar on Medicaid eligibility. This group consistently shows lower silver plan selection, probably reflecting a prevalence of low English proficiency and difficulty navigating a foreign bureaucracy and economy.

Auto-reenrollment of low-income bronze enrollees in silver plans from the same insurer is an excellent policy, but it affects a small number of enrollees. The fact that 12% of enrollees eligible for free silver plans (including those under 138% FPL) chose other metal levels indicates that there are just too many choices in the marketplace --even in California, where plans are standardized at each metal level.  While you could make a case that some bronze enrollees might rationally choose much bronze's less generous coverage in exchange for a desired private plan network, the huge difference in OOP max between bronze and high-CSR silver suggests that in all but the rarest cases, those who care enough about provider or drug access to pay more for a desired insurer are better off paying the silver premium than exposing themselves to high bronze OOP. 

As for gold and platinum selection among subsidized enrollees with income under 150% FPL -- those plans are just clearly dominated. An enrollee at this level should have to positively jump through hoops to enroll in one.

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* For this post, since it's focused on enrollees' initial choices (or auto-enrollment choices made for them), I have presented Covered California's "gross plans selections," which include some enrollees who never paid their first premium. The prior post focused on CoveredCA's alternative breakout of "net plan selections," which accounts for the slight percentage differences recorded there.

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