Monday, July 25, 2022

All Dem (and doc) hands on deck to get Medicare drug negotiation/ACA subsidy boosts across the finish line

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It struck my eye last week  that Doctors for America, a physician advocacy group that supports single-payer healthcare, saw fit to call on member docs (via email) to lobby for what's left of the Democrats' reconciliation bill:

This is a decisive week in Congress with the Senate poised to vote on several crucial pieces of legislation, including allowing the HHS Secretary to negotiate for Medicare drug pricing, out-of-pocket caps in Part D, and rebates for price increases exceeding inflation. There are also new provisions to make vaccines free for Medicare beneficiaries, to stabilize premiums, and expand the Medicare low-income subsidy programs.

We hope the Senate will move forward with a meaningful reconciliation package that includes the drug price provisions before the August recess. But we need to apply pressure to do so.  Remind your senators to choose #PatientsOverPolitics and pass the reconciliation bill this week, including all of the health care provisions promised to the American people. 

Friday, July 22, 2022

A Midas touch on New Mexico's ACA exchange, revisited

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Kudos to health insurance analyst and advocate Stan Dorn and actuary Greg Fann for selling the New Mexico Office of the Superintendent of Insurance on strict silver loading in advance of Open Enrollment for 2022.   

In brief, the Superintendent required marketplace insurers to price silver plans on a par with platinum, since silver plans, thanks to Cost Sharing Reduction (CSR) subsidies, do have platinum-equivalent actuarial value for enrollees with incomes up to 200% FPL. The directive is meant to be a self-fulfilling prophecy: if gold plans are cheaper than silver plans -- and in New Mexico in 2022, gold plans were 10% cheaper on average -- no one with income over 200% FPL should buy silver plans, which have a lower AV than gold plans. In that case, the average AV for silver plan enrollees will indeed be platinum equivalent. 

New Mexico didn't quite get there, but came close. In Health Affairs this week, Stan Dorn analyzed the results, spotlighting a massive decrease in enrollment in bronze plans, which have deductibles averaging more than $7,000:

Dorn argues forcefully that New Mexico's pricing directive should be adopted nationally, explaining in detail the flaws in CMS's risk adjustment formula for marketplace plans that favors silver plans, incentivizing insurers to underprice them, and urging a fix.

All that said, while metal level selection at incomes above 200% FPL in New Mexico is an unbridled triumph, there's a caveat to the drop in bronze plan enrollment at incomes below 200% FPL (the middle row above).  Bronze plan takeup at low incomes would have dropped significantly in any case -- and did drop nationally -- because the Open Enrollment Period for 2022 was the first (and possibly the only) OEP in which the premium subsidy enhancements provided by the American Rescue Plan were in effect. Those subsidy boosts made benchmark silver coverage free at incomes up to 150% FPL and available for 0-2% of income for enrollees in the 150-200% FPL range. In states, bronze plan selection dropped by 2 percentage points in the 100-150% FPL income range and by 8 percentage points at 150-200% FPL from OEP 2021 to OEP 2022. 

The bronze selection decrease at low incomes in New Mexico was much sharper. But far too many enrollees at income below 200% FPL switched into gold plans rather than silver, which have far lower out-of-pocket costs than gold plans at incomes below 200% FPL.  This is no knock on New Mexico pricing practices, but rather on presentation flaws on the newly minted state exchange, BeWellNM.  The New Mexico exchange does not emphasize the availability of CSR at low incomes. The display, uniquely among ACA exchanges, buries the annual out-of-pocket maximum for each plan (you have to go two clicks in from the top-line display for each plan to find the OOP max) -- and OOP max is where the silver advantage is sharpest, topping out at $2,900 for high-CSR silver compared to $8,700 for gold. 

Worst, the site has a malfunctioning total cost estimation tool, which apparently uses the unsubsidized premium to estimate "costs in a bad year," completely obscuring silver plans OOP max advantage.  (I described these flaws and their effects, with screenshots, in this post.)

The result: silver plan selection at incomes below 200% FPL was just 62% in New Mexico in 2022, compared to 81.5% nationally and 80% in the thirteen state-based exchanges that enroll people with incomes under 200% FPL and provide metal level choices broken out by income. (Those totals are based on my calculations from CMS's Public Use Files and omit the 1.6% of enrollees with income below 100% FPL). 

The 5% bronze selection in New Mexico at incomes below 200% FPL is a sterling accomplishment. But most of the 33% of enrollees in that income bracket who selected gold plans should be in silver. For some, getting a cheaper gold plan from a desired insurer might be worth the extra out-of-pocket exposure, which might be in the $5,000-6,000 range (as discussed here). But most would be better off in silver.

ACA metal level structure is confusing, as bronze, gold and platinum actuarial value is fixed at all incomes whereas as silver plans come with no less than four different AVs, depending on income.  The fact that silver plans can be worth more than gold -- as they are for slightly more than half of marketplace enrollees -- is deeply counterintuitive. Display matters. For enrollees with income under 200% FPL, silver plans should be displayed at the top of results. OOP maxes should always be clearly visible, and defined via mouseover. The availability of CSR and its impact should be heavily signposted. 

Gold plans should be consistently cheaper than silver plans nationally, as Dorn argues (and as David Anderson and I have also done). If metal levels are priced as in New Mexico, plans with an AV of at least 80% (gold) should be available at a premium at or below the benchmark against which subsidies are set. To maximize the value available, however, decision support on most exchanges also needs to be improved.

Update from Stan Dorn (click through for essential gif):

Replying to
...In yet another brilliant, creative NM policy innovation, they are labeling all high-AV products as “turquoise,” a favorite NM color that will easily signal the highest value options for each consumer

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Wednesday, July 20, 2022

Average weighted actuarial value in the ACA marketplace: about 77%

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How much exposure to out-of-pocket costs are ACA marketplace enrollees subject to, compared, say, to enrollees in employer-sponsored plans?

Exposure varies widely, according to income and metal level choice. The deductible for a marketplace enrollee with household income below 150% of the Federal Poverty Level ($19,320 for a single person) who selects a silver plan is likely to be zero (the median) or under $150 (the average), with an annual out-of-pocket maximum averaging about $1,200. For a single person with an income just over 250% FPL ($32,201), that silver plan will carry an average deductible over $4,700 (though many services, including doctor visits may not be subject to it) and an out-of-pocket max likely over $8,000. For a bronze plan enrollee at any income level, the deductible will probably top $7,000, with an out-of-pocket max near the highest allowable, $8,700.

What about actuarial value -- the percentage of the average enrollee's costs the plan is designed to cover? In employer-sponsored plans, AV averages 85-86%, according to the Kaiser Family Foundation. In the ACA marketplace, according to my calculations below, the average AV obtained by 2022 enrollees in 2022 was 77.4%. Marketplace AV ranges from 94% for silver plan enrollees in the lowest income category to 60% for bronze plans (and about 57% for the 0.6% of enrollees who select catastrophic plans, for which subsidies are not available).

Tuesday, July 12, 2022

How prevalent is underinsurance among ACA beneficiaries?

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Big rain, small umbrella

In a New York Times op-ed Aaron Carroll, a physician and highly reliable assessor of data (his Bad Food Bible sifts expertly through a lot of bullshit in dietary research) makes two incontrovertible points about U.S. healthcare:

1. Americans are burdened with uniquely high out-of-pocket costs that induce us to forego need as well as unneeded care.

2. The ACA partly replicated this gaping flaw in our healthcare system, inflicting ridiculously high deductibles and out-of-pocket maximums on a significant number of marketplace enrollees.

But the argument includes what I regard as a slight (and common) distortion of emphasis in his overview of marketplace enrollees' high out-of-pocket costs: 

The average deductible on a silver-level plan on the A.C.A. exchanges rose to $4,500 in 2021. If people tried to buy plans with a lower premium, at a bronze level, the average deductible rose to more than $6,000. Granted, some cost-sharing reductions are available for those who make less than 250 percent of the federal poverty line, but even after accounting for those, the average deductible was more than $3,100 for silver plans.

Monday, July 11, 2022

New Jersey enacts an easy enrollment program for the uninsured

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New Jersey Governor Phil Murphy today signed a bill  (A674/S1646) establishing an "easy enrollment" program for health insurance, the New Jersey Department of Banking and Insurance announced this afternoon (a press release just arrived by email; I can't find it online yet). Update! - here it is.

Maryland pioneered "check the box" programs like this, in which the state prompts uninsured residents to indicate an interest in getting insured and provides help (to the extent creaky state bureaucracies can manage it) with getting an application started. Here is the guts of the initiative in New Jersey:

Through this program, uninsured and underinsured residents can indicate their interest in coverage for themselves or a household member on their tax return or through unemployment insurance benefit claims, which will be shared with the New Jersey Department of Banking and Insurance.    

As required by the legislation, the department will create a system to analyze the data collected through tax returns and unemployment benefit claims to determine a resident’s eligibility for health insurance coverage and ability to receive financial help through Get Covered New Jersey and proactively connect with qualifying residents to help them enroll. The law also permits the department to work with the Department of Human Services to determine an individual’s eligibility for NJ FamilyCare and share data with the agency for that assessment.       

Several things to note here. First, the prompt to seek health insurance will appear not only on the tax return but on an unemployment benefit claim. The latter is very important, as it comes at a moment when the applicant's income has dropped dramatically, qualifying many for Medicaid. In states that have enacted the ACA Medicaid expansion (e.g., New Jersey), eligibility is based on monthly income (currently $1563 for an individual, $3,191 for a family of four). During the pandemic, Kentucky had the Dept. of uninsurance pass applicant data to the state Medicaid agency, helping to drive a 14% increase in Medicaid enrollment from February to July 2020.

Second, the department collecting the data will share the data with the Dept. of Banking and Insurance, which runs the state ACA exchange (GetCoveredNJ), and with the Dept. of Human Services, which runs NJ FamilyCare, the state Medicaid program. The departments can determine eligibility for NJ FamilyCare or for subsidized marketplace coverage, if the enrollee gives permission for the various departments to share information. The bill statement emphasizes interagency coordination:

The bill requires the Commissioner of Banking and Insurance, in coordination with the Commissioner of Human Services, the Commissioner of Labor and Workforce Development, and the State Treasurer to develop and implement systems, policies, and practices that encourage, facilitate, and streamline determination of eligibility for insurance affordability assistance and enrollment in minimum essential coverage to achieve the purposes of the program.

Finally, because New Jersey (unlike Maryland) is one of a handful of states that implemented a state individual mandate to obtain insurance after the federal mandate penalty was zeroed out, the uninsured tax filer has a strong incentive to check the box, as obtaining insurance will get the penalty for going uninsured waived. For most respondents, obtaining coverage should be either free or very low-cost. In New Jersey's ACA marketplace, supplemental state subsidies, in concert with the major federal boosts to marketplace subsidies provided by the American Rescue Plan Act (which will expire at the end of this year unless Democrats manage to extend them, benchmark silver coverage with strong Cost Sharing Reduction is effectively free, or very close to it, at incomes up to 200% of the Federal Poverty Level ($25,760 for an individual, $53,000 for a family of four). 

This is a good strong bill that should reduce the uninsured population in New Jersey, currently just shy of 700,000. Its impact will be blunted somewhat if Democrats fail to extend the ARPA marketplace subsidies. But its chief impact will probably be in Medicaid in any case, which is unaffected by the level of marketplace subsidization.

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Thursday, July 07, 2022

A "Manchin trim" for the ARPA subsidy boosts to Obamacare?

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A high-end haircut for the ARPA subsidies?

It's been reported in the last week or two that Manchin may be open to negotiating a bill that would raise about $1 trillion in new revenue over ten years and devote about half of that to new spending. Yesterday, the Washington Post's Greg Sargent reported that $200 billion of that new spending may be allocated to extending the American Rescue Plan Act's increases in ACA marketplace subsidies (which expire at the end of 2022):

If around $300 billion of that [$500 billion in new spending] went to funding the transition to clean energy, through tax incentives and other means — a key part of BBB that Manchin appears open to — that would leave around $200 billion for expanded ACA subsidies.

Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation, says it’s absolutely possible to fund the vast bulk of extended subsidies with that sum. The cost of extending all of them would be an estimated $220 billion, so getting that down to $200 billion, perhaps by shaving those subsidies for the highest-income people eligible, would be doable.

Welp. I have been assuming that with $500 billion over ten years reportedly on the table, a lot of competing priorities would be in the running. If $200 billion really does get allocated to extending the ARPA subsidies, then no problemo, as Larry Levitt suggests. But all these broad outlines (including the broadest, whether any deal gets done) are very uncertain, and I assume a smaller sum (if any) may be allocated to enhancing a version of the ARPA subsidy boosts.