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).

It should be noted that AV is a misleading measure according to any common understanding of what an "average user" might spend. The average is skewed by the very small percentage of enrollees whose total costs are in the tens or hundreds of thousands of dollars, since out-of-pocket costs are capped at no higher than $8,700 this year.  Thus a bronze plan with a $7,000 deductible may cover 50% of most costs after the deductible is met, until the out-of-pocket max is met, and still cover 60% of the "average" enrollee's costs.

For low income enrollees, the actuarial value of silver plans is enhanced by Cost Sharing Reduction subsidies from a baseline of 70% to 94% (at incomes up to 150% FPL), 87% at 150-200% FPL, or 73% at 200-250% FPL).  About half of all marketplace enrollees have incomes low enough to obtain "strong" CSR (94% or 87% AV), and about 43% do obtain silver plans at those AV levels. Silver plan AV is blended for enrollees who obtained 94% or 87% AV (averaged to 91%) and 73% or 70% AV (averaged to 71%), for reasons explained below.

All that said, below is the distribution of actuarial values obtained by marketplace enrollees this year. 

Let's start with the 33 states that use the federal exchange, HealthCare.gov. For those states, CMS provides more complete enrollment breakouts by income, metal level and CSR type than for the 18 states (including DC) that run their own exchanges (SBEs), and no extrapolation is necessary. 

 Average Weighted Actuarial Value Obtained by Enrollees in ACA Marketplace, 2022 
 Health.Care.gov states

Metal level	Actuarial value	Total enrolled	% enrolled	Weighted AV
Silver – AIAN	100%	54,526	0.5%	0.5
Silver – CSR94	94%	3,553,409	34.6%	32.5
Silver – CSR87	87%	1,368,120	13.3%	11.6
Silver – CSR73	73%	506,333	4.9%	3.6
Silver – no CSR	70%	453,413	4.4%	3.1
Platinum	90%	25,551	0.2%	0.2
Gold	80%	804,617	7.8%	6.2
Bronze	60%	3,447,850	33.6%	20.2
Catastrophic	57%	42,047	0.4%	0.2
Total		10,255,596	100%	78.1%

Source: CMS marketplace public use files, 2022
AIAN = American Indian/Alaskan Native - no cost sharing at incomes in 100-300% FPL range

Next, the breakdown for all states. for which some inferences and estimation are required, spelled out in the note at bottom.

Average Weighted Actuarial Value Obtained by Enrollees in ACA Marketplace, 2022 
All states

Metal level	Actuarial value	Total enrolled	% enrolled	Weighted AV
Silver – AIAN	100%	0.1 million	0.5%	0.5
Silver – CSR94/87	91% (avg)	6.2 million	42.6%	38.8
Platinum	90%	0.1 million	0.9%	0.8
Gold	80%	1.4 million	9.7%	7.8
Silver – CSR73 and no CSR	71%  (avg)	2.0 million	13.7%	9.7
Bronze	60%	4.7 million	32.5%	19.5
Catastrophic	57%	0.1 million	0.6%	0.3
Total		14.5 million	100.0%	77.4%

Source: CMS marketplace public use files, 2022
Enrollment totals do not quite sum due to rounding

Some notes:

1. Average AV is down a bit in HealthCare.gov states since mid-2016, when CMS recorded it as follows (prompted, I'm told, by a post of mine): 

Those enrollment shares indicate an average weighted AV of 81.4%, compared to 77.4% as of the end of OE for 2022. The difference can largely be attributed to three factors: 

•  Enrollees in silver plans with the highest level of CSR are concentrated in states that have refused to enact the ACA Medicaid expansion, where eligibility for marketplace subsidies begins at 100% FPL, as opposed to 138% FPL in expansion states (with Medicaid available at incomes below that threshold). Since CMS published the March 2016 totals, Medicaid expansions have been enacted in Louisiana, Virginia, Nebraska, Oklahoma and (slowly, reluctantly, recently) Missouri, all of which use HealthCare.gov, as well as in Maine and Idaho, which run their own exchanges.
  
  
• Silver loading, the pricing of the value of CSR directly into silver plans only (since CSR is available only with silver plans), began in 2018, after Trump in October 2017 cut off the direct reimbursement of insurers for CSR, which was required by the ACA statute but never funded by a Republican Congress (or by a Democratic Congress, after the benefits of silver loading became apparent). By inflating silver premiums, silver loading also inflates subsidies and creates discounts in bronze and sometimes in gold plans. Silver loading made free bronze plans widely available, particularly for older enrollees (for whom the spread between the benchmark silver plan and cheaper plans is bigger, since premiums rise with age). Bronze enrollment has accordingly risen from 21% in HealthCare.gov states in 2016 to 34% in 2022.
  
  
• The CMS brief tallies effectuated enrollment as of March 2016, by which point enrollment was down 13% from the total of plan selections recorded at the end of Open Enrollment. My prior post tallying average weighted AV in 2016 was based on plan selections at the end of OE and showed an AV about two percentage points lower. Apparently attrition was greater among bronze plan enrollees. 

See also my tally of average weighted AV in 2018, the first year of silver loading.

2. Silver loading quite rightly prompted a mass exodus out of silver plans at incomes over 200% FPL. Under the enhanced subsidies provided through 2022 by the American Rescue Plan, bronze plans can be free at high incomes, especially for older enrollees. High out-of-pocket maximums in silver and even gold plans often make a bronze plan choice all but inescapable for those who don't qualify for the strong levels of CSR (94% or 87% AV).  The resulting decrease in average weighted AV is partly offset by an increase in gold enrollment, from 4.0% of total enrollment in 2017 (a year in which large premium spikes priced gold out of reach for many) to 9.7% this year. Several states now mandate, directly or indirectly, that gold plans be priced below or on a par with silver plans, since, thanks to CSR, silver plan AV is higher than gold plan AV on average. (Texas -- yes, Texas -- will do so in 2023.)  In most states, though, silver plans remain underpriced; silver loading has stopped halfway. The exodus out of silver at higher incomes in the first years of silver loading is illustrated below (via CMS public use files).

Enrollment by metal level at 201-400% FPL in HealthCare.gov States 

Year	Total bronze	% bronze	Total silver	% silver	Total gold	% gold	Total
2017	969,190	34%	1,706,780	60%	173,881	6%	2,851,601
2018	1,299,845	45%	1,251,385	43%	337,995	12%	2,891,851
2019	1,428,582	50%	986,957	35%	427,824	15%	2,863,824

3. While silver loading has been a boon to enrollees with income over 200% FPL, it's also prompted more enrollees at incomes under 200% FPL to forgo high-CSR silver in favor of bronze -- that is, to trade deductibles under $1000 and OOP maxes under $2900 for deductibles over $7000 and OOP maxes over $8000). The enhanced subsidies provided by the American Rescue Plan, which render high-CSR benchmark silver plans free at incomes up to 150% FPL and costing no more than 2% of income up to 200% FPL, only partly reversed this slide.

4. About 1-2 million people are currently enrolled in ACA-compliant plans purchased off-exchange, and therefore unsubsidized. Bronze plans generally dominate off-exchange, though gold enrollment is also higher than on-exchange. 

By international standards, insured Americans face appalling out-of-pocket costs.  That's certainly true in the ACA marketplace.  Rendering the American Rescue Plan subsidy levels permanent, coupled with mandating strict silver loading, would provide some mitigation: affordable coverage would be available to almost all comers at 94%, 87%, or 80% AV.  Thanks to U.S. prices, however, those AVs still leave enrollees with out-of-pocket costs far in excess of those that citizens of other wealthy countries are exposed to.  As does U.S. employer-sponsored coverage.

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A note on all-state estimates

CMS Public Use Files for the marketplace do not provide all-state totals for CSR enrollment at each CSR level or for metal level selection by income level because of two gaps in data provided for state-based exchanges: 1) CSR is not broken out by level for any of the SBEs, and 2) Nevada metal level selection is not broken out by income. Nevada is also the only state for which total (undifferentiated) CSR enrollment is not provided.

To fill in the gaps, I distributed Nevada's total silver enrollment (provided in the PUF ) according to the income distribution recorded for the state in 2019, when it still used HealthCare.gov. That allowed for an estimate of total CSR enrollment in Nevada (silver enrollment at incomes up to 250% FPL) and therefore for all states (7,046,391) and SBE states (1,564,273). Filling in Nevada's income/metal level breakout also enabled an estimate of the percentage of CSR in SBE states with 73% AV (silver enrollment at 200-250% FPL divided by total CSR enrollment, about ~20%), which in turn allowed blended CSR94/87 estimates and Silver 70/73 estimates for all states. Since Nevada accounts for just .06% of total enrollment, the distortions should not be great.

For AIAN CSR enrollment, the total recorded for HealthCare.gov states was 115% of self-reported AIAN ethnic identity. I took the same percentage of self-reported AIAN identity for all states (57,699), estimating total AIAN CSR enrollment at 66,621.

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