xpostfactoid: 2023

Thursday, September 28, 2023

NJ DOBI responds: No more elder abuse in the ACA marketplace

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My last post spotlighted a form of elder abuse in New Jersey’s ACA marketplace. The state’s Individual Health Program (IHC) allows or requires insurers in the individual market to presume that enrollees who are over age 65 are eligible for Medicare — unless the enrollee provides proof positive otherwise.

If such proof is not furnished (at least one insurer, AmeriHealth, requires a letter from the Social Security Administration, which in turn requires applying for Medicare)— the insurer pays the enrollee’s claims only as a secondary payer, presuming that Medicare will pay the bulk of each claim. That leaves the enrollee on the hook for the bulk of every medical bill she incurs, rendering the insurance policy’s statutory out-of-pocket limit essentially void. NJ DOBI has been allowing insurers to do this since 2016, and in 2023 ratified the practice, stipulating in the standard policy policy form that the insurer “will assume the Covered Person is Eligible for Medicare and pay secondary benefits as set forth in this section unless the Covered Person provides written documentation that proves the Covered Person is not Eligible for Medicare” (p. 126)

CMS guidance issued on May 24, 2023 flatly forbids this practice, as CMS told me in response to a query, adding “CMS has been in contact with the New Jersey Department of Banking and Insurance (NJDOBI) regarding this issue. We recommend contacting NJDOBI for further information.” The May 24 guidance states that an ACA-compliant individual market insurer “may not limit or exclude coverage based on the theoretical possibility of an individual’s enrollment in other coverage… regardless of whether an individual is (or is presumed) eligible for Medicare.”

NJ DOBI did not respond to my repeated requests for comment on the state insurers’ apparent continuing violation of the CMS guidance — under color of state regulation. But an investigative reporter at NJ.com and the Star-Ledger, Karin Price Mueller, got on the case. And DOBI did respond to Mueller. Thus pushed, they are apparently ending the practice — effective yesterday:

“In light of the possible confusion in the market, the department (Wednesday) issued its own directive to carriers in the individual market — both on and off the marketplace — to ensure they are following the (Medicare guidance), which falls under the `Conformity with Law’ provision of the standard individual health benefits plans,” spokeswoman Dawn Thomas said.
The agency has told all insurance carriers to review the benefits of individuals who are 65 and older and enrolled in plans through GetCoveredNJ “to ensure that the policyholders are receiving the appropriate coverage, and that all coverage is consistent with the applicable Federal Guidance,” she said.
Thomas also said DOBI is reviewing how consumers may have been affected.
“Specifically, it is requiring that all carriers provide information on how the rule was implemented, including any requirements placed on consumers 65+ years of age, and what specific documentation may have been required for both on and off marketplace consumers,” Thomas said.
And, she said, the agency will make sure the language is clear when the 2024 plans roll around.
“If GetCoveredNJ determines a consumer eligible for a marketplace plan, the consumer should remain eligible and get the full benefits of the policy selected,” she said.

If those promises look a little soft to jaded eyes, other language in DOBI’s statement to Mueller, which she shared with me, was less equivocal:

On May 24, 2023, the Centers for Medicare and Medicaid Services (CMS) released guidance to insurers that demonstrated to the department that the IHC board’s rule change was not in compliance with CMS rules. Therefore, in June, the department informed carriers that the CMS guidance will govern the individual market and made clear the department accepted CMS’ position.

Apparently, that June bulletin changed nothing. Now, pending enforcement, this longstanding abuse of the fundamental ACA promise (quality affordable comprehensive coverage) appears to be ended going forward. But “going forward” points to a problem, which Mueller gave me a chance to articulate:

“I’m delighted to learn that DOBI is now acting swiftly to end this abusive practice — allowing Obamacare insurers to strip older plan members of most of the coverage to which they’re entitled,” Sprung said. “Now DOBI needs to dig in and find out whether there are people who have been subject to this practice for years who may have been saddled with provider bills that their insurer should have paid — and if so, to make sure those wrongs are righted.”

DOBI clarified to Mueller that NJ individual market insurers have been allowed to presume over-65 enrollees eligible for Medicare and act as a secondary payer at least since 2016. I have viewed bills from 2022 that reflect that practice. So there is compensatory work to be done. In 2023, almost 9000 enrollees through GetCoveredNJ were over 65. How many have been enrolled, and shorted coverage, in seven or more years?

Why 2016? In that year’s annual Notice of Benefit and Payment Parameters (NBPP) for the ACA marketplace, clarified that a marketplace enrollee who turns 65 during the plan year and enrolls in Medicare can maintain her marketplace plan, though she would lose eligibility for subsidies. A Medicare enrollee can even renew a marketplace plan if that plan does not change, i.e. if a new “contract of insurance” is not required. Why anyone would want to pay full freight for a marketplace plan (at least $800+/month in New Jersey in 2023 for an over-65 enrollee) when they are enrolled in Medicare is hard to fathom, but it can be done.

While finalizing this rule, CMS noted, “Several commenters expressed concerns that individuals enrolled in Medicare and those who are eligible for but not yet covered by Medicare present a significant burden to the single risk pool” (p. 94068). That is very likely the concern that New Jersey’s individual market insurers brought to regulators to get permission to presume elder enrollees eligible for Medicare. Ever since (if not before), in at least some if not virtually all cases, they have been getting full premiums for enrollees over age 65 while paying only what Medicare is presumed not to pay on claims.

Hats off to Karin Mueller, who was able to get what I could not from DOBI.

New Jersey's Department of Banking and Insurance lays a trap for elderly enrollees in the state's ACA marketplace

Filling out an application for subsidized health insurance in the ACA marketplace can be straightforward — or not so straightforward. If the exchange’s “trusted sources” of information do not readily identify you, uploading proof of identity nd getting it accepted can be a…process (especially in a family with mixed immigration status). If you are self-employed and your income is not obviously reflected in regular monthly payments, documenting your claimed income and having the documentation accepted can also be a multi-stage process.

That said, once your documentation is accepted and your monthly subsidy is assessed, you are good to go, right?

Not always. Not in New Jersey, anyway, where the insurer can come after you for additional documentation — and potentially reduce your coverage to a shadow.

Meeting the minds of Chinese students in Xi'an

If you’ll excuse an off-topic post, a graduate school friend of mine (circa 1990…), Wendy Bashant, has published a truly memorable account of her year teaching at a “Chinese MIT” - interrupted but not derailed by the pandemic. The book opens a real window into the minds of Chinese students — elite but not necessarily privileged. Their writings, liberally excerpted, reflect a huge variety of childhood experiences in a country that contains multitudes. The book is The Same Bright Moon: Teaching China’s New Generation During Covid. My Amazon review is below.

* * *

After decades serving as a dean at various U.S. colleges and universities, Wendy Bashant was burned out and ready to return to her teaching roots and meet the minds of students in a distant land. With her equally willing physician husband, she landed in mid-2019 at Jiaotong University in Xi'an, a megacity in central China, tasked with teaching American literature and writing at a school she describes as MIT-equivalent. In the course of a teaching year, she also experienced a pandemic, Chinese-style: emergency travel through a ghosted airport; swift, strict lockdown; partially successful experiments with remote teaching; and gradual return to something like normalcy under a regime of strict, unquestioned rules.

A passionate and empathic teacher, Bashant managed to form deep connections and spur original thought from a significant number of her students. She shares their reflections on their childhoods, their aspirations, and how they think the world works through conversation (in-class and one-on-one) and through the students' essays and poems. The writings and conversations offer a series of truly illuminating windows into young Chinese adults' varied experiences and mindsets. One reality that comes through very clearly is that China contains multitudes: the students' home environments range from rural villages to megacities (and often to both, as one recurring pattern is parents working in the city while their children live with grandparents in the home village), their parents from professionals or government officials to laborers with minimal education. The students have lived through decades of rapid change; often their parents' experience is radically different from their that of their grandparents, and the students’ essays describe these discrepancies.

Bashant develops a rather lovely framework to encompass this diversity, adapting the (fading) Chinese tradition of the "hundred family jacket," in which local families donate embroidered cloth patches to a newborn's family, to be sewn onto a jacket that's worn at festivals. Bashant's "jacket" is a map of China in which she places various students, chapter by chapter (initially, as a device to remember their names), as their narratives reflect the diverse regions and cultures in which they grew up, from open plains near Mongolia to small dark grandparents' apartments in megacities. This works, because the students' essays do take us to these places.

While these students have been studying English since they were 5 (Bashant tells us), English is a second and very foreign language. The essays reflect this -- along with, to my ear, a sometimes reflexive reliance on authority -- governmental, parental, commercial -- to frame the writer's thoughts. The book's drama comes in large part from students' efforts -- sometimes stunningly successful -- to break out of conventional wisdom and think for themselves.

Bashant gives a vivid account of the physical privations and social pleasures of living in a 60s-era Chinese apartment block that houses the university community, ranging from professors to custodians. The Bashants are showered with food, invited to residents' family homes outside of town, helped through logistical difficulties. You have to credit their resilience and willingness to embrace new experience. I would have liked to hear a bit more about the experience and perspective of husband David, who worked as a tutor and translator of scientific texts at the university.

While antagonism between China and the U.S. was not as intense in 2019 as now, it was rising quickly, and turbo-charged during the pandemic as Trump unleashed his incontinent verbal fury at China. The Bashants are asked constantly about Trump and about American attitudes toward China. Bashant's students voice some negative perceptions about Americans and America, but these do not seem to impede their relationship with her -- at least not for the students whose experience she chronicles and records. Bashant does not really engage politically (there would be severe constraints on doing so in China, I imagine). There are no discussions of Trump either as appalling anomaly or true expression of the worst American traditions. Nor does Bashant engage with escalating authoritarianism in China. Indeed, she seems receptive to positive aspects of Chinese governance -- that is, the tight restrictions and preventive procedures (many of which proved to be mistaken epidemiologically) in the first months of the pandemic.

That said, The Same Bright Moon fulfills the premise of its title: that minds can meet across cultures, that we can process the common elements of human experience very differently, while communicating and gaining some understanding of these differences; that on an individual level at least, empathy can bridge continents.

In Massachusetts, ACA Marketplace enrollees with income up to 500% FPL get affordable platinum coverage

A rickety but serviceable connector

In a two-year pilot program beginning in 2024, Massachusetts has extended eligibility for ConnectorCare, the state’s alternative to a standard ACA marketplace that features standardized plans with low out-of-pocket costs, to applicants with incomes up to 500% of the Federal Poverty Level (FPL), or $72,900 for an individual in 2024. Since the ACA marketplace’s 2014 inception, ConnectorCare has been the (only) option for applicants with income ranging from 138% FPL, the Medicaid eligibility threshold, to 300% FPL. The extension means that almost all subsidy-eligible marketplace enrollees will get a standardized ConnectorCare plan, at least through 2025.

All insurers who offer plans in Massachusetts’ regular ACA exchange (available through this year to enrollees with income over 300% FPL) will be required for the first time to offer ConnectorCare plans in 2024. Importantly, since ConnectorCare plans are in a single risk pool with the insurer’s offerings in the higher income marketplace, extending eligibility to 500% FPL should not cannibalize the Health Connector market plans offered to enrollees with income above that threshold. That is, the extension should not drive up premiums for those who get no subsidy or minimal subsidy.

The Massachusetts legislature included such an extension in its budget passed in August 2022, but Republican Governor Charlie Baker vetoed it. Last month, Democratic Governor Maura Healy, inaugurated this past January, signed the eligibility extension into law.

Could the FTC's proposed ban on noncompete clauses curb private equity incursions in healthcare?

“Then,” I cried, half desperate, “grant me at least a new servitude!”

The corruption of U.S. healthcare by the profit motive reaches a kind of apotheosis in the incursions of private equity into industry subsectors (hospice, nursing homes) and targeted physician practice specialties — e.g., the PEAR specialties (pathology, emergency, anesthesiology, radiology), dermatology, ophthalmology gastroenterology, orthopedics, and others. It’s common PE practice to load an acquisition with debt and then laser-focus on cutting costs and maximizing revenue.

In Private Equity and the Corporatization of Health Care, a paper posted in March 2023 (with a 2024 publication date in the Stanford Law Review), Erin C. Fuse Brown and Mark A. Hall acknowledge that “it remains unclear whether private equity investment is fundamentally more threatening to health policy than other forms of acquisition and financial investment,” but at the same time assert:

Even if PE investment in health care poses risks that are not unique to PE, it appears to heighten those risks by being more adept or ruthless at identifying profit opportunities and economies of scale among previously fragmented providers, consolidating physician specialty markets and raising costs as they go.’

Retention in ACA marketplace continues to improve

CMS just dropped its Effectuated Enrollment Early 2023 Snapshot and Full Year 2022 Average — a document I’ve been eagerly awaiting.

To my eye, the main takeaway is that in the second full year of enrollment after the American Rescue Plan Act (ARPA) boosted ACA marketplace subsidies, retention and off-season enrollment remain impressive. That’s reflected in average monthly enrollment for 2022 as well as early effectuated enrollment for 2023.

Year-over-year, from 2022 to 2023, early effectuated enrollment (enrollment as of the first month when premiums were due for all who selected plans during the Open Enrollment Period, or OEP) increased by 13.4% — more than the 12.7% year-over-year increase in plan selections during OEP, as the percentage of OEP plan selectors who effectuated enrollment reached an all-time high. That increase in retention of OEP signups continues a long-term trend.

The table below shows the ratios of early effectuated enrollment and average monthly enrollment to OEP signups since 2016.

ACA Marketplace Retention, 2016-2023

Limit short-term health plans to a...short term? Buyers and sellers speak out

My last post considered a rule proposed by the Departments of Health and Human Services, Treasury and Labor to restore a three-month term limit on so-called Short Term, Limited Duration (STLD) health plans. Those plans are currently available for year-long terms in some states, renewable for up to three years.

My main point was that if the removal of the ACA’s original income cap on subsidies by the American Rescue Plan Act (ARPA), extended through 2025 by the Inflation Reduction Act, is not further extended, STLD plans will once again be the only viable option as of 2026 for some modestly affluent non-elderly people who lack access to employer-sponsored or other insurance. For that reason, I suggested that the proposed rule automatically sunset if the income cap on subsidies returns.

To review briefly: STLD plans are not regulated as insurance and not compliant with ACA rules for individual health plans. They are medically underwritten, do not have to cover the ACA’s Essential Health Benefits (drug and mental health benefits are often excluded or very limited), are not subject to the balance billing protection provided by the No Surprises Act, and generally cap benefits at $1 million or $2 million. Some but not all STLD plans have provider networks (and so some balance billing protection) and annual out-of-pocket caps for covered benefits.

For further perspective I turned to the comments submitted so far in response to the proposed rule. There are just 43, from a mix of consumers and brokers (as opposed to more than 25,000 for the FDA’s proposed ban on most noncompete agreements). All, perhaps not surprisingly, ask that the allowable STLD term not be shortened as proposed.

A caveat about curtailing short-term limited duration health plans

It’s generally a good thing when the Biden administration repeals a Trump-era administrative rule. Under current ACA marketplace conditions, a rule proposed by HHS, Treasury and the Department of Labor to restore a three-month term limit on so-called Short Term, Limited Duration (STLD) health plans is a good thing. In a rule finalized in August 2018, the Trump administration extended the allowable duration of such plans to a year, renewable for up to three years, creating an alternative market to the ACA-compliant individual market.

STLD plans by legal definition are not insurance and not subject to regulation by the ACA, HIPAA, the No Surprises Act, or the law mandating parity between physical and mental health coverage (MHPAEA). STLD plans are medically underwritten, meaning that applicants with pre-existing conditions can be charged more, denied coverage altogether, or offered coverage with the pre-existing condition excluded. These plans do not have to cover the ACA’s Essential Health Benefits and often exclude drug coverage and mental health care. They often have no provider network - -instead, they set their own rates in payment to medical providers and thus leave enrollees subject to extensive balance billing — which is still possible, as these plans are not subject to the No Surprises Act, which began protecting people in ACA-compliant plans in 2022. (In many markets, however, United HealthCare does offer STLD plans that have a provider network.)

For the Trump administration, which inherited Republicans’ dead-end opposition to and demonization of everything ACA, STLD plans represented a kind of ideal, harking back to the Shangri-la of the pre-ACA individual market, in which plans without restrictive provider networks (and with coverage limitations similar to those of STLD plans) cost lucky, healthy enrollees considerably less than unsubsidized ACA-compliant plans would later cost. Seema Verma, Trump’s CMS director, lionized “choice” — a market teeming with lightly regulated options offering very partial coverage — and that is what the Trump administration created. Verma even floated ACA “waiver concepts” inviting the states to seek approval for providing federal subsidies for ACA-noncompliant plans.

Part D party! The Biden administration boosts a boast

"The IRA saved me $103 in Part D OOP!"

The Biden administration is rightly broadcasting the out-of-pocket savings that the Inflation Reduction Act will yield to enrollees in Medicare Part D prescription drug plans. That said, the headline claim in the White House fact sheet turned my head:

New data shows nearly 19 million seniors and other Medicare beneficiaries will save an estimated $400 per year in prescription drug costs because of President Biden’s out-of-pocket spending cap

Thanks to President Biden’s Inflation Reduction Act, out-of-pocket spending on prescription drugs at the pharmacy will be capped at $2,000 per year for Medicare Part D enrollees starting in 2025. Today, the Department of Health and Human Services (HHS) released data showing that 18.7 million (or 1 in 3) seniors and people with disabilities who are enrolled in Part D plans will save, on average, $400 per year when the $2,000 cap and other Inflation Reduction Act provisions go into effect in 2025. And some enrollees will save even more: 1.9 million enrollees with the highest drug costs will save an average of $2,500 per year starting in 2025. Overall, the law’s Part D benefits provisions will reduce enrollee out-of-pocket spending by about $7.4 billion annually.

Is there a pithy way to say that averages smooth out a lot of variation? Savings from the IRA’s changes to Part D are (appropriately) weighted toward a few million enrollees with really heavy out-of-pocket exposure.

Trading out-of-pocket cost protection for network adequacy in the ACA marketplace

Bronze sometimes works

In a prior post, I raised concern that the percentage of ACA marketplace enrollees eligible for strong Cost Sharing Reduction (CSR) subsidies who access that valuable benefit by selecting silver plans has not increased significantly since the American Rescue Plan Act of March 2021 made benchmark silver plans much more affordable. (CSR is available only with silver plans.)

This despite the fact that ARPA rendered the benchmark (second cheapest) silver plan free for enrollees with income up to 150% of the Federal Poverty Level and costing no more than about $45/month for a single enrollee with income up to 200% FPL. While CSR takeup did improve modestly in 2022, it slipped in 2023 — to its lowest level ever for enrollees with income up to 150% FPL (80.2%) and to its second-lowest for enrollees in the 150-200% FPL range.

In New Jersey's ACA marketplace, a "premium alignment" bill would turn gold plan pricing on its head

Gold skies, but almost no gold Obamacare, in New Jersey

On May 22, New Jersey state Senator Joseph Vitale, chair of the Health, Human Services, and Seniors Committee, introduced a bill (S3896) that mandates “premium alignment” — a.k.a. strict silver loading — in the state’s individual and small group health insurance markets. That is, insurers would be required to comply with the letter of the ACA statute that requires them to price plans at different metal levels in strict proportion to the actuarial value of each metal level. (Actuarial value refers to the percentage of the average enrollee’s costs the plan is designed to pay for, according to a formula promulgated by CMS.)

In effect, mandating that strict proportionality means pricing gold plans below silver plans with the same network (or, in New Jersey in the first year after enactment, roughly at par with silver plans, as explained below). That’s been the case since 2018, the first plan year after Trump cut off direct reimbursement of insurers for the value of Cost Sharing Reduction (CSR) subsidies, which attach to silver plans only. The cutoff induced most states to direct insurers to price CSR into silver plan premiums only, a practice that came to be known as silver loading. CSR raises the actuarial value of a silver plan to a roughly platinum level** for enrollees with income up to 200% of the Federal Poverty Level — — that is, for about 80% of on-exchange silver plan enrollees nationally (though far less in New Jersey, as discussed below). In 2023, the average actuarial value among silver plan enrollees on all ACA exchanges was about 87%, compared to 80% for gold plans.*

The other side of compressed premium spreads

Wide spreads have benefits and risks

As the ACA marketplace suffered steep premium increases and Republican political assault in 2017, one of the hardest-learned lessons for policymakers was that action to reduce baseline premiums (full retail cost before subsidy) would hurt more enrollees than it helped and reduce total enrollment.

That is, reducing retail premiums also reduces premium subsidies, and in particular, reduces price spreads between the benchmark (second cheapest) silver plan, which determines the size of subsidies, and plans cheaper than the benchmark, making those plans more expensive net of subsidy.

Can the risk adjustment gravy train for Medicare Advantage be slowed or stopped? A conversation with Richard Kronick

This past March, as in many Marches previous, MedPAC’s annual report to Congress found that a) the federal government is paying Medicare Advantage plans more than it would pay to cover the same enrollees in traditional, fee-for-service Medicare; b) that excess payment is widening (from 104% in 2022 to 106% this year); c) almost all the excess payment (almost 5 percentage points) stems from a risk adjustment system that enables MA plans inflating their enrollees’ risk scores, and d) the risk score gap between MA enrollees and FFS enrollees is also widening.

Sum it all up, and risk adjustment stands out as the engine by which MA is swallowing FFS Medicare. 2023 is the first year in which more Medicare enrollees are enrolled in MA than in FFS. MedPAC raises the possibility that in some counties at least FFS may no longer serve as a reliable benchmark for CMS’s capitated payment rates to MA plans. Those benchmarks - -which, according to MedPAC, also require adjustment — are the tether that hold MA provider payment rates close to those set by FFS Medicare. That tether is basically the only effective control on provider payment rates.

A modest proposal: Revenue-neutral risk adjustment in MA

MA insurers’ inflation of their enrollees’ risk scores is so obvious and pervasive that CMS is statutorily required to shave a minimum of 5.9% off of MA risk scores. It’s not enough. MedPAC estimates that in 2022 MA risk scores exceeded the scores that MA enrollees would be ascribed in FFS Medicare by 10.8%. In November 2021, Richard Kronick, a former CMS official and current professor at UCSD, and F. Michael Chua, also of UCSD, pegged the MA coding excess at 20% — almost double the MedPAC estimate — and estimated that the resulting overpayments would total $600 billion from 2023 to 2031 if not adjusted.

High auto re-enrollment rates in the SBMs, revisited

Sometimes, you can do worse

My last post flagged dramatically different rates of “active” health plan renewal and autorenewal in the 33 states using the federal ACA marketplace, Healthcare.gov, compared to the 18 states (including D.C.) that run their own marketplaces. This post take a second run at whether the high autorenewal rates in the state-based marketplaces (SBMs) are problematic.

In HealthCare.gov (the “FFM,” or federally facilitated marketplace), 72% of renewals in the Open Enrollment Period 2023 were active, meaning the enrollee logged into the marketplace, updated their personal information, and affirmatively chose either to remain in last year’s plan or choose a new one. In the SBMs, just 28% of renewals were active; 72% of returning consumers were auto re-enrolled.

Auto re-enrollment can be dangerous, because 1) enrollees’ personal circumstances that affect subsidies — their income and the family members seeking coverage in the exchange — may change; 2) an enrollee’s current plan’s premium may rise in the coming year; and 3) most unpredictably, the benchmark (second cheapest silver) plan against which subsidies are set can change. If the coming year’s benchmark plan has a lower premium than the current’ year’s, subsidies shrink, since enrollees pay a fixed percentage of income for the benchmark plan. If the enrollee’s premium rises and the benchmark falls, it’s a double whammy.

I therefore presented high auto re-enrollment rates as a troubling feature of the SBMs, and maybe in some cases they are. But there are also differences in SBM and FFM practice that may make auto re-enrollment more viable for more enrollees in the SBMs.

Enrollees get better information earlier in at least some SBMs

Most strikingly, independent health insurance broker Sheron Sidbury, who serves clients both in Maryland, which runs an SBM, and Virginia, which uses HealthCare.gov, explained in a lengthy Twitter exchange that in Maryland, plans and prices are posted on October 1, well in advance of the Nov. 1 kickoff of Open Enrollment. In Maryland, Sidbury explains:

Do the ACA's state-based marketplaces have an auto re-enrollment problem?

Enrollment should be active

It has been clear since plan offerings were posted for the ACA marketplace’s second Open Enrollment Period (OEP) in fall 2014 that “auto re-enrollment” can be dangerous for enrollees.

If marketplace enrollees take no action during OEP — declining to log on and update their income and other information relevant to subsidy eligibility and subsidy size, and review available plans — HealthCare.gov or the relevant state-based marketplace will auto-enroll them in their prior year plans, tapping the IRS and other data sources to update income and other personal information. If that plan is no longer offered, the marketplace will “crosswalk” the enrollee into the nearest equivalent, e.g., a plan by the same insurer in the same metal level. If the marketplace determines that the enrollee is no longer subsidy eligible, it will enroll her with no subsidy, exposing her to hundreds of dollars per month in premiums (one month, if she fails to pay any premium in the new plan year). Disenrollment occurs only if the person logs on and initiates it — or fails to pay the monthly premium when the new plan year begins.

Even when the enrollee’s income and family composition are essentially unchanged, remaining in last year’s plan (or a substitute into which one is crosswalked) without examining this year’s options can lead to major new expense. The plan’s premium may rise significantly. Worse, if another insurer (often a new entrant into the local market) undersells last year’s benchmark plan — the second cheapest plan, against which subsides are set — subsidies may shrink, hitting an enrollee who stays in a plan with a rising premium with a double whammy. The media was full of such stories in the fall of 2014. I told one myself, about a family of 3 in Philadelphia whose premium for a silver plan would have gone from $0 to $196 per month if a navigator hadn’t provided guidance.

The problem is not new, and it hasn’t gotten any better. In fact it’s gotten worse, as narrow-network HMO plans have become prevalent at the lowest price points, and cut-rate new entrants sometime render plans with more robust networks more expensive.. Another aspect of the problem is also not new, but when when it was brought to my attention this week it rather shocked me, and it may have major policy implications.

ACA marketplace enrollment 2021-2023: Where the growth is and isn't

The Open Enrollment Period for the ACA marketplace in 2023 was the second OEP in which the enhanced premium subsidies created by the American Rescue Plan Act (ARPA) in March 2021 were in effect. The table below shows enrollment patterns at different income levels and state groupings in what we can now call the post-ARPA era (extended through 2025 by the Inflation Reduction Act of 2022).

ARPA rendered benchmark silver coverage free at incomes up to 150% of the Federal Poverty Level; removed the previous 400% FPL income cap on subsidy eligibility, capping benchmark silver premiums at 8.5% of income above that threshold; and reduced the percentage of income required to buy a benchmark silver plan at income levels in between.

A data note before diving in: In the 18 state-based exchanges (SBEs), the data for enrollment at incomes above 400% FPL appears anomalous and probably erroneous, at least in 2022, as discussed at bottom. The far right column, which combines “income unknown” and reported incomes over 400% FPL (as well as income under 100% FPL, which was grouped with income above 400% FPL as “other” in CMS’s 2021 reporting) may give some idea of enrollment patterns at high incomes in the SBEs. Enrollment at income under 100% FPL, included by necessity, shouldn’t change much: it barely changed from 2022 to 2023, accounts for 1.4% of total enrollment and just shy of 10% of enrollment in the “<100%/>400% FPL/unknown category.”

Some takeaways from the data below:

The "upper coverage gap" in nonexpansion states has shrunk dramatically

It has been gratifying if frustrating to watch the number of states that have refused to enact the ACA Medicaid expansion (after the Supreme Court rendered the expansion optional to states in 2012) dwindle from 26 in 2014 (when the ACA’s core coverage programs launched) to 10 today.*

Those ten remaining nonexpansion states include Texas and Florida — two population behemoths that between them account for more than 60% of the 1.9 million uninsured people estimated by the Kaiser Family Foundation (KFF) to be in the “coverage gap” — eligible neither for Medicaid (available in expansion states to adults with income up to 138% of the Federal Poverty Level) nor for subsidized marketplace coverage (for which eligibility begins at a minimum income of 100% FPL in nonexpansion states). The arc of Medicaid expansion history may be bending toward justice, but for the poor uninsured it’s far too long.

The American Rescue Plan Act (ARPA) included an enticement to nonexpansion states to enact the expansion — a temporary but lucrative increase in the federal share of Medicaid costs for nonexpansion enrollees in any state that enacts the expansion. So far, only North Carolina has (provisionally) taken advantage of that incentive.

The lingering coverage gap, in which nearly two million uninsured adults with income below the poverty line remain mired with no federal help toward health coverage, has led some advocates to resurface an old proposal: Allow states to expand Medicaid eligibility only to incomes up to 100% FPL, rather than the statutory 138% FPL threshold now in effect in 38 states (with two more states, South Dakota and North Carolina, slated to join within the year). Such an expansion would be cheaper for states, since the federal government funds 100% of marketplace premium subsidies, versus a mere 90% of costs for Medicaid expansion enrollees.

CSR takeup drops in nonexpansion states

Texas, our largest Medicaid desert

While the 2023 Open Enrollment Period for the ACA marketplace was a success in bringing more people into coverage (total enrollment increased 12.7% nationally), my last post focused on one way in which the marketplace degraded: A lower percentage of low-income enrollees selected silver plans than in 2022, thereby forgoing the Cost Sharing Reduction (CSR) subsidies that raise silver plan value to a roughly platinum level at incomes up to 200% of the Federal Poverty Level*. CSR is available only with silver plans. In HealthCare.gov states, silver plan selection was at its lowest level ever in 2023 at incomes up to 150% FPL, and at its second-lowest level ever at incomes in the 150-200% FPL range*.

Since enrollment at low incomes is heavily concentrated in the twelve states that had not enacted the ACA Medicaid expansion as of OEP for 2023 (Nov. 1 - Jan. 15), here I want to look at the drop in CSR takeup in those twelve states. In nonexpansion states, eligibility for marketplace subsidies begins at 100% FPL, as opposed to 138% FPL in expansion states, where Medicaid is available below that threshold. The need for coverage at low income levels in nonexpansion states is particularly desperate, as those who estimate income below 100% FPL get no help at all. Enrollment in the twelve current nonexpansion states in the lowest subsidy-eligible income cohort, 100-150% FPL, has surged from 2.8 million in 2021 to 4.8 million this year.

Too many low-income ACA marketplace enrollees are forgoing high-CSR silver

Today is the ACA’s 13th birthday, and CMS released its final enrollment report and detailed enrollment data for the 2023 Open Enrollment Period (OEP) in a celebratory vein. The good news: Enrollment nationally overall is up 13% year-over year and 36% since 2021, after two years with premiums subsidies substantially boosted by the American Rescue Plan Act of March 2021. (As I noted here when OEP was mostly completed, enrollment growth is heavily concentrated in the twelve states that had not enacted the ACA Medicaid expansion as of OEP 2023.) New enrollment increased by 21%.

In OEP 2022 — the first OEP in which there was no income cap on subsidy eligibility — enrollment growth was highest at high incomes. In marked contrast, this year it’s concentrated at low incomes. In the 33 states that use HealthCare.gov (which include all of the twelve states that haven’t expanded Medicaid), enrollment at incomes between 100% and 150% of the Federal Poverty Level (FPL) increased from 32% of all enrollment in 2022 to 37% this year, rising 20.4%, from 4,640,092 in OEP 2022 to 5,588,315 million in 2023.

Why are certain U.S. healthcare system dysfunctions not endemic in other countries? Or are they?

I’ve just finished reading the eminent healthcare economist Uwe Reinhardt’s last and posthumously published book: Priced Out: The Economic and Ethical Costs of American Health Care. Reinhardt passed away at age 80 in November 2017; the analysis in Priced Out of the Affordable Care Act and Republicans’ failed 2017 repeal/replace attempts continues to within months of his lamented death from sepsis.

The book, a characteristically caustic and ironic overview of the politics and economics of healthcare delivery in the United States, brings into sharp focus the core themes of Reinhardt’s scholarship and writing. Key takeaways:

Republicans want to ration healthcare by ability to pay, but they won’t say it. The U.S. is the only developed country in the world that does not explicitly commit to providing equal access to healthcare for all (with some allowance for concierge service on a pay-for basis for the wealthy, which Reinhardt regarded as tolerable).
The U.S. multi-payer system, in which each insurer negotiates its own prices, is insanely wasteful. Reinhardt pegged the cost of all the wrangling between providers and payers at close to $200 billion per year.
It’s the prices, stupid*: Prices for medical services and drugs that are more than double norms in peer countries are also attributable in large part to our divide-and-conquer multi-payer system.
No single-payer soup for you, U.S.: While Reinhardt helped design a well-regarded single payer system in Taiwan, and regarded single payer as one viable model for universal healthcare, he repeatedly asserted that the U.S. political system was too corrupt to manage it: industry would use its funding leverage to demand unsustainably high payment.

While these themes were familiar to me from Reinhardt’s prior writings (e.g., regular contributions to the New York Times’ old Economix blog) a few throwaway lines made me wonder why some U.S. dysfunctions that are not solely attributable to our failure to standardize prices are not shared by peer countries, or at least not to the same degree.

Some archaic messaging on the ACA exchanges

Selecting a health plan in the ACA marketplace is often a ridiculously complex task. Many markets now offer dozens of plans at each metal level, widely varying in deductible and out-of-pocket maximums. In those markets a single insurer may offer six or eight or twelve plans in a given metal level, salami-slicing not only deductibles and OOP maxes, but co-pays and coinsurance for each service, and with a wide variety of services not subject to the deductible (mostly in silver and gold plans, though bronze plans often exempt some or even all doctor visits and generic drugs from the deductible). Cross-cutting these varieties in payment design are wide differences in network adequacy

CMS and various state exchanges (e.g., Washington’s) are moving to rein in this metastasizing of “choice,” introducing standardized plans, and limiting the number of nonstandard plans insurers can offer. In the meantime, decision-support tools and messaging on the online exchanges can help, or fail to help, optimize choice.

That’s especially true for the single most consequential choice for more than half of enrollees: whether to select a silver plan and so avail themselves of the Cost Sharing Reduction (CSR) benefit that attaches to silver plans, and only silver plans, for low-income enrollees — those with income up to 250% of the Federal Poverty Level.

A broker briefing on OEP 2023 in the ACA marketplace

ACA marketplace enrollment is up 13% nationally in 2023; 19% in the 33 states using the federal exchange, HealthCare.gov states; 23% in states that have not expanded Medicaid (all of which use HealthCare.gov), and 32% in Texas. Who’s buying in? In advance of the detailed enrollment data that CMS typically releases in spring, I spoke to health insurance brokers based in Texas and New Jersey.

High-income enrollees entering the marketplace

I touched base first with Dallas-area health insurance broker Jenny Hogue, president and CEO of KG Health Insurance, who had noted on Twitter in late 2021 that a number of higher-income people who had been priced out of the ACA marketplace before the American Rescue Plan Act removed the income cap on subsidy eligibility were buying in. Jenny’s perceptions were borne out by 2022 enrollment data, which showed enrollment at income over 400% FPL had more than doubled year-over-year in HealthCare.gov states, including Texas. I wanted to know if the surge was continuing this year.

Legislative and administrative love (and its opposite): Health Policy Valentines 2023

I can’t believe that this my tenth year offering up #HealthPolicyValentines — a tradition kicked off by Emma Sandoe, the country’s leading Medicaid enthusiast, in 2012, when she was a CMS spokesperson. Emma is now a Medicaid official in North Carolina, no doubt deeply invested in a not-so-funny legislative rom-com as the state House and Senate struggle to align not-quite-compatible bills to enact the ACA Medicaid expansion. The NC House may deliver the ultimate #HealthPolicyValentine this week, passing its expansion bill on V-Day itself.

I have no such substantive gifts to offer, but I can celebrate some goodies served up by legislators (federal and state) and administrators in the last year. Let the doggerel begin.

* * *

Roses are red,
Violets are blue.
I got no surprise bills
in 2022.

Roses are expensive,
Dandelions are free.
I'll get no surprise bills
in 2023.

In the U.S., alas,
there’s always an asterisk,
so an ambulance remains
a major financial risk.

* * *

Progress is fragile,
progress is slow,
but the uninsured rate’s
at an all-time low.

Alas, costs keep rising
so we needn't ask why
the underinsured rate's
at an all-time high.

* * *

Congress showered cash
but states must play their part (um…)
to provide young moms and babes
a year’s coverage postpartum.

* * *

Love to CMS
for reducing the immensity
of Medicare Advantage
coding intensity.

* * *

Love (and its opposite) in the states

In New Mexico, for sure,
but I didn't expect this:
Strict silver loading
enacted in Texas.

* * *

Some states will be cruel,
some states will be kind
when the starting whistle blows
for the Medicaid unwind.

* * *

100% FPL
is the cruelest of gates,
but Obamacare's on fire
in nonexpansion states.

Perhaps those excluded
have grown sick of rejections
and learned to adjust
their income projections.

* * *

In our founding fathers’ house
there’ll be one more mansion
when NC enacts
the Medicaid expansion.

* * *

New Jersey got it done --
that is, built the apparatus
to cover kids regardless
of immigration status.

* * *

New York,
defrosting pork,
and seasoning it well,
will cook the Essential Plan
to 250 FPL

* * *

Glutton for punishment? Browse my Health Policy Valentines archives: Flowers in the graveyard (2022), Institutional edition (2021), But love grows old and waxes cold (2020), The Water is Wide: Health Policy Valentines (2019), HPV (2018), Love Knows No Repeal (2017), Love in the Time of Obamacare (2016), love, 2015, and Romance of the Rose, Health Policy Edition (2014).

Why ACA marketplace enrollment surged at incomes above 400% FPL in 2022: A Houston illustration

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In 2022, the first plan year in which the enhanced ACA marketplace subsidies created by the American Rescue Plan Act (ARPA) were available in the Open Enrollment Period, enrollment at incomes above 400% of the Federal Poverty Level more than doubled in the 33 states using HealthCare.gov. Pre-ARPA, enrollees with income above 400% FPL were ineligible for premium subsidies; ARPA removed that eligibility cap.

I have a post up at Healthinsurance.org that charts the enrollment increase at high incomes in HealthCare.gov states in 2022 and the ARPA impact on premiums at high incomes in Houston in 2023. Just to tease here, a couple of charts:

How deep is public support for a broad public option in health insurance?

In polling about U.S. healthcare, the prospect of a “public option” for health insurance, open to all Americans regardless of whether they have access to employer-sponsored insurance, generally scores high. Here is the top-line response to a Kaiser Family Foundation tracking poll conducted in January 2020:

Looking beneath the hood of that apparent relative consensus, a research team led by Adrianna McIntyre of Harvard’s Chan School of Public Health conducted a poll in November/December 2020 that probed attitudes toward government that underlie responses to health reforms including a public option — specifically, a Medicare buy-in for people under age 65. The researchers published an analysis* in Milbank Quarterly this month. While top-line results were similar to KFF’s, the researchers note:

An overwhelming majority of Democrats (86%) report believing that it is the government’s responsibility to ensure universal health insurance coverage; only 11% of Republicans hold the same view. Most Democrats (71%) also report that they would prefer a health insurance system run mostly by the government, while a similar share of Republicans (78%) would prefer a system based mostly on private health insurance. Two-thirds of Democrats (67%) believe the federal government should be more involved in health care in the future, but over half of their Republican counterparts (56%) believe it should be less involved. Prior work has also found that while a large majority of Democrats (65%) believe the government would do a better job than private health insurance plans at reducing the nation’s health care costs, significantly fewer Republicans (25%) hold that view.

What's going on in the state-based marketplaces, cont.

My last post put a spotlight on lagging enrollment growth in the ACA’s 18 state-based marketplaces (SBMs). Enrollment in the SBMs appears on track to drop 2.8% year-over-year, from 2022 to 2023, while enrollment in the 33 states using HealthCare.gov (FFM states) looks to increase by 19.6%. While enrollment growth throughout the pandemic years has been concentrated in states that have refused to enact the ACA Medicaid expansion, enrollment in the 21 FFM states that have expanded Medicaid is up 10.3% year-over-year — perhaps the most pointed contrast with the SBM states. Longer term, while growth in the current SBEs is up 6.4% since 2020, the all-state increase during those pandemic years is 43.3%.

Let me say at the outset before diving in below that I think in my last post I may have got the emphases wrong, in that greater market penetration in SBM states in years prior to the pandemic may be a major factor. As of 2021, the uninsured rates in the SBM states were significantly lower, not only than in states that have not expanded Medicaid as you would expect, but also than in expansion FFM states. The same is true of the Kaiser Family Foundation’s estimates of the percentage of subsidy-eligible state residents who enrolled in marketplace coverage in each state in 2020. Moreover, in 2022, drops in the state unemployment rate were steeper on average in SBM states than in FFM states. That suggests a reduced pool of people needing marketplace coverage. On the other hand, UI rates remain higher on average in SBM states than in FFM states.

With the exception of Idaho, the states running their own SBMs are “blue” states that have invested considerable effort, and often state funds, in making their marketplaces as affordable and accessible as possible. They have variously implemented state-funded supplemental subsidies, individual mandates (requiring state residents to obtain insurance or pay a penalty), reinsurance programs, public option plans, standardized plans, active oversight of participating insurers, and strict silver loading (requiring insurers directly or indirectly, to price gold plans below or on par with silver) — not to mention the trouble and expense of launching and administering an exchange.

Conditions in every state are different, and the SBEs, as noted in the prior post, outperformed the HealthCare.gov states during the pre-pandemic Trump years and had proportionately smaller uninsured populations going into the pandemic. Nonetheless, the weaker enrollment growth over several years in the SBEs is worth scrutinizing. If it persists, state governments intent on improving their marketplac

What's going on in the state-based marketplaces?

While enrollment in the ACA marketplace as a whole in the Open Enrollment Period for 2023 is on pace to finish about 13% higher than in OEP 2022, enrollment in the eighteen states that run state-based marketplaces (SBMs) is on course to come in about 3% below the OEP 2022 total.

As my last post emphasized, enrollment growth throughout the pandemic has been overwhelmingly concentrated in states that have refused to enact the ACA Medicaid expansion. In those states, about 40% of enrollees would be eligible for Medicaid if their states had enacted the expansion, and the American Rescue Plan Act made a benchmark silver plan free to almost all of them. As of this past week’s enrollment snapshot, enrollment in the twelve current nonexpansion states is up 23% year-over-year.

But enrollment in twenty-one expansion states that use the federal HealthCare.gov platform is also up by 10%. That throws the apparent enrollment decrease (barring last-minute surges or Week 9 reporting lags) in the SBMs into sharp relief and has marketplace watchers scratching their heads. (See the bottom of this post by Charles Gaba for breakouts of 2023 enrollment to date by exchange type.)

In fact, throughout the pandemic years, enrollment growth in the states currently running their own marketplaces has collectively lagged far behind growth in the overall market. Enrollment in these eighteen states is up 6% since OEP 2020, compared to 43% for the marketplace as a whole.

ACA marketplace enrollment in nonexpansion states is up 73% since 2020

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CMS dropped its next-to-last snapshot of ACA marketplace enrollment for 2023 today. Enrollment remains on pace for a 13% year-over-year increase.

Charles Gaba has year-over-year breakouts for each state as well as for HealthCare.gov states, state-based exchanges (SBEs), and states that have refused to enact the ACA Medicaid expansion (or, in the case of South Dakota, not yet enacted an expansion that will kick off this summer). Salient facts among those breakouts:

Enrollment in the 18 SBEs is down slightly (2.8%).
Enrollment in all states that have enacted the ACA Medicaid expansion is up 2.6%
Enrollment in 12 nonexpansion states is up 23.4%.
Enrollment in Texas is up 32% — probably triggered in part by a state law effectively requiring insurers to price gold plans lower than silver plans.

I don’t think we’ve fully fathomed the enrollment growth in nonexpansion states during the pandemic years. Since the end of the Open Enrollment Period for 2020, which ended December 15, 2019 in HealthCare.gov states (e.g., in all nonexpansion states), enrollment in the twelve states that have not enacted the expansion to date has increased by 73%. By the end of Open Enrollment on January 15, the increase will probably top 75%. Florida and Texas alone have added more than 2.4 million enrollees in those three years. The twelve states together have added 3.6 million enrollees and account for 55% of enrollment nationally.

Thursday, September 28, 2023

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