CSR takeup drops in nonexpansion states

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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

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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?

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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

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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.