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

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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

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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.*