Why 2019 ACA enrollment drops were concentrated in Medicaid expansion states on HealthCare.gov, Take 3

I have been trying to figure out why (if there is any why) the overall 3.8% enrollment loss in HealthCare.gov states in 2019 was concentrated almost entirely in states on the platform that have enacted the ACA Medicaid expansion. Enrollment in the 21 HealthCare.gov states that have expanded Medicaid (excluding Virginia and Maine, where expansion was in progress or pending) is down 7% in 2019. It's down less than 1% in the 16 nonexpansion states.

David Anderson, while focused elsewhere, may have provided an answer:

we should expect larger #Silverloads between benchmark and cheapest Bronze plan in non-Expansion states compared to Expansion states.

— David Anderson (@bjdickmayhew) January 8, 2019

New Jersey's disappointing 2019 ACA enrollment: Some perspective

Policymakers in New Jersey were disappointed by enrollment in the state's ACA marketplace in 2019, which came in 7.1% behind 2018 enrollment. In the 39 states using HealthCare.gov, the federal exchange, enrollment was down 3.8%, and in the 12 states (plus DC) that have their own exchanges, it's likely to come in flat (enrollment is not over in several of them).

The state had acted swiftly in the first half of 2018 to pass a state-based individual mandate and get a reinsurance program enacted by legislation  and approved/funded by CMS. As a result, premiums were down an average of 9% in 2019, and 22% below where they would have been had no action been taken.

But base premiums affect only unsubsidized buyers, and in 2019 premiums in New Jersey were actually higher than in 2018 for most subsidized enrollees, as benchmark silver plan premiums, which determine subsidies dropped further than the average for all plans. For a 40 year-old with an income of $30k, the cheapest bronze plan cost 12-22% more in 2019 than in 2018 (varying by region) -- that is, $13-$25 more per month. Cheapest silver was also up slightly in most of the state.  There's some hope that off-exchange enrollment will show some improvement, as that's where the benefit from lower premiums comes home. We'll know when the state publishes first-quarter off-exchange enrollment in the spring.

Medicaid expansion states on HealthCare.gov account for nearly all enrollment losses in 2019

In yesterday's post, I  missed the most startling point in the ACA enrollment data I'd been staring at.

It's this: In 2019, virtually all of the enrollment decline in the ACA marketplace was concentrated in states on the HealthCare.gov platform that have expanded Medicaid. That's excluding Virginia and Maine, which are expanding Medicaid in 2019.*

Charles Gaba projects virtually flat enrollment in the states that run their own exchanges, in many of which enrollment for 2019 is still open. In the 16 remaining non-expansion states using HealthCare.gov, enrollment in 2019 is down less than 1% from enrollment in 2018 (excluding late adjustments, which should roughly cancel out similar adjustments made last year). Enrollment in the 21 HealthCare.gov states that have expanded Medicaid (excluding VA and ME) is down 7% in 2019. It was also down 7% in 2018, compared to 4% the in non-expansion states.

As I noted yesterday, outsized enrollment losses in 2018 were concentrated at lower income levels, where enrollment assistance is probably most vital, and where the value of Cost Sharing Reduction (CSR) mostly outstrips the value of  bronze and gold discounts generated by silver loading** (an income breakout is not yet available for 2019). In HealthCare.gov expansion states, enrollment in the 100-150% FPL income band, where CSR is strongest, cratered in 2018, dropping 14%. At 150-200% FPL, enrollment in these states dropped 11%.

At higher income levels, as was the case generally in 2018, silver loading discounts in these states seem to have partially offset the forces driving enrollment down at lower income levels. At 300-400% FPL, enrollment in these states was up 8% in 2018 (it was up 12% in non-expansion states).

Two key factors in state-by-state ACA enrollment performance

Last week, I noted that in the 39 states using the HealthCare.gov platform, enrollment declines from 2018 to 2019 were generally steeper in states that had accepted the ACA Medicaid expansion than in states that have so far refused to expand.

Excluding Virginia and Maine, which are expanding Medicaid as of Jan. 1 2019, 13 of the 18 states with enrollment performance above the hc.gov median are nonexpansion states, while 15 of 18 below the median are expansion states (as is Kentucky, at the median).

My working assumption is that a measure of enrollment stability in non-expansion states is grounded in the one third-plus of enrollees in those states who have incomes that would qualify them for Medicaid in expansion states (100-138% of the Federal Poverty Level). This is the income level at which ACA marketplace offerings are most affordable and comprehensive.  At 100-138% FPL, the premium for a benchmark silver plan with an actuarial value of 94% (average deductible $355) costs just 2% of income.

Apparently cutting against this hypothesis is the fact that in HealthCare.gov states in 2018, enrollment dropped 7% at 100-150% FPL while remaining essentially flat at 200-400% FPL, as at the higher income levels, silver loading discounts (see note at bottom) largely offset the effects of cuts to advertising and enrollment outreach. But the drop at 100-150% FPL was much steeper in the expansion states on the platform, where subsidy eligibility begins at 138% FPL (so that the income band is effectively 138-150% FPL). In expansion states on HealthCare.gov, enrollment in this income band cratered 14% in 2018, compared to 6% in the nonexpansion states.* At 138-150% FPL, a benchmark silver plan -- still at 94% AV -- costs 3-4% of income, compared to 2% of income for those below 138% FPL.  And while silver loading reduced enrollment losses at 200-400% FPL in 2018, the resulting discounts in many cases evaporated in 2019 (though new discounts also emerged).**

The chart below sets 2019 enrollment performance beside the percentage of enrollees in a state who obtain silver plans with the highest level of CSR, which raises the actuarial value of a silver plan to 94%.  That percentage is generally much higher in nonexpansion states, where over three quarters of the enrollees in 94% AV silver would be in Medicaid if their state had accepted the expansion. The relationship is significant, I think,  but can be trumped by silver loading effects, as they are in some (not all) of the highlighted states below, as well as by other factors noted below. In states marked in red, the relationship between the percentage of enrollees at 94% AV silver and enrollment performance is most sharply out of whack; in those marked in tan, more moderately so. The apparent effects (or lack thereof) of premium changes from 2018 to 2019 in highlighted states are discussed below.

The median percentage of enrollees with 94% AV silver plans in these 37 states is 19%. The median enrollment change is Kentucky's -5.38%.  I have excluded Virginia and Maine, as they are in the midst of Medicaid expansion.

Sources: Charles Gaba, CMS state-level Public Use Files, 2018.