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.

Supporting the biggest decision for ACA marketplace shoppers

People make poor decisions when buying health insurance. So demonstrates health economist Austin Frakt in a review of studies probing Americans' health insurance decisions and knowledge base. Frakt cites studies finding that:

• most people choose wrong when faced with relatively small tradeoffs between premium and deductible; 
• Americans have a poor grasp of core insurance terms like "coinsurance; 
• low income people will choose a plan labeled "gold" over one labeled "bronze" even if the "gold" plan is manifestly inferior (researchers swapped the labels to test comprehension); and
• when given an estimate of our yearly medical costs, a typical ACA marketplace shopper can't determine which plan would cost them least.

The upshot: When choosing among Medicare plans, employer-sponsored plans, or private plans on offer in the Affordable Care Act marketplace, we all need help.

But what kind of help? That depends, in part, on the menu of choices. And the ACA marketplace is unique -- different in at least one vital way from the markets for Medicare or employer-sponsored plans.

Connecticut continues to crush it on Cost Sharing Reduction

Connecticut's ACA exchange, Access Health Connecticut, has provided me with a breakout of private plan buyers' metal level selection sorted by income level. The data makes clear that Connecticut continues to lead the way among ACA exchanges in helping low income buyers make choices that will provide them with the strongest financial protection.

There's two things to keep in mind about metal level selection. The first is that bronze plans, the cheapest level with the lowest premiums, usually have deductibles in the $5,000-6,600 range for an individual.  The second is that the Cost Sharing Reduction (CSR) subsidies available to low income buyers are available only with silver plans. CSR reduces deductibles, co-pays and maximum out-of-pocket costs radically for buyers with family incomes below 200% of the Federal Poverty Level (FPL) and much more weakly for buyers in the 200-250% FPL range. Bronze plans are almost always a terrible choice for buyers under 200% FPL -- those buyers are leaving a large extra subsidy on the table and rendering most healthcare unaffordable for themselves.

ACA exchanges vary widely in how effectively they get that information across. The key measure is the percentage of buyers with incomes under 200% FPL who choose silver plans.

In Connecticut, 89% of 2015 private plan buyers with incomes under 200% FPL chose silver.  I had preliminary numbers indicating as much back in December, and the ratio held steady through the end of open season and to June 1. Slightly more than a third of all enrollees, 34,601, have incomes under 200% FPL, and 30,641 of them bought silver and accessed CSR.* Just 6% bought bronze plans. That is a real triumph. 4% bought gold.

New data: health exchange design matters

Why was there such huge variation among states in the proportion of ACA private plan buyers in the first open season who bought bronze plans -- the plans with the lowest premiums and highest deductibles and copays? In Hawaii, 41% of ACA shoppers bought bronze; in Mississippi, 8% did.

Part of the answer, as I've noted before, lies in a state's relative levels of wealth and health. Lower income buyers are eligible for generous Cost Sharing Reduction (CSR) subsidies that reduce deductibles, co-pays and yearly out-of-pocket (OOP) maximums -- but only if they buy silver plans.

Fortunately, most did. If you're sick and poor, a $6,000 deductible is likely to give you pause -- even if the plan is all but free and you don't come in knowing what a deductible is. On Healthcare.gov, only 15% of buyers eligible for any kind of subsidy bought bronze. The percentage is probably considerably lower among those eligible for strong CSR subsidies -- that is, buyers with incomes under 200% of the Federal Poverty Level (data from states that broke out metal level selection by income band, cited below, suggests as much).

Another factor plainly has a strong impact, though, and may account for some wealth/health anomalies in state performance. That's website design. In Connecticut, which had a 2013 median household income of $67,781, second highest in the nation, just 16% of all buyers in the first open season selected bronze. In Colorado, with a median income of $63.371, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the menu of plans available to a given user defaults to silver, both in the pre-application "shop-around" feature and in the actual application. The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is cumbersome; the filter by metal level is hard to find (at the bottom of the screen, and you have to scroll back up to activate it). Perhaps more importantly, unlike on Healthcare.gov, applicants who qualify for CSR and make a move to buy a bronze plan receive no warning that they're leaving benefits on the table.

New data from Connecticut

The strongest evidence of the impact of site design comes from data about the choices of buyers with household incomes below 200% FPL (CSR is available but much weaker for those between 200-250% FPL). HHS did not provide this information for the 36 states that used Healthcare.gov in the first open season, and neither did most states. Colorado did, however, and so did New York (median 2013 household income $53,843).  And now, Access Health Connecticut has provided me with CT numbers for the current open season, which began on November 15.

Connecticut's ACA exchange shows how to communicate with low-income health insurance buyers

In my ongoing quest to figure out why ACA private plan buyers bought low-premium, high-deductible bronze plans in much higher proportions in some states than in others (e.g., 41% in Hawaii, 8% in Mississippi), I have noted that bronze plan takeup correlates roughly, but by no means perfectly, with state median household income and public health measures.

Poorer, less healthy states tend to have lower bronze and higher silver plan takeup -- and that's as it should be. Buyers with household incomes under 200% of the Federal Poverty Level (FPL) are eligible for Cost Sharing Reduction (CSR) subsidies that radically reduce deductibles, copays and maximum yearly out-of-pocket (OOP) costs.  But CSR is only available with silver plans. (A much weaker CSR is available to buyers with incomes between 200 and 250% FPL, only marginally reducing OOP costs below the silver plan standard.)*

The tradeoff for low income shoppers is an often painfully higher monthly premium -- say, $30-$70 more for an individual -- in exchange for potentially thousands of dollars more coverage of out-of-pocket costs. For the most part, lower income shoppers made the right, if difficult, choice. Nationally, just 20% of all buyers on all exchanges chose bronze plans; just 15% of subsidy-eligible buyers in the 36 states on Healthcare.gov last year chose bronze; and the percentage among CSR-eligible buyers was even lower. In low-income Alabama, just 6% of subsidy-eligible plan buyers chose bronze. In Mississippi, just 7% did.

Not all poor states had low bronze takeup, though, and not all rich ones had high takeup. One outlier is Connecticut, the second richest state in the nation, with a 2013 median household income of 67,718. Just 16% of Connecticut buyers selected bronze, putting the state in a four-way tie for 12th-lowest nationally -- i.e., in the lower third of states. The only other relatively wealthy state in the top 16 was New Jersey, with 14% bronze takeup and a median household income of $61,782.