The catastrophic option in a degrading market for health insurance

Okay, so short-term health plans are back to not really being short-term -- or likely will be so, as of July. HHS has rolled back the Obama administration rule that limited such plans to three-month terms, a rule that only went into effect last April.  Once again, these plans -- which do not comply with ACA coverage rules and can be medically underwritten and exclude coverage for pre-existing conditions -- can be offered for up to a year.

So big deal, you might say. Short-term plans with year-long terms were available from 2014-2016 (and in the first quarter of 2017) and did not have a huge impact on ACA marketplace enrollment. Yes, but this time it's different, for two reasons. First, the individual mandate is effectively repealed as of 2019, so people need not obtain ACA-compliant coverage. Second, premiums in the ACA-compliant market have skyrocketed in the last two years (thanks largely to Republican sabotage), so more people are priced out. Louise Norris's analysis strongly implies that HHS is lowballing projected enrollment with its estimate of 100-200,000.  See Louise's post for a thorough overview of how short-term plans work and who's likely to buy them.

Short-term plans can be very cheap, and coverage can be very limited (especially if you have a serious pre-existing condition, which will be excluded). ACA-compliant plans, on the other hand, can be astronomically expensive if you're not subsidy-eligible, particularly if you're in your late fifties or early sixties.

As the individual market for health insurance fractures, I want to take a look at one tweener market that may help a few people navigate between the Scylla of unaffordable coverage (say, $1,000 per month for a solo plan with a $7000 deductible) and the Charybdis of unregulated coverage that may exclude, say, drug coverage or pregnancy, cap total coverage, and be medically underwritten.

CSR windfall: Will it have bronze or gold cast?

Those of us who have been anticipating the paradoxical effects for subsidized ACA marketplace shoppers of Trump's cutoff of CSR reimbursement have to split our gaze more between shiny objects.

Designed as an add-on benefit, CSR (Cost Sharing Reduction) radically reduces out-of-pocket costs for silver plan enrollees with incomes under 200% of the Federal Poverty Level (and much more modestly for enrollees in the 200-250% FPL range). Until this month, the federal government reimbursed insurers for the extra benefit. In 2018, insurers will price it in.

What excited folks like David Anderson, Charles Gaba and I* (though we're also appalled by the premium hikes for the unsubsidized) was the prospect that in many states and regions, gold plans would be cheaper than silver. That's because 38 states (according to Charles Gaba's tracking) instructed insurers to load the cost of CSR onto silver plans only, since CSR is only available in silver plans.

This has, um, panned out -- as we now know, since prices have been posted for almost all states. The cheapest gold plan is cheaper than the cheapest silver plan in Pennsylvania, Kansas, New Mexico, Wyoming, most of Texas and Wisconsin, much of Michigan and Florida (including Miami, which has the heaviest concentration of marketplace enrollees in the country), much of California, and parts of several other states. In other regions, the price of gold plans is closer to the price of silver plans than it used to be.

See plans and prices -- and get buttonholed for Cost Sharing Reduction -- on HealthCare.gov

Healthcare.gov has launched its "shop-around" feature for 2017 -- that is, the screen where you can enter a few basic facts about yourself and then preview plans and prices, with your subsidy built into the price estimate.

As in past years, the shoparound has been redesigned. The new design has plusses and minuses in my view. As always, my primary focus is on how well the app communicates about Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, and only to people with a household income up to 250% of the Federal Poverty Level (FPL).

CSR radically lowers deductibles and copays for buyers with incomes up to 200% FPL and offers a more marginal benefit to those in the 200-250% FPL range. Because the benefit comes only with silver plans, the silver level provides the best value in absolute terms to CSR eligibles.

Because it makes silver plans more valuable than gold plans for anyone with an income up to 200% FPL, CSR is inherently counterintuitive. And because silver plans cost more than bronze, they are easy to miss when plans are ranked by premium, lowest first.

Some state-run ACA marketplaces "default to silver" for CSR-eligible shoppers -- that is, they automatically show silver plans first in the display of available plans. HealthCare.gov appears to have thought long and hard about doing this. Current CEO Kevin Counihan ran Connecticut's ACA marketplace, which has "defaulted to silver" since its launch in 2014. Connecticut has had an unusually high CSR takeup rate.

What Hc.gov decided for 2017 was a kind of optional default to silver. If you're CSR-eligible, the screen below appears before you move on to view available plans (apologies for the cut off phrase at top: it should read "only if you pick a silver plan"):

Since this screen is meant to highlight the benefits of CSR, there's a disconnect in fronting the "estimated total yearly costs." That estimate derives from a prior screen, in which you forecast whether you'll need a low, medium or high level of medical care. The estimate above is for a "low" user.

There may be an appropriate place for that information, but this is not it. What's not highlighted is the radical difference in bronze vs. silver deductibles and copays -- a disproportionate difference, thanks to the CSR subsidy added to silver alone. The light-text explanation at bottom appears to fly in the face of the cost estimate -- which of course presumes that the buyer will be a light user as expected. Risk is left out of the equation implied by the bolded text, as is the extra value added by CSR.

A second flaw is in the contrast of the average premium at each metal level. That average can be skewed by some very expensive options. Most marketplace enrollees consider only the cheapest plans available at each metal level.  In this zip (07079) and income level $23k), the cheapest-plan contrast for a 40 year-old would be between a bronze plan at $69 per month with a $3,000 deductible and a silver plan at $104 with a $300 deductible. That would make a more compelling and coherent contrast:

The good news is, I got that comparison from the shop-around's excellent "compare plans" feature. But I had to first pick through the bronze selections to find the first silver (which, to make matters more confusing, was cheaper than several bronze plans in this zip code). The contrast of CSR-enhanced silver with bronze should be clearer in the intro screen.

A third flaw is that if you go back and edit your information, for example to change the income estimate, you don't get the CSR filter screen the second time around.  You just get plans ranked by premium, and the only alternative filter available at first blush is to rank them by deductible, which can yield off-putting results if there are gold plans at premiums that quintuple lower-cost bronze or silver.

There is in fact an additional "refine results" filter that enables screening for a host of options, but it's in a different color and took me several passes to notice it (I can be a very thick user, but I'm sure I'm not alone in that).

As in previous years, once you've input your basic information and before the screen discussed above appears there's an overview screen that also provides an explanation of CSR. But it's  in light type at the bottom of the page, very subordinate to the centerpiece focused on the tax credit:

The broader shoparound tradeoff is between keeping it short and simple, so that users get a quick view of what they're likely to pay, or slowing the process by adding more information, such as plans that cover the shopper's drugs and have her doctors and hospitals in-network.  This year's shoparound takes  a bit longer to get through  than last year's, which was slower than 2015's. Added this year is a filter to indicate whether one is eligible for subsidies at all, e.g., whether the user has an offer of affordable insurance from an employer, which renders him subsidy-ineligible.

In my view that is a worthy feature, as are the drug and doctor filters, and, if properly contextualized, the total cost estimator, which varies according to whether the user anticipates low, medium or high use of medical services. But I wonder whether a two-tier process mightn't be appropriate. In 2015, you could view plans and prices, with your subsidy priced in, within 30 seconds of visiting the home page.Perhaps the shoparound should start with the most basic info -- zip code, household members with their ages, and family income -- give the price quotes, and then prompt for the additional info in a second stage.  In particular, I'm wary of total cost estimators, which tend to push the cost of unexpected accident or illness out of view. I think the results should be carefully hedged, perhaps with views of what you'll pay under alternative scenarios.

Still, the current shoparound gets you results reasonably fast, and I can't say it ignores CSR, the workings of which are notoriously difficult to communicate. We'll see how it works out for users.

See also:
The ACA's uncertain shield against underinsurance: A CSR compendium

He who buys bronze absconds

In the spring of 2014 my son, knowing he'd enter a graduate program that September, switched his health insurance from COBRA to a bronze marketplace plan. Healthy, he gambled the premium difference between bronze and silver (or bronze and COBRA) against the deductible difference, essentially settling for catastrophic protection for a limited period.

Yesterday I noted that attrition in the ACA marketplace, which is sharpest in the months immediately following open enrollment since 10 percent or more of those who select plans never pay the first premium, is highest among those who enroll in bronze plans.   As of March 31 of this year, while bronze enrollment dropped 15.5%, from 2,873,422 to 2,427,337, silver dropped just 9.3%, from 8,520,787 to 7,721,983. A similar discrepancy was recorded in the spring of 2015.

It turns out that the same pattern held throughout the year in 2015. By December 31, total enrollment was down from 11,688,074 as of  Feb. 22, 2015 (not all of it "effectuated," or paid for in the first month) to 8,780,545, a 24.8% drop. Among bronze plan holders, the drop was 30.5%, versus 23.2% for silver, 18.8% for gold and 18.6% for platinum. Those with gold, hold -- relatively speaking.  And he who buys bronze... absconds.

As bronze plans typically carry deductibles over $6,000, many enrollees may decide that they're not worth the money. But I think it's also likely that those who know they have a short-term need for insurance, like my son, may lean toward bronze, basically holding their breath until employer insurance, or school-based insurance, or a spouse's insurance kicks in.

It's fair, O Robert Pear, to spotlight high deductibles in ACA plans. But some context is missing.

An article by the New York Times' Robert Pear, spotlighting the plight of ACA marketplace customers who bought plans with sky-high deductibles, had my eyeballs shooting lasers in two directions.

On the one hand, kudos to Pear, not only for showing the absurdity of offering plans with deductibles north of $6,000 per person to people who are not affluent, but for spanking HHS for emphasizing low premiums uber alles:

Sylvia Mathews Burwell, the secretary of health and human services, issued a report analyzing premiums in the 38 states that use HealthCare.gov. “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.

I have complained about that misdirection repeatedly, most recently noting that only about 5 in 10 will be able to buy a silver plan for under $100 and thus access the Cost Sharing Reduction (CSR) subsidies that are available only with silver. So Burwell is effectively hawking bronze plans to those who, as Pear illustrates, won't be able to use them.

On the other hand, Pear exaggerates the prevalence of super-high deductibles among marketplace enrollees. His acknowledgment of CSR is buried deep and lacks context:

Affordable underinsurance? That's where healthcare.gov's new total cost estimator may steer you

Buying health insurance is hard, experts tell us. Even highly educated customers have trouble weighing monthly premium vs. deductibles and copays - especially since many Americans don't know offhand what terms like "deductible" and "coinsurance" mean.  To help, many have called for a "total cost estimator" that will ask users about their current medical usage and then estimate what their total yearly costs are likely to be under each plan.

This year, healthcare.gov has delivered. The "Preview Plans and Prices" feature, which asks a handful of questions about age, income and household size before delivering price quotes, now includes a total yearly cost calculator. It's optional, easy to use, and only adds one question before showing plans and prices (two, if you count the question whether you want to use it).

I don't like it. At least, I don't like its prominent placement; I think it should be a Step 2 offering, after you see plans and prices. I fear it will make some people focus on the wrong number, and the wrong question.  It leaves out a core factor in the insurance equation: risk.

Take the case of a single 40 year-old man earning $17,000 a year in Las Vegas (gender and age affect the estimated medical cost calculus). Here's the cheapest bronze offering -- the first result the user (let's call him Vince) will see:

Alabama's Obamacare buyers ride a Silverado

Spotlight here is on Alabama in my continuing close look at how many low income ACA private plan buyers accessed Cost Sharing Reduction (CSR) subsidies by buying silver plans. (Yesterday, HHS released detailed county-level data about buyers of private plans on healthcare.gov, the federal exchange, enabling a close look at state stats.)

CSR is available to buyers with household incomes below 251% of the Federal Poverty Level (FPL), and strongest for buyers under 201% FPL. It is available only with silver plans, the second-cheapest of four metal levels available on ACA exchanges -- a fact that's less than obvious to the average shopper, Buyers under 201% FPL are leaving a really strong benefit on the table if they don't buy silver plans (see the note at bottom for more detail). I consider the percentage of buyers under 201% FPL who select silver an important measure of how well the exchange is functioning in a given state. (Those in the 201-250% FPL range are likelier to have good cause to forego the relatively negligible CSR provided at that level.)

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.

Affordable health insurance vs. affordable health care

One of the flaws of the Affordable Care Act is that it partially (not entirely!) confuses affordable insurance with affordable health care.

On the plus side, for insurance purchase purposes, the ACA benchmarks affordability to silver-level plans and calibrates the out-of-pocket costs these plans impose on buyers to income, via Cost Sharing Reduction (CSR) subsidies, which raise the plans' actuarial value to 94% for buyers with incomes under 150% of the Federal Poverty Level and to 87% for buyers under 200% FPL.

On the minus side, CSR fades to near-insignificance at 201% FPL; silver plan premiums slope toward unaffordability for a lot of buyers somewhere over 150% FPL; and the ACA dangles cheaper bronze plans with deductibles north of $5,000 in front of low-income buyers, for many of whom many of those plans will do very little good.

Also on the downside, for the purposes of determining whether a person or family has access to "affordable" insurance (and so whether they are subject to the mandate to purchase it), the ACA benchmarks affordability to the cheapest available bronze plan -- which, again, is likely to have a per-person deductible and out-of-pocket maximum in the $5000-6,600 range. Some bronze plans offer some services, such as low-copay doctor visits or generic drugs, before the deductible is reached, but many (my spot-checks make me suspect most) do not. They do offer mandated free preventive services, but those are a patchwork.

Hey, HHS, you're boasting about the wrong metric

If you read the inimitable Elisabeth Rosenthal's account of unhappy ACA plan holders this weekend, you know that high deductibles and out-of-pocket costs are one serious weakness of the coverage offered to many buyers on ACA exchanges.*

One mitigating factor is that most buyers with incomes under 200% of the Federal Poverty Level get Cost Sharing Reduction (CSR) subsidies that strongly reduce deductibles and maximum out-of-pocket costs, to levels superior to those offered by most employer-sponsored plans.  CSR is only available with silver plans, but as I've labored to deduce, best evidence suggests that over 80%** of buyers with incomes under 200% FPL do buy silver, resisting the temptation of lower-premium bronze plans that would leave them on the hook for huge out-of-pocket (OOP) costs.

Given this partial success, I find it baffling that all of HHS' reports of enrollment data are written as if nothing matters but premium -- the lower the better. The report released today boasts:

Maryland's low income ACA customers benefit from Connecticut's site design

Maryland's ACA exchange was a disaster last year, so the state started over, creating a freely offered clone of the highly successful Connecticut exchange. That's worked out very well.

Charles Gaba reports that Maryland is one of 18 states that have exceeded HHS's goal for private plan enrollments in 2015.  As of January 11, Maryland has enrolled 91,137 residents in private plans, versus 67,757 in the first open season that ended last April.

Equally importantly. the Maryland exchange has strongly boosted the percentage of plan buyers who selected silver-level plans and reduced the percentage that bought bronze -- the lowest level, with deductibles averaging over $5,000 for a single enrollee. In 2014, just 49% of Maryland private plan customers bought  silver, and 31% bought bronze. That's in contrast to 65% silver/20% bronze breakdown in the nation as a whole,and 69%/17% in the 36 states using healthcare.gov.  This year so far, Maryland's silver plan takeup has risen to 61%, while bronze takeup has dropped to 23%.* 

The ACA's invisible deductible discounts

The healthcare Twittersphere was riveted yesterday by Robert Pear's spotlight on Harvard professors up in arms about comparatively modest deductibles and copays added to their excellent health plan.

The main underlying story, as Adrianna McIntyre pointed out, is that cost-shifting to employees is accelerating in employer-sponsored insurance, driven in part by the ACA's Cadillac tax on the most generous plans.

There's a second story, however, in Pear's use of the ACA exchanges as a foil to highlight Harvard employees' relative privilege. Pear contrasted the Harvard plan's 91% actuarial value with that of a silver ACA plan, which he said "typically" covers just 70% of the average user's medical costs. As I pointed out yesterday, only about 20% of silver plan buyers get plans with an AV of 70%. For the rest, income-based Cost Sharing Reduction (CSR) raises the AV -- to 94%, 87% or 73%, depending on the buyer's household income. Available stats indicate that over 60% of silver plan buyers are at the AV 87% or 94% levels.

The broader point here is that the apparent prevalence of high deductibles on the ACA exchanges is somewhat misleading. As has been widely reported, bronze plans single-person deductibles average over $5,000, and silver plans (unenhanced by CSR) close to $3,000. Moreover,if you take a spin on the shop-arounds offered by Healthcare.gov and most state exchanges, the first price quotes you'll see are for bronze plans with deductibles in the $5,000-6,600 range, since available plans are most often displayed sorted by premium, lowest first.

Health exchange design has a clear impact on metal level choices

[New data from Connecticut: please read updated version of this post here.]

Why was there such huge variation among states in the proportion of ACA private plan buyers 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 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.

Another factor plainly has a strong impact, though, and accounts for some wealth/health anomalies. That's website design. In Connecticut, which has a median household income of $67,8k, second highest in the nation, just 16% of all buyers selected bronze. In Colorado, with a median income of $63.4k, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the search results default to silver (at least they do in the pre-application shop-around feature; I've been trying to confirm that they do in the actual application process). [UPDATE: an Access Health CT spokesperson has confirmed that the actual application also defaults to silver for CSR-eligible users.] The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is extremely 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); and 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.

Obama: Drop that "Plans for under 100!" pitch

Hey, Mr. President: you may have the right audience here. But you have partly the wrong message:

Obama appeared Dec. 8 on Comedy Central’s “The Colbert Report,” where he took the place of host Stephen Colbert for a regular segment called “The Word” -- retitled “The Decree” for his appearance -- to pitch enrollment to young viewers.

“Most young people can get covered for less than $100,” Obama said, using lines purportedly meant for Colbert. “How is the president going to get that message out to the kids? 

The administration really needs to take down this "plans for under $100!" banner. Here's why: if an adult under age 35 has an income low enough to get a plan with a premium under $100, she almost certainly qualifies for Cost Sharing Reduction (CSR) subsidies that reduce deductibles and copays -- but only if she buys a silver-level plan. Keeping the premium under $100 for a single person in many cases means buying a bronze plan -- and the average deductible on a bronze plan is over $5,000.

Instead of adding copper plans to the ACA marketplace, enhance bronze

One of the relative successes of the ACA's first open season is the high rate at which private plan buyers who were eligible for Cost Sharing Reduction (CSR) subsidies, which attach only to silver plans, did in fact choose silver.

In so doing, they resisted the temptation to pay far less per month for bronze plans, which carry sky-high deductibles and out-of-pocket maximums, unsoftened by CSR. As I've noted before, in the federal marketplace only 15% of buyers eligible for any kind of subsidy (including those who earn too much for CSR) bought bronze plans.

That's kind of surprising, since the premiums for silver plans are quite high for those in the middle income range of CSR eligibility. For a 44 year-old earning $23,000 per year, the benchmark second-cheapest silver plan in 2015 will cost $118, and the cheapest silver is usually only a few dollars cheaper.  The cheapest bronze plan price for this 44 year-old varies widely by state and county, falling most commonly in the $50--$75 range. That price spread between bronze and silver widens with age; a buyer in her 60s at this income level will often pay nothing or next to nothing for a bronze plan, versus the same $118 for silver (the subsidized benchmark price is a percentage of income and doesn't change with age).

I am troubled by the high premiums that low-income people have to pay for silver. $118 per month on an income of under $2,000 per month is quite a swallow. Though paying the extra premium for silver could save the buyer thousands in out-of-pocket medical costs, I'm impressed that so many many had the discipline to do it.  Prompted by a comment by xpostfactoid reader Bob Hertz, I find myself wondering: why do CSR subsidies attach only to silver plans?

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.

Why go for the bronze?

I've devoted a lot of posts to worrying about who bought high deductible bronze plans but shouldn't have, especially those who were eligible for Cost Sharing Reduction subsidies if they bought silver (Fortunately, most CSR-eligible buyers did choose silver.) This evening I have a post up on healthinsurance.org digging into who should buy bronze -- that is, for whom is a plan with, say, a $5,000 deductible at least a rational choice.

One key: in  some states and counties, some bronze plans provide substantial benefits that kick in before the deductible is reached -- say, $20 primary doctor visits or $10 generic drug copays. Another: for the unsubsidized, premiums climb steeply with age, while deductibles and copays remain the same regardless of age. For the rest, I hope you'll take a look.

Maybe we should call blue states bronze states

In several posts, I have tried to track how successful the ACA exchanges were in steering lower-income buyers of private plans toward silver plans, the only metal level at which subsidies that reduce deductibles and out-of-pocket costs are available. Low-income buyers of bronze plans, which offer low premiums but sky-high deductibles, forfeit access to these Cost Sharing Reduction (CSR) subsidies, which radically reduce costs for those with household incomes under 200% of the Federal Poverty Level and phase out at 250% FPL.

On the whole, the news is good, though information that correlates metal level selection with buyers' income is sketchy. In New York, the only state that breaks out metal level selection by income bracket, 89% of buyers under 200% FPL chose silver plans and so took advantage of CSR. In the federal exchange, only 15% of buyers who qualified for any kind of subsidy bought bronze plans.

Bronze plan selection varies quite a bit by state, however, for reasons that are hard to tease out.  For starters, more people on average bought bronze in the 14 states (plus D.C.) that built their own exchanges -- most of which are also among the wealthier states.

State per capita income seems to affect metal level selection. interacting with other factors such as premium prices, the quality of outreach to the uninsured, whether the state expanded Medicaid (which takes out potential buyers between 100 and 138% FPL), and the age composition of the buying pool.*

My thanks to a friendly stranger on Twitter who put together a scatterplot correlating state median income and bronze plan selection. That led me to the latest census data on median household income by state. Below, I've matched it up with HHS state-by-state data on ACA buyers' metal level selections.

For ACA buyers at all income levels, here are the bronze takeup rates for the thirteen highest- and thirteen lowest-earning states:

The ACA marketplace and the toilet paper aisle

My last post was in protest to a New York Times front-page article that highlighted the very real plight of ACA private plan buyers who were forgoing needed medical care because they'd bought high-deductible, mostly bronze-level plans. My beef was that the article omitted important context, e.g., that only 20% of ACA shoppers selected bronze and that the vast majority of low-income buyers who were eligible for Cost Sharing Reduction (CSR) bought silver plans that allowed them to access those important secondary subsidies.

I also suggested that the four individual narratives in the piece should not be taken at face value -- in particular, the plight of one woman who had selected a bronze plan with a $6,000 deductible but was plainly eligible for CSR that would have brought the deductible down to $500 at worst and as low as $25, depending on what plan she chose. This woman plainly made the wrong plan choice -- in itself a significant problem, but not one that the Times article addressed.

I want to focus here on a second brief narrative in the Times story, in which the woman in question was somewhat higher-income and so faced a tougher choice, with less obviously attractive options. Here's the tale:

ACA signups: Why is bronze more popular in blue states?

It's good news that more than three quarters of those who bought private health insurance plans on the ACA exchanges selected silver-level plans.  Most of those who qualified for help with premiums also qualified for subsidies reducing deductibles and other out-of-pocket costs.Those subsidies, dubbed Cost Sharing Reduction (CSR) were only available with silver plans.

According to a May 1 HHS issue brief, in the federal marketplace (healthcare.gov), only 15% of buyers eligible for any kind of subsidy bought bronze plans, which have lower monthly premiums but higher deductibles and cost-sharing and render a buyer ineligible for CSR.  Presumably an even lower percentage of those eligible for CSR bought bronze -- again, good news.

The percentage of bronze buyers varies considerably by state, however. Just 5% of subsidy-eligible Pennsylvania buyers selected bronze, while in Washington state, 36% did (Washington breaks out buyers' choices by income level).*  Overall, 25% of buyers in the state marketplaces selected bronze, versus 20% in the federal marketplace.  The outliers in the high-bronze column are all states that ran their own marketplaces.**

Those states are blue-to-purple;they're the ones where state government tried to make the ACA work. How did they end up with higher concentrations of bronze buyers?