Choosing a metal level in the CSR-addled Maryland marketplace: Not bad, enrollees!

In Maryland's ACA marketplace, as in much of the country, Trump's cutoff of reimbursement to insurers for Cost Sharing Reduction (CSR) drove huge premium increases for unsubsidized buyers -- but also bizarre bargains for the subsidy-eligible.

Throughout the state, all subsidy-eligible* enrollees with incomes below 200% of the Federal Poverty Level (FPL) could obtain an bronze plan for under $20 per month. Most at this income level -- e.g., everyone over 30 -- could get a bronze plan for under $4 per month. In the state's most populous counties, subsidy-eligible buyers could get a gold plan for just a few dollars more than a silver one.  And in several rural counties, an enormously expensive benchmark (second cheapest) silver plan, which determines subsidy size, rendered silver and gold plans as well as bronze plans free for many enrollees.

The effects of these pricing anomalies on the subsidized were mostly beneficial, as you might expect. Discounted (not to mention free) gold plans are a real boon to enrollees with incomes over 200% FPL, for whom silver plans have high out-of-pocket costs (sharply reduced for those up to 200% FPL by strong CSR). And free bronze plans are better than nothing, even with the $6200 deductible they carry in the most populous counties.

But anomalous pricing also can create problems. Some enrollees eligible for strong CSR might be tempted to choose  bronze plans (deductible $6200) over silver (deductible $0). Some enrollees under 200% FPL might also have been tempted by gold plans that cost slightly more than the cheapest silver -- not recognizing that CSR-enhanced silver plans cover more of their out-of-pocket costs than gold (i.e., are just straight-out more valuable).

So how did enrollees' choices shake out? Courtesy of the Maryland Health Connection, I have a breakout of enrollees metal level choices at different income levels, posted below.  And they look pretty good:

A few observations:

A Medigap for the Marketplace?

It's well known by now that Trump's cutoff of federal funding for Cost Sharing Reduction (CSR) subsidies in the ACA marketplace has had the paradoxical effect of making free bronze plans widely available to subsidy-eligible marketplace enrollees.

The blessing is something of a mixed one for many buyers with incomes up to 200% of the Federal Poverty Level (FPL), however. Silver plans up to the 200% FPL level come with strong CSR that reduces average deductibles to under $300 (for enrollees up to 150% FPL) or under $1000 (for those in the 151-200% FPL range). That's in contrast to bronze plan deductibles that average over $6,000.  Other out-of-pocket cost differences are commensurate. More than half of current marketplace enrollees have incomes under 200% FPL, and most can probably now find free bronze plans.

CSR was designed to make actual healthcare affordable to low income enrollees -- who, again, constitute more than half of all marketplace enrollees (and more than half of the uninsured; as of 2013, 55% of the uninsured had incomes under 200% FPL). $6,000 deductibles are not generally appropriate for low income people (or arguably, for almost anyone).

On the other hand, a benchmark silver plan for a solo buyer with an income of $24,000 just under 200% FPL costs $126 per month -- versus $0, in many cases now, for bronze.

Since CSR costs the enrollee nothing, CSR-enhanced silver plans used to be worth considerably more in absolute terms than bronze, providing more actuarial value for the buck. That's not necessarily true any more. And a fair number of bronze plans do not subject services such as doctor visits and generic drugs to the deductible. The yearly out-of-pocket maximum for a bronze plan, on the other hand, is $7,350 for an individual -- versus $2,450 for a CSR-enhanced silver plan for enrollees with incomes up to 200% FPL. The out-of-pocket maximum represents an enormous amount of risk for a low income person.

There is an existing market resource, however, that could give some enrollees in free or very cheap bronze plans significant relief from high out-of-pocket costs. That's so-called gap insurance, which offers first-dollar coverage for a range of expenses up to a limit of, say, $5,000 or $10,000. It's not available everywhere, coverage for preexisting conditions is excluded, and coverage is not comprehensive -- it's for named perils such as accidents and critical illness, as commenter Bob Herz cautions below [I have updated here to make those limitations clearer].  But for a healthy enrollee, plans of this sort may provide coverage up to the bronze out-of-pocket maximum and beyond. [Update, 11/23: Comment by Bob Hertz below is on point -- the policy featured below is for named perils only, e.g., accident, heart attack/stroke/"invasive"cancer, plus limited hospital indemnity.]