In 2015, I spent some time tracking the effects of "CSR discounts" in select ACA marketplaces -- that is, discounts on the Cost Sharing Reduction subsidies offered to low income enrollees (i.e., most enrollees to date) when they buy silver plans -- and only silver plans.
Since the ACA's income-based premium subsidies are set according to the price of the benchmark second cheapest silver plan in a given area, a "CSR discount" is available when the cheapest silver plan has a significantly lower premium than the benchmark. Such a discount lowers income shoppers' temptation to buy bronze plans, which are much cheaper but have sky-high deductibles and no CSR.
Large CSR discounts are not the norm in the ACA marketplace, but they're not rare either. I found some evidence, across California and in two adjacent CA counties, that where the discount is significant, silver plan selection rises.
My interest stemmed from a concern whether most low income buyers in the marketplace were likely to obtain coverage adequate to their needs -- in shorthand, obtaining plans with deductibles in the $0 to $750 range (the range CSR-enhanced silver plans for those with incomes up to twice the poverty level) rather than in the $5000 to $6850 range (typical of bronze plans). Richard Mayhew, a health insurance professional, shares that interest but also homes in on the effects of various price configurations on insurers' health. With two thirds to three quarters of insurers in the ACA marketplace posting losses there, and a quarter of last year's participating insurers exiting the market, that concern must be shared by all who want to see the marketplace function as designed.
Since the ACA's income-based premium subsidies are set according to the price of the benchmark second cheapest silver plan in a given area, a "CSR discount" is available when the cheapest silver plan has a significantly lower premium than the benchmark. Such a discount lowers income shoppers' temptation to buy bronze plans, which are much cheaper but have sky-high deductibles and no CSR.
Large CSR discounts are not the norm in the ACA marketplace, but they're not rare either. I found some evidence, across California and in two adjacent CA counties, that where the discount is significant, silver plan selection rises.
My interest stemmed from a concern whether most low income buyers in the marketplace were likely to obtain coverage adequate to their needs -- in shorthand, obtaining plans with deductibles in the $0 to $750 range (the range CSR-enhanced silver plans for those with incomes up to twice the poverty level) rather than in the $5000 to $6850 range (typical of bronze plans). Richard Mayhew, a health insurance professional, shares that interest but also homes in on the effects of various price configurations on insurers' health. With two thirds to three quarters of insurers in the ACA marketplace posting losses there, and a quarter of last year's participating insurers exiting the market, that concern must be shared by all who want to see the marketplace function as designed.
