Trading out-of-pocket cost protection for network adequacy in the ACA marketplace

Note: All xpostfactoid subscriptions are now through Substack alone (still free), though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up! 

Bronze sometimes works

In a prior post, I raised concern that the percentage of ACA marketplace enrollees eligible for strong Cost Sharing Reduction (CSR) subsidies who access that valuable benefit by selecting silver plans has not increased significantly since the American Rescue Plan Act of March 2021 made benchmark silver plans much more affordable. (CSR is available only with silver plans.)

This despite the fact that ARPA rendered the benchmark (second cheapest) silver plan free for enrollees with income up to 150% of the Federal Poverty Level and costing no more than about $45/month for a single enrollee with income up to 200% FPL. While CSR takeup did improve modestly in 2022, it slipped in 2023 — to its lowest level ever for enrollees with income up to 150% FPL (80.2%) and to its second-lowest for enrollees in the 150-200% FPL range.

"Strong" CSR takeup dropped only slightly on HealthCare.gov in 2018

Update/correction: This year, for the first time, CMS broke out enrollment at each level of CSR (at actuarial values of 73%, 87%, and 94%) -- and separately, metal level enrollment at each income level (indirectly - see note below). As explained below, the percentage of apparently subsidy-eligible enrollees with incomes up to 200% FPL who obtained strong CSR (94% or 87% AV) is somewhat lower than the percentage who selected silver plans. 

I noted recently with respect to Maryland ACA marketplace enrollment, the downside of "silver loading" the cost of CSR is a drop in takeup of the strong CSR available to enrollees with incomes below 200% FPL. CSR is available only with silver plans (please see the prior post to un-abbreviate all this).

That downside (for the subsidized) is outweighed by the upside. In Maryland, about 30,000 enrollees with incomes over 200% FPL obtained steep discounts in bronze and gold plans, whereas about 6,000 fewer enrollees under 200% FPL obtained strong CSR than would have had Trump not disrupted the market by cutting off federal funding for the benefit (see appendices to post linked to above for a quick explanation).

Now we have enrollment numbers for the all states -- with, as usual, more precise breakouts for the the 39 states using the federal exchange, HealthCare.gov, than for the whole country.  In HealthCare.gov states, CSR takeup among those with incomes up to 200% FPL downticked only slightly.  -- to  about 82%. Silver selection among those with incomes ranging from 100-200% FPL dropped from 86.9% in 2017 to 85.3% in 2018. For 2017, we don't know how many silver enrollees in the income bracket did not obtain CSR.

On HealthCare.gov, CSR takeup rose steadily from 2015 through 2017

One aspect of ACA marketplace enrollment that's intrigued me ever since HHS started producing enrollment statistics is "CSR takeup" -- the percentage of enrollees who are eligible for Cost Sharing Reduction (CSR) subsidies who access the benefit by selecting silver plans, the only level at which CSR is available.

Silver can be expensive for low income enrollees -- a benchmark silver plan costs an enrollee with an income at 200% of the Federal Poverty Level about $125 per month. At the same time, up to 200% FPL, CSR dramatically reduces out-of-pocket costs. (The benefit is much weaker for those in the 200-250% FPL range, and silver plan selection tapers off accordingly among enrollees over 200% FPL.)

One fact that's escaped me until now: CSR takeup rose steadily from 2015 through 2017, at least in the states using the federal exchange, HealthCare.gov (as 37 states did in 2015 and 39 in 2017). That's been somewhat obscured by the fact that the percentage of all enrollees with CSR has not risen. But enrollees' income mix on the federal platform has shifted upward as states on the platform enacted late Medicaid expansion, and as two states that expanded Medicaid early, Hawaii and Kentucky, came on board the federal platform. In 2015, 78% of enrollees were known to have incomes under 251% FPL. In 2017, 74% were below that threshold.

CSR takeup: Good enough for me* and Emily Gee

Long before the Cost Sharing Reduction (CSR) subsidies accessed by more than half of enrollees in the ACA marketplace became a political battleground zero, I was preoccupied with CSR as the marketplace's primary (and too limited) defense against underinsurance. In dozens of posts, I explored what leads people to accept or reject CSR, i.e. to buy or forego silver plans if they qualify for the benefit (as CSR is available only with silver plans). Among the most basic conclusions:

1. Although a large body of research suggests that health insurance shoppers often make the wrong choice when faced with relatively small tradeoffs between premium and out-of-pocket costs, a large majority of CSR-eligible marketplace enrollees make the right choice That is, they choose not to leave a large subsidy on the table, despite the fact that silver premiums can be a strain on income and bronze plans temptingly cheap. Over 80% of enrollees eligible for strong CSR -- i.e., enrollees with incomes below 201% of the Federal Poverty Level (FPL) -- choose silver plans.

2. CSR takeup declines in step with the weakening of the benefit at higher income levels, with a sharp drop at 201% FPL, where the benefit weakens almost to insignificance.  Based on data released by CMS in July 2016, the chart below shows the takeup rates in the 38 states that used healthcare.gov in 2016. The rates are inflated by probably about 2 percentage points, for reasons explained in this post. The numbers attached to "Silver" under coverage level are the CSR-enhanced actuarial value of silver at each level.

CSR Takeup: HealthCare.gov states, 2016

Income range	CSR coverage level	Enrollees in income range	Enrollees With CSR	Takeup Percent- age
0-150% FPL	Silver94	3.64m	3.18m	87%
151-200% FPL	Silver87	2.21m	1.83m	83%
201-250% FPL	Silver 73	1.33m	866k	65%

Five factors driving (or inhibiting) CSR takeup in ACA private plan markets

I want to lay out some notes here for a regression analysis of what drives takeup (or the lack of takeup) of Cost Sharing Reduction (CSR) subsidies among buyers of private health plans on ACA exchanges. CSR reduces out-of-pocket costs for buyers with incomes under 251% of the Federal Poverty Level (FPL).  The benefit is quite strong up to 200% FPL, but almost negligible in the 201-250% FPL range.

CSR is best understood not as some obscure secondary benefit but as the ACA's best defense against underinsurance -- that is, against leaving plan holders on the hook for more medical expenses than they can afford. Thanks mainly to CSR, about 60% of buyers on ACA exchanges buy insurance with an actuarial value of 80% or higher - - coverage comparable to or more comprehensive than that offered by most employers. Without CSR, only 10% of exchange customers would access that AV level. CSR provides insurance with AV 87% or 94% to about half of ACA exchange customers.

CSR is a leaky vessel, however, Only about three quarters of those who are eligible access the benefit, including probably a bit over 80% of those eligible for "strong" CSR (AV 87% or 94%). Silver plan premiums can be a hard swallow for low income buyers. In 2015, somewhere between 15% and 20% of buyers under 201% FPL probably opted for cheaper bronze plans with their sky-high deductibles (usually over $5,000 per individual).

CSR takeup among all eligible buyers varies quite a bit from state to state, most commonly between 70% and 80%, more broadly between about 68% and 85% -- discounting a few states that have layered their own benefit structures on the national ACA template (e.g., Vermont and Massachusetts).  In various posts, I've spotlighted factors that have an impact (or may have an impact) on CSR takeup levels, though none form a basis for consistent predictions. Below, I've listed those factors in what I would guess to be descending order of likely impact.

A quibble with Avalere over CSR takeup

9/3/15: See update at bottom for Avalere's response to questions posed here 

I may have to "never mind" this post if I'm missing something basic, but...it seems to me that Avalere Health lowballed Cost Sharing Reduction (CSR) takeup a little in an analysis released today.

Avalere's calculation is simple: 5.9 million buyers of private plans on ACA exchanges bought plans with Cost Sharing Reduction subsidies, available only to buyers with incomes under 250% of the Federal Poverty Level (FPL), and only if they selected silver plans.  8.1 million buyers were eligible for CSR, according to Avalere; hence about 2.2 million left the benefit on the table; most of them probably brought bronze plans with sky-high deductibles. The CSR takeup rate comes to just 72.8%,

Avalere says that it derived these numbers from HHS's March enrollment report,which broke out enrollees by income level in the 37 states using healthcare.gov, and a CMS update released in June, which adjusted for attrition (mostly no-pays) as of March 31.

We know where the 5.9 million figure for those who accessed CSR came from: the June update, which reported 5,850,936 enrollees with CSR. But what about the denominator, the 8.1 million? That's trickier. We know there were 10,187,197 enrollees as of March 31. But how many were CSR-eligible?

New light on QHP enrollees' income levels in states that refused to expand Medicaid

Below are some state-by-state numbers for private health plan enrollment in the 21 Healthcare.gov states that refused to expand Medicaid.  The state enrollment totals at different income levels are extracted from the county-by-county data released by HHS in early July. I've sandwiched those tallies between the states' median household incomes as of 2013 and Kaiser's estimates of the percentage of potential private plan enrollees that each state has enrolled as of March 31, 2015.*

What I'm after is possible causes of state variations in the percentage of enrollees eligible for Cost Sharing Reduction (CSR) subsidies who accessed that benefit by buying silver plans, the only metal level at which CSR is offered. CSR is available to buyers of Qualified Health Plans (QHPs) whose household incomes are below 251% of the Federal Poverty Level (FPL). In nonexpansion states, that's fully 80% of QHP buyers.**

In the chart below, states are listed in ascending order of median household income. I track the percentage of buyers in each states whose household incomes are between 100% and 150% FPL, for reasons explained below, as well as those who are CSR-eligible (0-250% FPL***). The next-to-last column tracks the percentage of CSR-eligible buyers who selected silver plans and so obtained the benefit.****