Juice it, Jersey: What silver loading anemia looks like

Subscribe to xpostfactoid via box at top right (requires only an email address; you'll get 2-3 emails per week on average)

I have noted before that New Jersey's implementation of an individual mandate and a reinsurance program in its ACA marketplace in 2019 illustrates the tradeoffs involved in reducing premiums in the ACA marketplace. In brief: unsubsidized premiums down, subsidized premiums up.

I have also noted that in New Jersey, silver loading is underpowered -- that is, it has produced weaker-than-average discounts in bronze plans and no discounts in gold plans, which accounted for an anemic 2% of enrollment in 2019.

Last week, David Anderson and Coleman Drake published a study indicating that the widespread availability of free bronze plans, a major byproduct of silver loading*, has had a particularly strong impact on enrollment.  The authors noted that this effect is conspicuously lacking in Jersey, and suggested a reason:

New Jersey restricts cost-sharing variation within metal levels. In 2019 New Jersey bronze plans were required to have an actuarial value of 64 percent—higher than the 58.5 percent minimum allowed by federal law. This regulation limited the financial exposure of existing enrollees by preventing them from selecting plans with higher cost sharing. However, it also limited the premium spread between the benchmark silver plan and bronze plans, which reduced the availability of zero-dollar premium plans in the state and thereby reduced enrollment. A trade-off thus exists between reducing enrollees’ financial exposure by increasing minimum actuarial value levels and increasing insurance coverage via the zero-price effect.

Is "free" a magic word in the ACA marketplace?

Subscribe to xpostfactoid via box at top right (requires only an email address; you'll get 2-3 emails per week on average)

Healthcare scholars David M. Anderson and Coleman Drake have published a study that analyzes the impact of free bronze plans, which became available to millions of prospective ACA marketplace plans in 2018, on enrollment.

Ubiquitous free bronze is one result of "silver loading," the byproduct of Trump's October 2017 cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are required to provide to low income marketplace enrollees who select silver plans. Faced with the cutoff at the brink of open enrollment for 2018, most state insurance departments allowed or encouraged insurers to price CSR into silver premiums only. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans. As a result of silver loading, $0-premium bronze plans available to millions.

Perhaps the most striking finding in Anderson and Drake's paper is the sheer ubiquity of free bronze plans, particularly for enrollees over age 45 (since premiums rise with age, and the benchmark plan costs subsidized enrollees a fixed percentage of income regardless of age, older enrollees have larger subsidies to cover plans that cost less than the benchmark). The authors divined the availability of free bronze by matching enrollment data, which CMS breaks out by county, income, age and metal level in the 38 states that use HealthCare.gov, with pricing data, which CMS also provides. 

Free bronze, they found,was available in 2019 to almost every marketplace enrollee with an income below 150% of the Federal Poverty Level (FPL) -- that is, to about 3 million enrollees in HealthCare.gov states, more than a third of all enrollees. It was available to most enrollees at 150-200% FPL, and to a large majority of enrollees over age 45 in the 200-250% FPL income bracket.

In Health Affairs: Silver loading goes into reverse, cont.

Subscribe to xpostfactoid via box at top right (requires only an email address; you'll get 2-3 emails per week on average)

A Health Affairs blog post by David Anderson, me, and Coleman Drake probes the likely impact of reduced silver loading effects in the ACA marketplace this year. In brief, there are fewer counties nationwide where plans below the benchmark are free to many enrollees, and fewer counties where gold plans cost less than benchmark silver. 

One profound impact may be where potential spreads are narrowest: between benchmark silver and the cheapest silver plan in each region.

The reduced silver spread, while small in dollars, may have a profound impact. At incomes up to 200 percent of poverty, the value of CSR—a free added benefit—exceeds the value of most bronze and gold plan discounts generated by silver loading. Accordingly, enrollees with incomes in the 100–200 percent of poverty range—56 percent of all enrollees in HealthCare.gov states in 2019—have mostly stuck to silver plans: According to Aron-Dine, 84 percent of enrollees in this income bracket selected silver in 2019, down slightly from 87 percent in 2017. In that same period, enrollees with incomes in the 200–400 percent of poverty range, for whom CSR is unavailable or negligible, took broad advantage of discounts in bronze and gold plans, reducing their silver selection from 60 percent in 2017 to 35 percent in 2019.