Many people don't know what's on offer through the ACA. Or through Medicare.

According to the Kaiser Family Foundation's most recent estimate, as of March 31, 64% of Americans who were eligible for subsidized health plans sold in the ACA marketplace were enrolled. 

One persistent barrier to getting the uninsured covered has been simple ignorance of what's available (though a too-large percentage of the uninsured who do check out their options find marketplace coverage unaffordable). While the numbers have improved year by year, in the Commonwealth Fund's 2016 tracking survey, 43% of the uninsured with incomes under 250% of the Federal Poverty Level were unaware of the existence of the ACA marketplace. Of the uninsured who were aware of the marketplace, 64% said they did not visit it because they did not think they could get affordable coverage there. While that was probably true for a significant number (e.g., the undocumented, those with an employer's offer of insurance, and those who did not qualify for subsidies), , a substantial portion doubtless remain unaware that subsidies are available.

On-exchange or off-exchange, the unsubsidized seem to make similar choices

Back in April, I set out to compare the coverage obtained by subsidized enrollees in health insurance plans in the ACA marketplace in 2016 with the coverage obtained by unsubsidized buyers. The measure compared was actuarial value (AV) -- the percentage of the average enrollee's annual medical costs paid by the insurer.

Long story short: the average weighted AV for subsidized buyers in the 38 states using HealthCare.gov was 81.4%, right in line with estimated averages for employer-sponsored insurance. For the 15% of HealthCare.gov enrollees who did not qualify for subsidies, average weighted AV was 68.9%. Averages in the state-based exchanges are probably about the same. The more comprehensive coverage obtained by subsidized enrollees stems from the fact that about two thirds of them also access secondary Cost Sharing Reduction (CSR subsidies, available only with silver plans.

I also inferred that the coverage obtained by those who bought ACA compliant plans outside the marketplace was roughly comparable to that obtained by  unsubsidized marketplace enrollees.  And I've just happened on some corroboration.

Selling health insurance to young adults is inherently hard

Among the troubling aspects of the performance of the ACA private plan marketplace to date, the age distribution looms large. HHS officials hoped that 40% of enrollees would be in the 18-34 age range; they got 28%. The overall enrollee population in the marketplace is sicker than anticipated, leading to losses for most insurers and a sharp upward adjustment in premiums.

Some observers have argued that the ACA's subsidy structure is to blame. Jed Graham, for example, in his e-book Obamacare is a Great Mess, asserts:

While bronze plans are generally more appropriate for younger adults than older ones, the ACA pricing distortions likely account for part of the reason that enrollment has been so much more robust among older adults. For moderate-income, healthy young adults who get little to no subsidies, ACA age-rating rules have made health care significantly less affordable (Locations 656-658).

A multi-part argument is embedded above. First, reducing age-rating from the former industry standard of 5-to-1 to the ACA's 3-to-1 means higher premiums for unsubsidized young buyers. Second, the fact that unsubsidized premiums are much higher for older buyers, coupled with the pegging of income-adjusted subsidies to a silver-level plan, means that the subsidy often all but wipes out the premium for a bronze plan for an older buyer, but not for a younger one. Third, for those with low income and few or no assets, bronze plans are often close to worthless in any case.

That's all true. It's also true, though, that young adults are inherently less likely to fork out for health insurance than older adults, no matter how attractive the terms.  A recent report on employer-sponsored health insurance by the ADP Research Institute highlights this fact:

Commonwealth: Lower income ACA marketplace buyers get a tolerable substitute for employer-sponsored insurance

The Commonwealth Fund writeup* of its 2016 survey of adults under age 65 with health insurance stresses that lower income marketplace enrollees (under 250% FPL) pay premiums and deductibles comparable on average to those paid by enrollees in employer-sponsored plans.

Overall, survey results suggested, 57% of marketplace enrollees spend less than $125 per adult per month on premiums, compared to 60% in employer-sponsored plans. And among the 59% of marketplace enrollees with incomes under 250% FPL, 30% have per-person deductibles over $1,000, versus 26% at that income level in employer plans. At higher incomes, the discrepancy is sharper: 68% of marketplace enrollees over 250% FPL have deductibles over $1,000, compared to 42% of those in employer plans.

These survey findings track roughly with my own calculation that the weighted average actuarial value of a marketplace plan in the 38 states using HealthCare.gov  is 81.4%** -- quite close to various estimates of average AV in employer-sponsored plans, I also found, though, that the weighed average AV for Hc.gov enrollees with incomes under 200% FPL (not 250%)  was 86.3%. For those over 200% FPL, it was just 69.3%.

In my view, 200% FPL is a more useful dividing line for marketplace enrollees than 250% FPL -- because Cost Sharing Reduction (CSR) subsidies, while available up to 250% FPL, fall off a cliff at 201% FPL. CSR raises the actuarial value of a silver plan from a baseline of 70% to 94% for those up to 150% FPL, to 87% for those up to 200% FPL, but to just 73% for those in the 201-250% FPL range. To relate this to the Commonwealth survey: the average deductible for a silver plan at the weakest CSR level (200-250% FPL) is $2491.

A question for healthcare economists (update)

I have a question for healthcare economists. Bear with me through a few bullet points to get there. [Note update at end: there's an answer of sorts in Kenneth Thorpe's analysis of Bernie Sanders' plan.]

• It's well known that the U.S. pays far more for healthcare -- per capita, per procedure, and as percentage of GDP --  than any of its developed-world peers. According to the OECD, the US spent 16.4% of GDP on healthcare in 2013. The next highest spenders, Holland and Switzerland, spent 11.1% of GDP.
  
• A main reason, if not the driving reason, is that in the U.S. healthcare payers are fragmented, diminishing their buying power. Private insurers and self-funded employers pay rates that may average 150-160% of Medicare rates.
  
  

So, ACA marketplace, how're you doin so far? [Updated 10/14]

[Update, 10/14/15: This week Kaiser estimated that about 7.1 million uninsured people are currently eligible for private plan subsidies in the ACA marketplace. As of June, the marketplace had 8.3 million active subsidized enrollees. Thus the marketplace has reached about 54% capacity among the subsidized, if Kaiser's estimate of the uninsured population is on point. The Kaiser estimate, like a recent HHS estimate of the 2016 target market, indicates that CBO's projections of what will constitute full marketplace capacity may be too high. ]
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A dispiriting backdrop for those assessing the progress of the ACA private plan marketplace is the Kaiser Family Foundation's estimate that state marketplaces have enrolled just 35%  of the "potential marketplace population." 28 million are eligible; 9.9 million have enrolled.

That stat is easy to misinterpret, though, in that the "potential eligible population" encompasses those who earn too much to qualify for subsidies -- including those who buy plans off-exchange. Taking off-exchange buyers into account*, probably about 17 million of Kaiser's 28 million "potential" enrollees are currently insured in the individual market.

Subtracting about 2.5 million who are in "grandfathered" or "grandmothered" pre-ACA plans, perhaps 14.5 million are in the unified risk pools that insurers who participate in the state marketplaces must establish for all their customers in each state who are enrolled in ACA-compliant plans.

Spotlight on the subsidy-eligible

What about the percentage of potentially subsidizable marketplace customers reached thus far? They're the real target market of the marketplaces. If you earn too much to qualify for ACA subsidies, there's little reason** to buy your plan via an exchange.

"You oughta be in Medicaid" revisited

Charles Gaba and I have at different times both taken a shot at estimating how many of the private plan buyers in the ACA Marketplace would have been eligible for Medicaid had their states not refused to implement the ACA Medicaid expansion. In 2015, slightly more than half of Marketplace customers were in states that had refused the expansion.

Our estimates were based on HHS's March 2015 report of the percentage of healthcare.gov buyers whose incomes were between 100% and 150% of the Federal Poverty Level (FPL). That's a frustratingly blurry frame, since it includes both buyers who would and would not have been eligible for Medicaid in "nonexpansion" states. Buyers up to 138% FPL would have been eligible for Medicaid (as they are in "expansion" states).

Now, the Commonwealth Fund has added an  equivocal hint. I'll get to that in a minute. First, the current estimates.

"Are marketplace plans affordable?"

Last week the Commonwealth Fund released a report* comparing the experiences of people who bought health plans in the ACA marketplace to that of people who get health insurance through their employers. Commonwealth surveyed nearly 5,000 adults between March and May of this year, asking questions about their income, their insurance status, plan features, usage and affordability.

With respect to out-of-pocket costs, here's the top-line takeaway as framed in the Commonwealth press release:

Overall, larger shares of adults with marketplace plans had per-person deductibles of $1,000 or more than did those with employer plans (43% vs. 34%). The differences were widest among those with higher incomes: in this group, over half (53%) with marketplace plans had high deductibles, compared to about one-third (35%) with employer plans. In the survey, people with high deductibles were less confident than those with lower deductibles that they could afford needed care.

What's equally salient, in my view, is that the subsidized marketplace has narrowed the longstanding coverage gap between employer-sponsored insurance (ESI) and nongroup market insurance for lower-income buyers. Compare those with incomes under 250% of the Federal Poverty Level (FPL) to those with ESI:

Underinsurance: What's offsetting the rise in deductibles?

On the weekend, I posed a few questions raised by the Commonwealth Fund survey of underinsurance released this week. I've since heard from Commonwealth's Sara Collins, VP of health care coverage and access, the lead researcher in the study. Her answers highlight some significant unknowns about what's going on in employer-sponsored insurance.*

To recap, Commonwealth found that among those American adults under age 65 who were insured for a full twelve months, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees. Among those who get insurance from an employer, the Commonwealth found an underinsurance rate of 20%, unchanged since 2012 and up from 17% in 2010.

Mysteries of underinsurance in the Commonwealth Fund survey

A Commonwealth Fund survey released this week found that among those American adults under age 65 who were insured throughout 2014, 23 percent were underinsured – that is, their deductibles and copays were high enough to cause severe financial strain. That top line is almost unchanged since 2010; the real damage on this front was done from 2005 to 2010, when employers started shifting costs en masse to employees.

I have several questions about the report, to which I'm seeking answers from the authors. If you have any insight, please let me know (email address is in profile to right).

In the questions below, please keep in mind Commonwealth's definition of underinsured: 1) total out-of-pocket costs exceed 10% of annual income, or 5% if the person's household income is under 200% of the Federal Poverty Level (FPL), or 2) the plan deductible exceeds 5% of the beneficiary's annual income.

1. While deductibles in employer-sponsored plans continue to rise, most notably among those with less than 100 employees, the underinsurance rate actually dropped among large employers from 2012 to 2014, from 16% to 14%.  In the same period, the percentage of large-firm employees whose deductible exceeded 5% of annual income rose from 6% to 8%.  What's offsetting that rise in the ranks of those whose deductibles alone classify them as underinsured? Do the free preventive services mandated by the ACA play a role? Or rather, since "the out-of-pocket cost component of the measure is only triggered if a person uses his or her plan," could reluctance to use (and pay for) any medical services be inhibiting the underinsured total?

2. More generally, , among all insured Americans under age 65, Commonwealth finds an increase of 7 million since 2010 in those whose deductibles qualify them as underinsured, but a net increase in underinsureds of only 2 million . Again, something seems to be offsetting the relentless rise in deductibles. Since 2010,

Commonwealth and Kaiser on underinsurance

This week, the Commonwealth Fund put out a new survey of underinsurance among American adults under age 65, while Kaiser released a new survey of buyers in the individual market, both on- and off-exchange. Over at healthinsurance.org, I find that Kaiser indirectly indicates that Cost Sharing Reduction subsidies are somewhat leveling the underinsurance playing field. CSR is a leaky vessel, but it's carrying maybe 6 million souls across the underinsurance chasm. Hope you'll have a look.

Between Scylla and Charybdis in a hospital bed

The Commonwealth Fund is out with a report*suggesting that the ACA has the potential to reduce the substantial ranks of the nation's underinsured -- those who currently either spend a percentage of their incomes on premiums deemed unaffordable by ACA formulas or who are exposed to out-of-pocket medical expenses high enough to deter them from getting needed care. Jonathan Cohn overviews the core conclusions here.

While affirming that ACA benefits are well-targeted at those likeliest to be underinsured, the report also highlights ways in which the ACA's Qualified Health Plans  (QHPs) may also underinsure -- chiefly via the high deductibles and out-of-pocket cost limits prevalent in bronze plans, selected thus far by 19% of QHP buyers. That much was not news to me. But then the report flagged another underinsurance hazard that brought me up short -- and brought a memory flash. My emphasis below: