In Massachusetts, ACA Marketplace enrollees with income up to 500% FPL get affordable platinum coverage

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A rickety but serviceable connector

In a two-year pilot program beginning in 2024, Massachusetts has extended eligibility for ConnectorCare, the state’s alternative to a standard ACA marketplace that features standardized plans with low out-of-pocket costs, to applicants with incomes up to 500% of the Federal Poverty Level (FPL), or $72,900 for an individual in 2024. Since the ACA marketplace’s 2014 inception, ConnectorCare has been the (only) option for applicants with income ranging from 138% FPL, the Medicaid eligibility threshold, to 300% FPL. The extension means that almost all subsidy-eligible marketplace enrollees will get a standardized ConnectorCare plan, at least through 2025.

All insurers who offer plans in Massachusetts’ regular ACA exchange (available through this year to enrollees with income over 300% FPL) will be required for the first time to offer ConnectorCare plans in 2024. Importantly, since ConnectorCare plans are in a single risk pool with the insurer’s offerings in the higher income marketplace, extending eligibility to 500% FPL should not cannibalize the Health Connector market plans offered to enrollees with income above that threshold. That is, the extension should not drive up premiums for those who get no subsidy or minimal subsidy.

The Massachusetts legislature included such an extension in its budget passed in August 2022, but Republican Governor Charlie Baker vetoed it. Last month, Democratic Governor Maura Healy, inaugurated this past January, signed the eligibility extension into law. 

In Washington State, a public option may get some traction

Cascade Care flowing more freely

When considering how states might improve their ACA marketplaces, it’s often struck me that Massachusetts’ ConnectorCare program, which predates the ACA, would be difficult for another state to replicate. That’s too bad, because ConnectorCare offers simpler and better coverage to enrollees with incomes up to 300% of the Federal Poverty Level than does a conventional ACA marketplace. (At incomes above 300% FPL, the Massachusetts marketplace conforms to ACA design.)

Washington state, however, is tacking toward a marketplace that shares some features with ConnectorCare: partial plan standardization, wraparound subsidies offered at low incomes, and a measure of state-imposed cost control. For 2023, those features may be starting to jell.

The case for Medicaid-like coverage at high-middle incomes: Alex Sheff of Health Care For All Massachusetts

Line up those ducks for ConnectorCare expansion

My last post focused on a plan in Massachusetts to extend eligibility for ConnectorCare, the state's unique low-cost health insurance program for marketplace enrollees with income up to 300% of the Federal Poverty Level, to residents with income up to 500% FPL. This past July, the state legislature passed a budget provision funding the eligibility extension for a two-year pilot period, but  Republican Governor Charlie Baker vetoed it.

Yesterday I spoke to Alex Sheff, policy director at nonprofit Health Care Access for All Massachusetts, a prime mover of the proposal, about the rationale for focusing new state spending on a relatively affluent income segment -- those with household income ranging from $40,770 to $67,950 for an individual and from $83,5250 to $138,750 for a family of four. HCFA commissioned an actuarial study, conducted by Gorman Actuarial Associates, that sketched out the proposal's parameters. HCFA provides phone help to Massachusetts resident who need help enrolling in health coverage and stresses that its policy proposals derive from trends gleaned from the call line.

To keep background as short as possible here (see the last post for more): ConnectorCare features a standardized benefit design (varying somewhat by income bracket) with zero deductibles, low copays, and annual maximum out-of-pocket (MOOP) cost limits lower than those generally available in a conventional state ACA marketplace. Those costs are modestly lower than in the ACA marketplace at the lowest incomes, but much lower at the 200-300% FPL level.* ConnectorCare premiums range from $0 at incomes up to 150% FPL** to $130 per month for a solo enrollee with income in the 250-300% FPL range.

Massachusetts poised to extend ConnectorCare's low out-of-pocket costs to 500% FPL

Mr. and Mrs. Mallard hunt for coverage

Predating and existing alongside the ACA marketplace, Massachusetts implemented and has maintained a better system.

At incomes up to the 300% of the Federal Poverty Level, Massachusetts applicants who earn too much to qualify for Medicaid are offered a standard, easily comprehensible benefit package with low premiums and out-of-pocket costs. That contrasts with the ACA's bewildering array of sometimes more than 100 plans in four metal levels, each offering a smorgasbord of copays and coinsurance, often with high but Swiss-cheese deductibles to which many services are not subject.

As measured by actuarial value -- the percentage of the average enrollee's annual costs* the plan is designed to pay -- ConnectorCare offers more generous coverage than the ACA's benchmark silver plans  (which are enhanced by Cost Sharing Reduction subsidies at incomes up to 250% FPL) at every income at which it's available. The AV difference is nominal at the 100-150% FPL income level, pronounced at 150-200% FPL, and enormous at 200-300% FPL, as illustrated below (via a 2021 program overview). Equally important, enrollees are not lured by bronze or gold plans with radically higher out-of-pocket exposure.

ACA Hunger Games, Part II

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I'd like to revisit the "hunger games" scenario for legislation to improve the ACA posited in the last post. In brief: assume that Democrats, forced to accommodate their most conservative members to get all 51 of their Senate votes on board for any legislation passed through reconciliation, pare back the broad expansion of premium subsidies for ACA marketplace coverage they've proposed elsewhere -- e.g., in candidate Biden's health care plan and in the House-passed Affordable Care Enhancement Act of 2020 (ACEA). If forced to scale back, should they:

a. Concentrate on the currently unsubsidized, for whom coverage is often truly unaffordable, capping premiums for a benchmark plan as a percentage of income (e.g., 8.5% as in the ACEA, but probably higher)?

b. Concentrate on lower incomes, where takeup among the subsidy-eligible has been poor? (See the last post for the ACEA subsidy scale and how it compares to current law.)

c. Spread whatever enhanced subsidy money they can muster across all income groups?

In a crisis, Democrats bench the ACA marketplace

As tens of millions of American file for unemployment insurance, about half of those who lose job-based health insurance will be eligible for Medicaid and another 25-30% for ACA marketplace subsidies, according to estimates by the Urban Institute and Kaiser Family Foundation.

The lower percentage potentially picked up by the marketplace is not in itself a knock on that program.  In the U.S., regular unemployment insurance income is very low, and normally accessed only by a minority of the unemployed. In the 35 states that have enacted the ACA Medicaid expansion, those with incomes up to 138% of the Federal Poverty Level (FPL) are eligible for Medicaid. People whose current monthly income is below that threshold are expected to make up a large percentage of those losing job-based coverage.  The $600-per-week extra unemployment insurance (UI) benefit provided for up to four months by the CARES Act does not count toward Medicaid eligibility.

That said, the marketplace has always been a leaky vessel for those who need insurance and qualify for its subsidies (let alone those who need insurance and don't qualify for subsidies, a group that abandoned marketplace coverage in droves in response to the premium runups of 2017-18). A bit less than half of those who qualify for subsidies enroll, according to the Kaiser Family Foundation's 2019 estimate (which I suspect is a tad low). Takeup of Medicaid is much higher. The Kaiser Family Foundation's 2018 estimate of the uninsured who are eligible for Medicaid (6.7 million) is less than 10% of total Medicaid enrollment (73 million in 2018).

The ACA as it should have been: Massachusetts' ConnectorCare in a crisis

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On March 11, the Massachusetts Health Connector became the first ACA marketplace to respond to the flood of job losses triggered by the Covid-19 pandemic by opening an emergency Special Enrollment Period (SEP) in which any uninsured resident could enroll in private market coverage. Eventually, 12 of the 13 state-based exchanges opened emergency SEPs, whereas HealthCare.gov, the federal exchange serving 38 states, declined to do so, though HealthCare.gov has taken steps to ease the normal SEP-for-cause application process. 

On  May 1, Massachusetts reported that in the SEP's first 40 days, 8,300 state residents had gained coverage specifically through the emergency SEP, while 20,200 in total had enrolled in coverage in March and April -- the bulk of them via ordinary SEPs, in which an applicant reports a life change, usually loss of other insurance, that qualifies her to enroll outside of the annual fall Open Enrollment period.

It's hard to assess the success or impact of the emergency SEPs based on these kinds of data snippets, which several state marketplaces have put out. On the whole, March/April enrollment in Massachusetts represents 6.3% of enrollment as of the end of Open Enrollment in January. That does seem a somewhat elevated off-season pace.* In any case, it's likely that Medicaid will pick up the lion's share of the newly uninsured, and the enrollment report did not include Medicaid numbers.

Boosting ACA coverage in a time of mass unemployment: State options

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In the past five weeks 26 million Americans have lost their jobs. Could national impoverishment prepare a path to universal health coverage?

When tens of millions of household incomes shrink toward the poverty level, tens of millions will become eligible for Medicaid. If double-digit unemployment persists for many years, the program may be upgraded by popular demand and its eligibility threshold may creep up by degrees.

All bets are off if Trump is reelected, as Republicans are sworn enemies of Medicaid. Their 10 years' war against the ACA has at bottom been a drive to defund Medicaid -- roll back the ACA eligibility expansion, impose block granting or per capita caps on remaining Medicaid programs, and throw up barriers to enrollment like work requirements and frequent "redeterminations" of eligibility.  If Republicans regain control of Congress as well as the presidency any time soon -- or neutralize Congress under authoritarian rule -- they'll doubtless succeed in shrinking and hollowing out the program.

If they don't, Medicaid will remain funded, and it stands ready to catch a hefty proportion of the newly unemployed in the 36 states that have enacted the ACA Medicaid expansion. Total enrollment is likely to increase by 16.5 million to about 87 million according to the mid-range estimate in an analysis by Health Management Associates. With no end to our coronavirus exposure in sight, we are probably looking at double-digit unemployment for the foreseeable future. Elevated Medicaid enrollment may persist.

If Democrats win the presidency in 2020, but lack power or will to enact sweeping new coverage expansions, Medicaid coverage, perhaps under different names, will likely expand further.

Blue states looking to avoid (or roll back) massive increases in their uninsured population should look closely at existing state programs that extend Medicaid-like coverage up the income ladder.  There are two existing models that states might follow.