In May, CMS quietly moved to shrink the ACA's coverage gap in states that have refused to expand Medicaid

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One of the most intractable of the holes in the ACA's implicit promise of affordable care for all is the so-called "coverage gap" opened up when the Supreme Court made the ACA Medicaid expansion optional for states in 2012, two years prior to scheduled full implementation. 

As originally enacted, the ACA provided Medicaid eligibility to adults in households with incomes up to 138% of the Federal Poverty Level (FPL). In the wake of the Supreme Court decision, just 25 states implemented this expansion upon the 2014 launch of the ACA's core programs. To date, thirteen holdout states have not enacted it. In those states, eligibility for ACA marketplace subsidies begins at 100% FPL, and some 2 million adults with incomes below that level get no help obtaining insurance.

There's no easy way for Democrats to plug this hole, as KFF's Larry Levitt recently explained on Twitter. They could make people in nonexpansion states with incomes below 100% FPL eligible for premium subsidies. But that might tempt states that have enacted the Medicaid expansion to rescind it, since the federal government pays 100% of marketplace premium subsidies and "only" 90% of Medicaid costs for expansion enrollees. They could create a new federally administered public option operating in nonexpansion states, but that's a heavy administrative lift, and very likely beyond the political capabilities of a Democratic party with razor-thin majorities.

As I mulled Levitt's thread, a partial and kludgy administrative response occurred to me: CMS could allow any applicant in a nonexpansion state to attest to an income over 100% FPL, without requiring documentation. In 2020, supplemental unemployment insurance provided by the CARES Act pushed a lot of incomes over the 100% FPL threshold, and enrollment for 2021 at 100-150% FPL in nonexpansion states soared 17%. Marketplace subsidy eligibility is based on an estimate of next year's income, and low income is notoriously uncertain and fluctuating. Why not open the door further?

I took a look at the statute setting the terms for marketplace subsidy eligibility and verification (42 U.S. Code § 18081) and the 2022 Notice of Benefit and Payment Parameters (NBPP) published May 5, 2021, seeking a way that current rules might be modified. It turns out that new rulemaking is unnecessary. 

As of now (effective May 5), CMS is declining to require verification of an income claimed to be above 100% FPL even if data sources tapped by CMS indicate that the applicant's income is below that threshold. The change is announced in the NBPP:

Two reasons the proportion of young adults in ACA marketplace may be rising

Sarah Kliff has marshaled good evidence that the individual mandate is working over time to pull more young adults into the ACA marketplace. As the penalty ratchets up each year, the proportion of young enrollees increases. The evidence in brief: 1) that's how it worked in Massachusetts; 2) young adults identify the mandate as a chief motivator in polling data; 3) HHS and Enroll America have brought the mandate to the fore in marketing messages; and 4) the proportion of enrollees under 35 (including children) has risen modestly this open season, from 35% in OEII to 38% so far this time around.

All of this is convincing. But the perspective of Anne Filipic, of Enroll America, also indirectly highlighted something I've put forward as a secondary cause of this year's modest spike in young enrollment: Because prices are higher this year, more young adults qualify for subsidies. Here's Filipic:

Filipic and her team already think the mandate could play a bigger role in their messaging going forward. Right now, Enroll America has a calculator that lets potential enrollees see how much financial help they'd be eligible to receive if they signed up for coverage.

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.****

Saved from the Medicaid Gap

Prompted in part by my observation last week that at least a third of Florida's 1.4 million private plan enrollees on healthcare.gov would have been Medicaid-eligible if the state had accepted the ACA Medicaid expansion, Richard Mayhew poses a question (or rather, elaborates on one posed in a comment on my post):

Liberal technocrats have been assuming that the states which refuse to expand are giving up massive amounts of money and thus economic growth by refusing to expand Medicaid will eventually expand.  However, are we accounting for the additional cash flow coming in as premium and cost sharing subsidies for people making between 100% and 138% Federal Poverty Line.

Leaving aside the financial question, we can make some reasonable estimates as to what percentage of those who would have been eligible for Medicaid had their states not refused the expansion are now in subsidized private health plans purchased on healthcare.gov. (All but one of the states that refused the expansion use the federal exchange).

On one side of the equation, we have Kaiser's state-by-state estimates of how many people fall in the Medicaid gap -- that is, have household incomes under 100% of the Federal Poverty Level (FPL) but are shut out of Medicaid in their state. On the other side is the number of subsidized private plan buyers in non-expansion states who have incomes in the 100-138% FPL range -- those who would have been eligible for Medicaid if their states had accepted the expansion.

Alabama's Obamacare buyers ride a Silverado

Spotlight here is on Alabama in my continuing close look at how many low income ACA private plan buyers accessed Cost Sharing Reduction (CSR) subsidies by buying silver plans. (Yesterday, HHS released detailed county-level data about buyers of private plans on healthcare.gov, the federal exchange, enabling a close look at state stats.)

CSR is available to buyers with household incomes below 251% of the Federal Poverty Level (FPL), and strongest for buyers under 201% FPL. It is available only with silver plans, the second-cheapest of four metal levels available on ACA exchanges -- a fact that's less than obvious to the average shopper, Buyers under 201% FPL are leaving a really strong benefit on the table if they don't buy silver plans (see the note at bottom for more detail). I consider the percentage of buyers under 201% FPL who select silver an important measure of how well the exchange is functioning in a given state. (Those in the 201-250% FPL range are likelier to have good cause to forego the relatively negligible CSR provided at that level.)

For ACA marketplaces, the near-poor have been the sweet spot

The just-released National Health Interview Survey for 2014 confirms that the chief beneficiaries of the ACA private plan marketplaces were those defined by the survey as "near-poor," with incomes between 100% and 200% of the Federal Poverty Level (FPL).

The NHIS found that among near-poor adults aged 18-64 (those with incomes from 100-200% FPL),

the percentage who were uninsured decreased from 38.5% to 30.9%, the percentage with public coverage increased from 26.6% to 29.6%, and the percentage with private coverage increased from 36.4% to 41.2% between 2013 and 2014. 

In states that expanded Medicaid, those with incomes up to 138% FPL became Medicaid-eligible -- hence the substantial rise in those in this income group with public insurance. But the jump in private insurance is really substantial, By comparison, private coverage for adults 18-64 with incomes over 200% FPL rose  from 81.2% in 2013 to 83.9%, and for the poor, from 19.0% to 21.9%* (while public coverage for the poor rose from 42.4% to 46.6%).

New data on Cost Sharing Reduction in ACA marketplaces

The latest ACA enrollment snapshot from CMS shed some new light on the extent to which ACA private plan buyers accessed Cost Sharing Reduction (CSR) subsidies. CSR reduces deductibles, copayments and maximum out-of-pocket costs for plan buyers with incomes under 250% of the Federal Poverty Level (FPL) -- but only if they buy silver plans (and forego the often much cheaper bronze plans).

CSR takeup is especially important for buyers under 200% FPL, because below that income level it raises the actuarial value of a silver plan from 70% to 94% (for buyers under 150% FPL) or 87% (for buyers in the 150-200% FPL range). At 200-250% FPL, CSR weakens, raising the AV just 3 points to 73%. Silver plan selection accordingly drops suddenly at 201% FPL.

The new report doesn't deliver any great surprises on the CSR front, but it does for the first time provide overall CSR numbers for the 13 states plus D.C. that run their own exchanges. The percentages of buyers accessing CSR in state-based marketplaces (SBMs) have always been lower than in the states using healthcare.gov, for several reasons

1. All the SBMs except Idaho have expanded Medicaid, which means that subsidized private plan eligibility begins at 138% FPL rather than 100% FPL.  The lower the income, the higher the CSR takeup rate - especially below 138% FPL, where the benchmark silver plan premium can't exceed 2% of income.
2. States with SBMs are generally wealthier, so a lower overall percentage of private plan enrollees are eligible for CSR.
3. Several SBMs do a much poorer job than healthcare.gov of highlighting CSR for those eligible -- though conversely, several SBMs do a better job than hc.gov on this front.

All that said, here are some new facts, along with some extrapolation from info that was in HHS's March report but not updated in this one.

1) In states using healthcare.gov (federal facilitated marketplaces, or FFMs) 60% of enrollees accessed  CSR -- 4,550,205* out of a total enrollment of  7,524,234.  In the SBMs, 49% accessed CSR -- 1,300,731 out of 2,662,964.

1.9 million private plan enrollees on Healthcare.gov would have been eligible for Medicaid if their states had accepted the expansion

In a post on healthinsurance.org, I report that almost 2 million of the private plan enrollees on Healthcare.gov would have qualified for Medicaid if their states had embraced the ACA Medicaid expansion.

That is, about a third of the six million-plus private plan enrollees in non-expansion states and about 22% of all ACA private plan signups would have been in Medicaid if the Supreme Court had not made the expansion optional or if every state had embraced it voluntarily. In that case, there would probably be fewer than 10 million signups in the "Qualified Health Plans" (QHPs) offered on the exchanges today.

In their furious rejection of everything associated with the ACA, and cruel denial of insurance to millions of their constituents, red state governors and legislatures gave the QHP markets in their states a vital boost.

In the healthinsurance.org post, I explore the weakness in exchange offerings that these statistics imply. In brief, because exchange offerings are so much cheaper and offer such dramatically better coverage at the lower end of the subsidy-eligible income range, takeup is dramatically better among the lowest-income eligible uninsured than among the uninsured in higher subsidy-eligible income bands, as Avalere recently concluded.

Here I just want to add some support to my calculation that about 1.9 QHP enrollees in non-expansion states had incomes in the 100-138% FPL range, which would have put them in the Medicaid pool in expansion states.

Medicaid expansion means a richer QHP buyer pool on ACA exchanges

In my close look at silver plan selection in 2015 among healthcare.gov customers who were eligible for Cost Sharing Reduction (available only with silver plans). I expressed some disappointment that CSR takeup had apparently dipped a bit on the federal exchange from 2014 to 2015 (HHS did not provide CSR takeup numbers for states operating their own exchanges). Disappointment on that particular point may have been misplaced.

While I continue to believe that too many low income ACA private plan buyers selected bronze plans, CSR takeup probably did not decline from 2014 to 2015. In fact, since silver plan selection across all exchanges ticked up a bit, from 65% in 2014 to 67% in 2015, CSR takeup probably did too.

My perception that CSR takeup dropped on healthcare.gov in 2015 stemmed from a drop in silver plan selection from 76% to 74% by buyers eligible for any kind of subsidy --including those eligible for premium subsidies but not CSR. But that drop may just reflect a shift in the composition of the market using healthcare.gov -- specifically, it may reflect a higher percentage of customers in healthcare.gov states being placed in Medicaid in 2015. This happened because two states that dropped their own exchanges and joined healthcare.gov in 2015, Oregon and Nevada, had expanded Medicaid, while three other states on the federal platform implemented the Medicaid expansion at some point during 2014 (Michigan and New Hampshire) or as of Jan. 1, 2015 (Pennsylvania).

The poorer the buyer pool, the higher the CSR takeup

States that expanded Medicaid generally have lower CSR takeup because their buyer pool for private health plans is wealthier. In states that refused the expansion, the buyer pool starts at 100% of the Federal Poverty Level (FPL); in states that embraced the Medicaid expansion, it starts at 138% FPL. In hc.gov states that refused the Medicaid expansion, consequently, an astounding 50% of private plan buyers had household incomes under 150% FPL; in expansion states, just 25% had incomes below that level.

A reduced ACA spending projection that no one should celebrate

Early this month the Congressional Budget Office released an updated ACA baseline that once again reduced projected spending from 2015-2025, to general celebration. Among the items forecast to cost less were Cost Sharing Reduction (CSR) subsidies that reduce deductibles and out-of-pocket costs for low income buyers. Projected CSR spending was forecast at $136 billion over ten years, down $11 billion from from a prior reduction forecast just this January, which CBO based on data suggesting that more low-income buyers than HHS had previously expected were buying bronze plans "that minimize their monthly premium payments, even if the amounts they ultimately pay for health care (including out-of-pocket payments) exceed what they would pay under silver plans."

This particular line item is no cause for celebration. Those costs are simply being shifted to low-income buyers who fail to avail themselves of CSR by buying silver-level plans on the ACA exchanges.

CBO's latest reduced CSR forecast might float on a raft of fresh data released by HHS on March 10 about 2015 enrollment in private health plans offered on ACA exchanges. The percentage of buyers choosing silver plans -- which must be purchased to access CSR -- is down a bit since 2014, from 69% to 67%,  and the percentage of bronze plan buyers is up, from 20% to 22%. On healthcare.gov, among subsidy-eligible buyers, bronze plan selection rose from 15% in 2014 to 21% this year. That's not good, since bronze plans carry average per-person deductibles of over $5,000 and the vast majority of buyers on healthcare.gov, the federal exchange, have incomes under 250% of the Federal Poverty Level (FPL).

Bronze plan buyers with incomes under 250% FPL are leaving a valuable benefit on the table, as CSR attaches only to silver plans.  CSR subsidies reduce deductibles and out-of-pocket expenses massively for those under 200% FPL, more weakly for those in the 200-250% FPL range.

As readers of this blog know, I have gone to considerable effort to divine CSR takeup rates -- particularly for buyers under 200% FPL, for whom the benefit most strongly boosts the relative value of silver. Evidence has been fragmentary, as in the past HHS did not break out metal level selection by income band, though a handful of states did.

Now HHS has provided income level information, though not specific breakouts of metal level selection by income band. The data for the 37 states using healthcare.gov as I read it is a bit disappointing for two reasons: 1) silver plan selection among subsidy-eligible buyers went down from 2014-2015, and 2) silver selection among buyers eligible for CSR in the 37 states using Healthcare.gov is lower than I had inferred for buyers under 200% FPL -- about 81--83% rather than 88-90%. I had based that inference largely on 2014 data published by the state-run exchange in New York, which seemed to me for reasons explained below likely to be comparable to healthcare.gov on this front,   About half that difference is probably due to the uptick in bronze plan selection in 2015, the other half in differences between the New York market and that of the healthcare.gov states.

The numbers

In the 37 states using healthcare.gov in 2015, a (to me) astonishing 83% of buyers for whom HHS has income data had incomes under 250% FPL and so were eligible for CSR if they bought silver. (HHS has income data for 94% of buyers, 8.31 million out of 8.84 million. Larry Levitt of the Kaiser Family Foundation speculates that the "unknowns" likely earn too much to qualify for subsidies, an assumption adopted here. Hence that 83% (of 8.31 million) suggests 6.89 million buyers under 250% FPL.)  60% of all buyers, or 5.3 million, accessed CSR. That is, about 77% of CSR-eligible buyers (5.3m out of 6.9m) bought silver plans and so accessed CSR.

No, Clinton and Frist, ACA marketplace coverage will not render CHIP unnecessary

In an otherwise eloquent plea by Hillary Clinton and former GOP Senate majority leader Bill Frist for Congress to renew funding for the Children's Health Insurance Program (CHIP), one paragraph brought me up short. It's not strictly speaking inaccurate, but it resorts to a shorthand that, in the way of 750-word op-eds, leaves a misleading impression:

Of course, the American health care landscape has changed significantly since CHIP started. Under the Affordable Care Act, many families with children are now receiving financial help to enroll in private health coverage through the new health insurance marketplace. But while it is possible that private, family-wide policies offered by employers and marketplaces may one day render CHIP unnecessary, for now substantial gaps still exist — and too many children can still fall through them.

In fact, the ACA puts the kids in CHIP in most families in which the adults qualify for private-plan premium subsidies. CHIP eligibility operates independently from adult eligibility for subsidized private plans or Medicaid under the ACA.  Every state sets its own eligibility for CHIP, ranging from 170% of the Federal Poverty Level (FPL) in North Dakota to 405% FPL in New York. The median eligibility is 255% FPL (see this Kaiser Family Foundation chart).

A surprise (to me) regarding Medicaid eligibility under the ACA

I learned an interesting fact about the ACA from Kaiser's Larry Levitt on Twitter today.

It's well-known to ACA watchers that a low-income worker whose employer offers insurance deemed "affordable" according to ACA formula cannot buy subsidized private coverage on the exchanges. What I suspect is less well-known, and what Larry spelled out, is that the availability of employer-sponsored insurance does not negate Medicaid eligibility for someone whose household income is low enough to qualify for Medicaid.

Republicans wouldn't scrap the main driver of ACA rate shock

As the reality that millions have benefited from full implementation of the Affordable Care Act takes hold, more and more Republicans are resorting to what Ezra Klein has dubbed Fauxbamacare: propose to repeal the hated law, replace all its popular components without providing any details.

Progressives counter that if you claim you want to make health insurance affordable to all, unless you come out in favor of a single payer system there is no real alternative to the basic structure of the ACA: guaranteed issue (that is, no variation in health plan price based on a person's medical history), an individual mandate or equivalent* to offset the influx of sick people into the risk pool, and subsidies (or Medicaid) for those who can't afford the premiums.

While that's mostly true, it's also true that some plans crafted to current conservative specs look significantly if not radically different from the ACA. The vast majority of Republican elected officials have shied from putting forward such a plan -- or ignored the one put forward by Senators Coburn, Burr and Hatch --  since such alternatives require tough tradeoffs. The main difference is that conservative schemes give insurers more leeway to sell plans with skimpier benefits and lower premiums. They eliminate or vastly reduce the Essential Health Benefits (EHBs) mandated by the ACA. They loosen the allowing "age banding" of premiums -- the degree to which older buyers can be charged more than younger ones -- from the ACA-mandated 3-to-1 to the pre-ACA norm of 5-to-1.

It's true that for healthy people who were buying insurance in the individual market prior to the ACA, the law's coverage rules substantially drove up the premium price. Rate shock is a real phenomenon. As the complaints poured forth, the EHBs were a prime attack point.  "I'm 55 -- I don't need childbirth coverage." "I'm of sound mind -- I don't need mental health coverage."  Limited age-banding was also a rallying point, since the 5-to-1 ratio was based on actuarial calculations.  Why should a 23 year-old pay more so that a 58 year-old can pay less?

These complaints have some legitimacy. The EHBs and age-banding limits involve tradeoffs that can be argued from either side. But they are not the prime drivers of the rate hikes caused by the ACA.

A correction in NYT ACA coverage

The New York Times has an excellent front-page story by Abby Goodnough today detailing the "blessings and hurdles" that various people seeking health insurance in Kentucky have encountered under the Affordable Care Act. A key point in one of the marquee narratives did not compute, however.

A certain David Elson, 60, was reported in today's print editions to earn $22k and be eligible for cost-sharing subsidies that would lower his deductible -- but also unable to pay his first monthly premium, reduced via a monthly subsidy of $250 to $350.  In fact, a 60 year-old nonsmoker anywhere in the country earning $22k should be able to access a silver plan for around $100 per month, with Cost Sharing Reduction (CSR) reducing the deductible to under $1000 per month.

Children, CHIP, Medicaid and the ACA

Means-tested government benefits are inevitably a somewhat blunt instrument. One inflexibility in the Affordable Care Act is its propensity to put children into CHIP and young adults into Medicaid.

Every state has its own threshold for CHIP eligibility, which the ACA incorporates into its calculations. If the state threshold is 300% of the Federal Poverty Level (FPL), then any ACA applicant in that state with children and an income under that benchmark will find their children enrolled in CHIP, while the adults select a subsidized plan from the exchange. A family with CHIP-eligible kids can enroll the whole family in an exchange plan, but the kids will be unsubsidized, according to the Kaiser Family Foundation.

Likewise, a lot of young adults, including most college students, will have an income that qualifies them for Medicaid -- that is, below $15,521 in 2014 --  and so will not be able to get a subsidy for a private plan if it better suits their needs.

Just what has a single mother of three lost in Wisconsin's Medicaid "expansion"?

Today's New York Times has an illuminating contrast of how one-party rule is changing life in the "twinned cities" of Duluth, MN (Democratic) and Superior, WI (Republican). The article's finale focuses on how the Affordable Care Act affects people in Minnesota, which runs its own exchange and is implementing "an expansion of the state’s already far-reaching Medicaid system," and Wisconsin, which declined to run its own exchange and has just won federal approval for a conditional Medicaid expansion, which will offer Medicaid to childless adults earning less than 100% of the Federal Poverty Level (FPL) while at the same time ending existing Medicaid coverage for adults who earn more than 100% FPL*, pushing them onto the exchanges**.

Times reporter Monica Davey found a single mother of three in Superior, WI in the latter category, newly booted off Medicaid because she earns over 100% FPL. Her situation is doubly ironic, in that she works for a nonprofit that serving homeless people -- including helping them sign up for Medicaid -- but is herself a Republican and supporter of Scott Brown Walker. That is perhaps why she has not fully checked out her own options -- which have indeed been worsened by Walker's some win/some lose Medicaid shift, but not as badly as she may think.  The Times article did not delve very deeply into her options  -- so we'll fill in the gap below. Here's the situation:

A CHIP off the old block in the ACA

Test-driving HealthCare.gov  in various locales, I was a bit surprised to learn that in New Jersey, the kids (under age 19) in a family of four with an income of  $75,000 would be eligible for the Children's Health Insurance Program (CHIP).

Probing for the break point, I found that if the same family earned $82,424, the kids would still be in CHIP. At $82,425 they would not.  The exchange would offer a subsidized plan for the whole family.

The cost difference for the family is negligible. Because families are subsidized so that premiums equal a fixed percentage of the family income, the subsidy for the family just over the CHIP line grows to cover the difference. The subsidy for the $82,235 family in Essex County is $616 per month, while for the CHIP-eligible family earning a dollar less, it's $297. Net result: their premiums for identical silver plans are within a couple of dollars of each other (in Essex County, $654--$655 for the benchmark second cheapest plan). 

CHIP eligibility is not tied to the ACA Medicaid expansion, and every state has its own eligibility break point. In New York, it's 400% of the Federal Poverty Level (FPL). In Texas, it's 200%. In New Jersey, oddly left blank on this otherwise useful map, it's 350% (the FPL for a family of four was $23,550 in 2013). Exchange shoppers in states that have opted out of the Medicaid expansion may nonetheless swell the CHIP rolls a bit -- though only if those shoppers had previously failed to take advantage of their kids' CHIP eligibility.