In Health Affairs: The Biden administration should complete the silver loading revolution

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The Covid relief legislation making its way through Congress would vastly increase premium subsidies in the ACA marketplace for two years but would not touch out-of-pocket costs. Premium subsidies would still be set against a silver benchmark -- that is, designed to make the second-cheapest silver plan "affordable." At incomes over 250% FPL, silver plans have deductibles averaging $4816.

In Health Affairs, David Anderson and I have a post positing that the Biden administration can complement the subsidy boosts by requiring insurers to price gold plans below silver plans. That is, by requiring full "silver loading."

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

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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.

In Health Affairs: If CMS ends silver loading

I've co-authored with David Anderson, Charles Gaba and Louise Norris a blog post in Health Affairs that surveys the fallout from Trump's cutoff of federal funding for Cost Sharing Reduction subsidies in 2018 and considers the likely effects if the Trump administration moves to block the current effective strategies that most states have employed for dealing with that cutoff.

That is, what happens if CMS administrator Seema Verma and/or HHS Secretary Alex Azar move to block states from allowing or instructing insurers in the individual market to price CSR into silver plans only, a strategy that has created discounts in gold and bronze plans?

Part one recounts the history of how states and insurers found their way to silver loading. Part two quantifies how many people likely benefited from discounted bronze and gold plans. Part three reviews the impact of the CSR cutoff on unsubsidized premiums. And Part four considers the likely effects on plan pricing and enrollment if HHS/CMS either forces individual market insurers to spread the cost of CSR evenly among all ACA-compliant plans or to spread it evenly among all plans sold on-exchange only.

Hope you'll take a look.

Careful with that study! A second look at enrollment decisions in Covered California

A study of the buying decisions of enrollees in California's ACA marketplace, Covered California, in 2014, suggests that a lot of people left benefits on the table:

The Affordable Care Act includes financial assistance that reduces both premiums and cost-sharing amounts for lower-income Americans, to increase the affordability of health insurance coverage and care. To receive both types of assistance, enrollees must purchase a qualified health plan through a public insurance exchange, and those eligible for the cost-sharing reduction must purchase a silver-tier plan. We estimate that 31 percent of individual-market enrollees in California who were likely eligible for financial assistance purchased plans that were not silver tier or that were not sold on the state’s exchange and thus missed opportunities to receive premium or cost-sharing assistance or both. Lower-income enrollees who chose plans not eligible for subsidies had two to three times higher odds of reporting difficulty paying premiums and out-of-pocket expenses during the year, compared to those who chose eligible plans. Regardless of how the structure of the individual market evolves in the coming years, efforts are likely needed to steer lower-income enrollees away from financially suboptimal plan choices.

The study, just published in Health Affairs, lead author Vicki Fung of Harvard and Mass General, is based on  survey responses from 2103 enrollees and has some very interesting results regarding the difficulty (or lack thereof) that enrollees experienced paying premiums and out-of-pocket expenses at different income levels and benefit levels. But while the authors are quite thorough in enumerating the study's limitations, some caveats are worth elaborating.* In brief: CSR takeup is higher at income levels where the benefit is strong, and many of those deemed potentially eligible for subsidies are not in fact eligible.

Let's look more closely at the more specific claims.

Stat shots of the unsubsidized uninsured

Barring any slip between cup and lip, I should have an article coming out soon that recounts the experiences of several people who do not qualify for ACA subsidies but who have bought insurance plans for 2014 in the new ACA-enacted universe.  A preview is here. In the process, I've tried to get a grip on just how many such people there may be and how they're likely to fare under the ACA.

A Health Affairs post by Urban Institute researchers Lisa Clemans-Cope and Nathaniel Anderson has helped me bring the statistical picture into focus. I should say into relative focus, because there's a good deal of uncertainty in every stat shot. With that caveat, here goes:

• Estimates based on 2009 surveys conducted by different federal agencies as to how many Americans were buying insurance in the individual market vary widely, from 9.1 million in the Medical Expenditure Panels Survey to 25.3 million in the American Community Survey. A mid-range estimate from the National Health Interview Survey (NHIS) conducted by the CDC is 14.0 million.


• In December 2013, the Health Reform Monitoring Survey found that 18.6% of those insured in the individual market received cancellation notices attributing cancellation to the ACA, and  another 6% had their policies cancelled for other stated reasons.  Using that data, and the NHIS estimate of 14 million in in the individual market, Clemans-Cope and Anderson  estimate that 2.6 million people received policy cancellations that their insurers blamed on the ACA (and one might infer another 840,000 cancelled for other stated reasons).


• According to a March 2013 Urban Institute study, 48.6% of those currently in the individual market are ineligible for subsidies. If that ratio is right, and the estimate of 2.6 million cancellations attributed to the ACA is on target, about 1.2 million people who received cancellation notices blamed on the ACA would be ineligible for subsidies.  Of those, some probably had pre-existing conditions and will do better under the ACA.
  


• The Urban Institute study estimates the current individual market at 12.8 million, 6.2 million of whom would be subsidy-ineligible.