Where is Medicaid enrollment surging? Notes from a few states

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Last month, the Urban Institute forecast that at 15% unemployment, between 8.2 million and 14.3 million people would enroll in Medicaid, an increase of 11-20%.* While the job rate officially now stands at 13.3%, it would be 3 points higher if those classified as employed but absent from work were counted as unemployed, as BLS says they should be (see pg. 6 here).

I have been tracking Medicaid enrollment in states that have accepted the ACA Medicaid expansion and that report timely monthly data. As of early May, enrollment in Kentucky and Minnesota was the highest I was able to track, having increased about 8% since February.  Nationally, the increase at that point was probably about half that. In both states, enrollment increased by another 2% from May to June.

Below, a few bulletins from states (including MN and KY) showing significant enrollment growth. A 2% jump in a given month seems like a frequent marker that enrollment is getting in gear.

What would it cost a state to offer something like Medicaid to all its uninsured?

At healthinsurance.org, I look back at a state-wide proposal to create what I've called an "all-public option" for the ACA -- that is, an exchange in which all the insurers operate like Medicaid managed care companies, paid directly  by government. Here I want to outline a few factors involved in funding such a plan.

Here's the basics from the healthinsurance.org post:

In November 2009, before the ACA was passed, a New York nonprofit, Community Service Society, produced a plan for the state that would have done just that -- and then some, as it would have given employers the option of buying in. (In 2013, CSS produced a plan outline and cost estimate for the state's BHP that did a good job scoping out the costs and target population as it actually played out, )

Authored by  Elisabeth Benjamin, CSS's VP of health initiatives, and Arianna Garza, the Cornerstone for Coverage Plan  would have used New York Child Health Plus plan (CHP), which was the prototype for the national Children's Health Insurance Program, as the building block of a low-cost public program available not only to the uninsured but to the underinsured. Here is the core proposition:

Hillary Clinton "waives through" the public option

[Update: more on "BHP for all," with New York as model, on healthinsurance.org, here.]

Hillary Clinton has updated her package of proposals for "building on" the Affordable Care Act, finding incremental ways to make coverage more affordable. The new proposals include this:

Continue to support a “public option”—and work to build on the Affordable Care Act to make it possible. As she did in her 2008 campaign health plan, and consistently since then, Hillary supports a “public option” to reduce costs and broaden the choices of insurance coverage for every American. To make immediate progress toward that goal, Hillary will work with interested governors, using current flexibility under the Affordable Care Act, to empower states to establish a public option choice.

Clinton is here suggesting that her HHS will support state initiatives to form their own public options. In a vague way, she references the ACA's Section 1332 "innovation waivers" enabling states to propose alternative schemes to the core ACA structure that would meet the ACA's coverage and affordability standards. The great advantage of this proposal -- as with Clinton's promise to ramp up healthcare antitrust enforcement -- is that it would not require legislation.

As Kaiser's Larry Levitt has pointed out to me, "Nothing in the ACA stands in the way of a state creating a public option." He further noted that a state would not need an innovation waiver to form one. It would, however, need funding, and that's where the waiver might come in. If the state could find other means of savings, those measures might be integrated in a waiver proposal with a public option.

Ripples in the ACA risk pool

When a state that initially refused to implement the ACA Medicaid expansion embraces it, that's great news for state residents who were in the so-called "coverage gap" -- earning too little to qualify for subsidized private plans in the ACA marketplace, but denied the Medicaid coverage which the ACA had originally mandated for them, before the Supreme Court rendered the expansion optional for the states.

For another income group, those with household incomes between 100% and 138% of the Federal Poverty Level (FPL), the expansion may be a blessing for some but not all. People in this income range are eligible for subsidized private plans in states that have refused the Medicaid expansion -- but for Medicaid only in states that implement it.

As of the end of the ACA's last "open season" enrollment period in February 2015, 22 states had not yet adopted the law's Medicaid expansion, and one state, Indiana, had just adopted it, effective February 1.  In those states, about one third of enrollees in private health plans purchased in the ACA marketplace had incomes in the 100-138% FPL range and so would have been eligible for Medicaid if their states had embraced the expansion.  They constitute perhaps 15-20% of all enrollees in the ACA private plan plan marketplace.

The NAIC takes on balance billing

Of all the dysfunctions of the U.S. healthcare system, perhaps the most egregious (besides leaving tens of millions uninsured) is the "balance billing" of insured patients at in-network hospitals by out-of-network providers.

Elisabeth Rosenthal has documented some particularly extreme examples -- e.g.,  a man who arranged with his orthopedist for neck surgery at an agreed price -- and was billed $117,000 by an out-of-network assisting surgeon. Sarah Kliff found a particularly sharp illustration of the roulette-like character of hospital care, in which two women working for the same employer and having the same insurance gave birth within weeks of each other at the same hospital. One was billed $1600 for an epidural by an out-of-network anesthesiologist who happened to be at work that day; the other (who also had an epidural) was billed nothing.  A Consumers Union survey conducted this past March indicated that 30% of  privately insured Americans received a surprise medical bill in the past two years, with their health plan paying less than expected.

This week, the National Association of Insurance Commissioners (NAIC) adopted a model act for health plan network adequacy that includes some protections for patients faced with balance billing. Such model acts are meant to serve as templates for state legislatures to adapt to local needs and political propensities.

I plan to write about the balance billing section of the model rule in some depth next week. This post is a sketchboard -- and an invitation for anyone with expertise in the area or a personal experience to relate to comment or contact me.

Five factors driving (or inhibiting) CSR takeup in ACA private plan markets

I want to lay out some notes here for a regression analysis of what drives takeup (or the lack of takeup) of Cost Sharing Reduction (CSR) subsidies among buyers of private health plans on ACA exchanges. CSR reduces out-of-pocket costs for buyers with incomes under 251% of the Federal Poverty Level (FPL).  The benefit is quite strong up to 200% FPL, but almost negligible in the 201-250% FPL range.

CSR is best understood not as some obscure secondary benefit but as the ACA's best defense against underinsurance -- that is, against leaving plan holders on the hook for more medical expenses than they can afford. Thanks mainly to CSR, about 60% of buyers on ACA exchanges buy insurance with an actuarial value of 80% or higher - - coverage comparable to or more comprehensive than that offered by most employers. Without CSR, only 10% of exchange customers would access that AV level. CSR provides insurance with AV 87% or 94% to about half of ACA exchange customers.

CSR is a leaky vessel, however, Only about three quarters of those who are eligible access the benefit, including probably a bit over 80% of those eligible for "strong" CSR (AV 87% or 94%). Silver plan premiums can be a hard swallow for low income buyers. In 2015, somewhere between 15% and 20% of buyers under 201% FPL probably opted for cheaper bronze plans with their sky-high deductibles (usually over $5,000 per individual).

CSR takeup among all eligible buyers varies quite a bit from state to state, most commonly between 70% and 80%, more broadly between about 68% and 85% -- discounting a few states that have layered their own benefit structures on the national ACA template (e.g., Vermont and Massachusetts).  In various posts, I've spotlighted factors that have an impact (or may have an impact) on CSR takeup levels, though none form a basis for consistent predictions. Below, I've listed those factors in what I would guess to be descending order of likely impact.

New York to make health insurance *really* affordable for low-income residents

Very quickly, as I'm leaving the house in 40 minutes, big news (via Charles Gaba, natch)  from New York: it's becoming the second state to offer a Basic Health Plan (BHP) for lower-income insurance seekers, as enabled by the Affordable Care Act. A BHP is a low-cost, low-premium offering for buyers with incomes between the Medicaid eligibility cutoff (100% or 138% of the Federal Poverty Level*) and 200% FPL.   The premiums and cost-sharing compare very favorably with the mainstream private health plans offered on ACA exchanges as previously priced for low-income buyers. New York's BHP will have two tiers, with virtually no cost for plan holders with incomes between 100% and  150% FPL and just a $20 monthly premium and minimal cost-sharing for buyers in the 150-200% FPL range.

The 100% FPL starting point presumably means that the upper end prior Medicaid-eligibles (100-138% FPL) will be transitioned in. The benefit summary is below the jump. The plans will be available in 2016; enrollment will begin in November. The state will contract with private insurers to deliver the benefits.

While this is excellent news for New Yorkers with incomes under 200% FPL, it may raise challenges for the private insurance market in New York. In 2014, 53% of private health plan buyers had incomes under 200% FPL, so the market is being sliced more than in half. Minnesota, which has had a low-cost option for residents under 200% FPL since the launch of the ACA markets (and in somewhat similar form, before the launch), has struggled to meet enrollments targets. Enrollments are currently just under 62,000; the state is now aiming for 95,000 private plan enrollments by the end of next year, versus early projections at least twice as high.. The state's lowest-cost insurer in 2014 exited the market this year.

In Washington State, too many low-income bronze plan buyers

Washington HealthPlanFinder, the state's ACA exchange, has set the standard for enrollment data reporting, providing a more detailed and complete account of private plan buyers' demographics and behavior than any other state to date. Washington is a wealthy state, with a median household income (2013) of $60,106, compared to a national median of $51,939.   Its buyers of private plans on the exchange (known as Quality Health Plans, or QHPs) are accordingly a much wealthier group than the average among the 37 states that used the federal exchange, healthcare.gov.

Only 12.5% of Washington's QHP buyers have incomes under 150% of the Federal Poverty Level (FPL), compared to 24% in those healthcare.gov states that accepted the Medicaid expansion -- and 50% in healthcare.gov states that refused the expansion. (In non-expansion states, eligibility for QHP subsidies began at 100% FPL, versus 138% FPL in expansion states, and those between 100 and 138% FPL swelled the QHP enrollments, accounting for about a third of all enrollments in non-expansion states.) Low takeup in this low-income band perhaps explains in part why Washington has reached just 32% of its target QHP market as calculated by the Kaiser Family Foundation, versus 42% for the nation as a whole. Conversely, Washington has been very successful in expanding its Medicaid rolls. The enrollment report tallies 533,628 "Medicaid expansion adults," far exceeding a 2012 Urban Institute forecast of 330,000.

Too many poor buyers of bronze plans

While Washington's relatively small number of enrollees in the 100-150% FPL income band may be in large part a matter of demographics, there is one way in which the state exchange has seemingly failed lower-income buyers. Takeup of Cost Sharing Reduction subsidies, available only with silver plans and only to buyers with incomes below 250% FPL, is lower in Washington than on healthcare.gov, and much lower than in states like New York and Connecticut that take special measures to highlight CSR for those who are eligible for it.

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.

In Rhode Island, low-income ACA buyers chose silver

From Rhode Island comes fresh evidence that a very high percentage of lower-income private plan buyers nationwide who bought silver plans, and thus accessed the Cost Sharing Reduction (CSR) subsidies that reduce deductibles and out-of-pocket expenses (CSR is available only with silver plans).

I have been tracking, in states that publish or provide me with the info, the percentage of buyers with household incomes under 200% FPL who bought silver plans, because at under 200% FPL, CSR is really strong. Without CSR, a silver plan is mandated to cover 70% of the average plan holder's yearly medical expenses - that is, its actuarial value is 70%. For buyers with incomes under 150% of the Federal Poverty Level (FPL), CSR raises the AV to 94%. For those with incomes between 150-200% FPL, the AV goes to 87%. For those between 200-250% FPL, it's 73%.

Health exchange design has a clear impact on metal level choices

[New data from Connecticut: please read updated version of this post here.]

Why was there such huge variation among states in the proportion of ACA private plan buyers who bought bronze plans -- the plans with the lowest premiums and highest deductibles and copays? In Hawaii, 41% of ACA shoppers bought bronze; in Mississippi, 8% did.

Part of the answer, as I've noted before, lies in a state's relative levels of wealth and health. Lower income buyers are eligible for generous Cost Sharing Reduction subsidies that reduce deductibles, co-pays and yearly out-of-pocket (OOP) maximums -- but only if they buy silver plans. Fortunately, most did. If you're sick and poor, a $6,000 deductible is likely to give you pause -- even if the plan is all but free and you don't come in knowing what a deductible is. On Healthcare.gov, only 15% of buyers eligible for any kind of subsidy bought bronze. The percentage is probably considerably lower among those eligible for strong CSR subsidies -- that is, buyers with incomes under 200% of the Federal Poverty Level.

Another factor plainly has a strong impact, though, and accounts for some wealth/health anomalies. That's website design. In Connecticut, which has a median household income of $67,8k, second highest in the nation, just 16% of all buyers selected bronze. In Colorado, with a median income of $63.4k, 40% bought bronze.

That's doubtless because the Connecticut site shows CSR-eligible applicants silver plans first; that is, the search results default to silver (at least they do in the pre-application shop-around feature; I've been trying to confirm that they do in the actual application process). [UPDATE: an Access Health CT spokesperson has confirmed that the actual application also defaults to silver for CSR-eligible users.] The Colorado site, in contrast, does next to nothing to steer CSR-eligible buyers toward silver. The shop-around is extremely cumbersome; the filter by metal level is hard to find (at the bottom of the screen, and you have to scroll back up to activate it); and unlike on healthcare.gov, applicants who qualify for CSR and make a move to buy a bronze plan receive no warning that they're leaving benefits on the table.