What kinds of health plans are people buying outside the ACA marketplace? An eHealth snapshot

In estimating the weighted average actuarial value of health plans sold in the entire U.S. individual market last Friday (spoiler: AV 75%), my proxy for the off-exchange market was the 1.4 million HealthCare.gov enrollees who did not qualify for subsidies. Here's the score:

Actuarial value obtained by unsubsidized enrollees on HealthCare.gov

Actuarial Value	% of unsubsidized enrollees
90 (Platinum)	3.3
80 (Gold))	18.5
70 (Silver)	39.0
60 (Bronze)	33.0
57 (Catastrophic)	6.8
68.9% (weighted avg)

There are probably 7 to 8 million enrollees in ACA-compliant off-exchange plans, and assuming that the unsubsidized Hc.gov population reflects their choices is something of a leap, as I acknowledged. But here is a second data set: last December eHealth, the largest commercial online health insurance broker (pre-dating ACA implementation) broke out metal level selection among its unsubsidized enrollees in the first two weeks of open enrollment for 2016. The "last year" comparison in each line is to the first two weeks of open enrollment 2015. The results:

Don't deny ACA-driven rate-shock. Do put it in perspective

Most Obamacare horror stories trumpeted by Americans for Prosperity, Fox News et al did not hold up to scrutiny because the protagonists turned out to be eligible for subsidies. The law's enemies wanted real hardship cases, and even modest affluence apparently takes the edge off for propagandists.

That sloppiness has made it relatively easy for some of the law's supporters, including Paul Krugman (see update #7 here), to gloss over the substantial price hikes suffered by those who 1) are in the individual market for a relatively long haul, 2) earn too much to qualify for ACA subsidies, and 3) do not have a pre-existing condition or a family member who has one.

eHealth, the nation's best-known online health insurance broker pre-ACA, has published statistics indicating the extent of  premium price hikes for the unsubsidized under the ACA. The latest snapshot is based on 213,000 insurance applications completed on eHealth during the ACA's first open enrollment period, from October 2013 through March 2014;  a 2013 baseline is published here.   According to eHealth's most recent stats, the average individual plan premium rose from $197 in 2013 to $271 in 2014, a 38% increase. The average family plan rose from $426 to $667, a 57% hike.

The larger jump in family plan premiums is partly explained by a larger reduction in average deductibles, which shrank from $10,568 in 2013 to $7,771 in 2014 (that's for the whole family; each individual would have a smaller deducible). The average individual plan deductible fell less dramatically, from $4,900 to $4,164.  As open season wore on, eHealth customer trended toward lower premiums and higher deductibles.

Who needs HealthCare.gov?

[updated and corrected 11/22, per notes at bottom]

HealthCare.gov may be obsolete before it's fixed.

Purely informational comparison shop sites ValuePenguin and HealthSherpa provide all the information that's supposed to be available on HealthCare.gov: price quotes incorporating the user's location, income,  age and family composition for all insurers available to that user on the exchange. ValuePenguin provides plan details.  (Shopping without a login or completed application is also possible on HealthCare.gov, but there are limitations and inaccuracies.*)

The missing link has been the subsidy application. That has had to be done through HealthCare.gov, or through phone or print applications, both of which can be started by calling the number posted on HealthCare.gov.  That application is the black box from which it's unclear how soon a completed application will emerge. As I've noted before, some insurers at least will take an application for a specific plan from a user who's started a subsidy application with the government, but that's a two-track and perhaps unsettling process

Now, though, the government is poised to let the insurers -- and online brokers, which also enable some comparison shopping -- take the subsidy application, according to HuffPost's Jeffrey Young:

Now these insurance issuers and brokers are about to get what they want. The Centers for Medicare and Medicaid Services is close to providing insurers with the technological capability to also take subsidy applications, as well as sell plans to customers, spokeswoman Julie Bataille said during a conference call with reporters Tuesday. ..

Online brokers eHealth, Go Health and about 30 others also will soon have this capability, Bataille said. "We believe that they are on track to begin their transactions as soon as possible. This is something that, obviously, they will make determinations about individually as they see how their system is interacting with ours, and they make their own assessments about the fixes necessary for them to begin their work." 

[Update: fixes currently being tested  have the insurers route their customers' subsidy applications through healthcare.gov.  It remains unlikely that insurers will gain direct access to the federal data hub that enables subsidy determinations.] 

The brokers could be a useful intermediary for some. eHealth  offers comparison shopping, with plan details for each posted choice, though in many locations it's far from covering all options on the exchanges. Within its own universe, however, eHealth will make your subsidy estimate, give you price quotes incorporating that estimate, hold information for any plan you select and notify you when enrollment is available on eHealth -- that is, when the site can initiate the subsidy application. A user should check their choices against ValuePenguin or HealthSherpa, however (I have found ValuePenguin's price quotes to be more accurate than HealthSherpa's in New Jersey).

If you want to eliminate the middleman, once the government allows third parties to process the subsidy application, you can use a non-transactional comparison site like ValuePenguin and then apply directly through the insurer offering the plan you choose. Many (I suspect most) insurers on the exchanges provide plan summaries online and enable online applications.

Once the government does outsource the subsidy application process, who needs HealthCare.gov? Its front end, that is. All that really matters is the back end: whether an application can be processed accurately in reasonable time. That of course is the rub, and allowing third parties to initiate subsidy applications won't make the technological challenge* go away. But perhaps the insurers and brokers will be able to expedite the process on behalf of their prospective customers -- and enable a smooth shopping process. If insurers and brokers can take the complete application, all the government needs to do on the front end is refer users to functioning online brokers and the informational sites.

At present, those who are not eligible for subsidies can easily make an informed choice from among policies available on the exchanges and complete the transaction through the insurer or an online broker.

One caveat: "informed" choice is a relative term. Online (and print brochure) plan summaries are not insurance contracts, which are complex, though less prone to booby-trapping than before ACA coverage rules took effect. If I were buying on the exchanges (as I might, next year), I might still seek the advice of a real live human broker to scope out how the co-pays, deductibles etc. might play out.

* You can comparison shop on HealthCare.gov without filling out an application. But subsidy information won't be incorporated in the price quote (they refer you to the Kaiser calculator for that). And the price quotes I got for my wife and I in New Jersey did not take our age into account and so were way off.

** Not to mention the yet-unbuilt systems to process subsidy payments to insurers.

Update, 11/21: just recalled that eHealth has been somewhat notorious for poor customer service:  it gets two out of five stars on epinions.com, and Rick Ungar spotlighted some customer horror stories when Avik Roy used the site to spotlight rate shock. Among the complaints: signing up at one price, getting enrolled at another. That should not be possible under the ACA. But the experiences do highlight possible pitfalls to using a middleman. Of course HealthCare.gov and the state websites should function at the least, in William Ocasio's  phrasing, as "public options to private marketplaces."   The point here is that complete effective workarounds while HealthCare.gov is still balky may soon be imminent, and that private online gateways may remain an important part of the landscape.

Update 2, 11/22: An earlier version of this post assumed that one could effectively ACA shop on eHealth. Prompted by the Anon comment below, I further tested eHealth and found that in many locations it does not include most of the plans available on the exchanges. I have amended the post accordingly. For the record, here is the original lead paragraph:

Online health insurance brokers like eHealth and purely informational comparison shop sites ValuePenguin and HealthSherpa provide all the information that's supposed to be available on HealthCare.gov: price quotes incorporating the user's location, income,  age and family composition for all insurers available to that user on the exchange. eHealth and ValuePenguin provide plan details. eHealth will make your subsidy estimate, give you price quotes incorporating that estimate, and, for now, hold the the plans you select in a kind of provisional shopping cart. [Update: management/healthcare scholar William Ocasio of Northwestern tweets that eHealth omits some insurers. So results should be checked against ValuePenguin or other brokers.]