ARPA subsidy boosts in ACA marketplace reduced underinsurance, reversing a 'slide to bronze' at low incomes

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When the premium subsidy enhancements for the ACA marketplace that became law when the American Rescue Plan passed were first published in early February of this year, my first thought was that no one with an income below 200% FPL should ever buy a bronze plan again:

If the subsidy enhancements become law while the emergency SEP [Special Enrollment Period, running from Feb. 15 to Aug. 15 on HealthCare.gov] is still open, bronze plan enrollment at incomes under 200% FPL should go to zero. At incomes up to 150% FPL ($19,140 for a single person), silver coverage will be free. At 200% FPL ($25,520 for a single person), benchmark silver will cost $43 per month. That expense doesn't feel like nothing at that income, but the average deductible for silver at that income level ($800) is about one ninth of the average bronze deductible ($6,921). The out-of-pocket maximum for bronze plans is usually close to the highest allowable, $8,550 for a single adult.  For silver at incomes up to 200% FPL, it's $2,850, and usually well below that, averaging $1,189 at incomes up to 150% FPL and $2,528 at 150-200% FPL. 

Well, those subsidy boosts did go into effect during the emergency SEP, helping to drive a major surge in off-season enrollment. Nationally, 2.8 million people newly enrolled in ACA marketplace plans from Feb. 15 to Aug. 15, 2.1 million of them in the 36 states using the federal exchange, HealthCare.gov. And while selection of plans at metal levels other than silver at low incomes did not go zero during the SEP, it did go way down, reversing a troubling trend.  The ARPA subsidies are reducing underinsurance.

Almost a quarter of all emergency SEP enrollees in ACA marketplace should have been in Medicaid

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For years, we have had to infer what percentage of ACA marketplace enrollees in states that have refused to enact the ACA Medicaid expansion have incomes below 138% FPL -- the Medicaid eligibility threshold in expansion states. It's a very large percentage, but as CMS's enrollment reports usually break out income in increments of 50 FPL percentage points, e.g., 100-150% FPL, it has to be inferred.

Just once, in 2016, CMS did provide enrollment results by state for the 100-138% FPL income range as well as for the broader 100-150% FPL bracket. In nonexpansion states, the former was about 85% of the latter. For years since, I've used 85% as a benchmark to estimate down from 100-150% FPL for the "should-have-been-in-Medicaid" cohort.

The final enrollment report for the 2021 emergency Special Enrollment Period, which ran from Feb. 15 to Aug. 15 in the 36 HealthCare.gov states, provides a tantalizing hint: 33% of all enrollment in those states was in the 100-138% FPL bracket. (All nonexpansion states use HealthCare.gov.) But what percentage of those were in the 13 states that had not expanded Medicaid as of the SEP period? (I'm including Oklahoma, which opened the Medicaid expansion gate on July 1 of this year.) 

ACA enrollment under ARPA: The view from near 100% FPL (and San Antonio)

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The ACA's tragic coverage gap confronts poor people in the 12 states that have refused to date to enact the ACA Medicaid expansion with a cruel logical absurdity: they may earn too little to qualify for government-supported health coverage.  Adults in households with incomes below the Federal Poverty Level (100% FPL) do not qualify for subsidized coverage in the ACA marketplace.

A few weeks ago, I noted that on May 5 CMS put a modest patch on the coverage gap by rescinding a Trump era policy of demanding income verification from marketplace applicants in nonexpansion states if "trusted data sources" indicated that the applicant's income was likely below 100% FPL -- i.e., ineligible for subsidies -- and the applicant had estimated an income above that threshold. (Since HHS's computer systems can't be retooled instantly, CMS explained, the exchanges will continue to request documentation in these circumstances for some time -- but in followup communication, they will "notify those consumers that they need not provide the requested information.")

In effect, a low-income applicant can make a good faith estimate of a household income in the coming year above 100% FPL and qualify for subsidized coverage (now free through 2022, if income is below 150% FPL, thanks to the subsidy boosts in the American Rescue Plan enacted on March 11). Documentation will not be required (though awkwardly, it will be requested for some time).  If income for the year in question ultimately proves to fall below the 100% FPL threshold, there is no clawback of subsidies granted, unless the applicant's income estimate is made with "intentional or reckless disregard for the facts."* 

The opportunity for low-income applicants to estimate their way into free coverage is the sort of regulatory forbearance that inspires high moral dudgeon from conservative adversaries of the ACA. In fact, though, poor or near-poor people in nonexpansion states who get as far as applying for health coverage - many don't, as ignorance of ACA programs is pervasive -- are likelier to underestimate their income than overestimate it. 

Emergency SEP enrollment, shrinking attrition boost ACA marketplace enrollment beyond yearly top lines

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In a report issued last September, Covered California, the golden state's ACA exchange, announced that effectuated enrollment in private health plans through the exchange had reached an all-time high of 1.53 million (1,527,730) as of June 2020.   That was in the midst of an emergency Special Enrollment Period (SEP), effectively a second open enrollment season, implemented by California in response to the Covid-19 pandemic.  (In normal years, SEPs are open only to individuals who can demonstrate a qualifying "life change," such as loss of job-based insurance.)

The emergency SEP ran from March 20 through August 31, 2020. According to the September report, SEP enrollment increased by more than 100% over the same period in 2019, to 289,460.  As the CoveredCA report stresses, that's in contrast to a mere 27% increase in SEP enrollment in the 38 states then using the federal exchange, HealthCare.gov, for which the Trump administration refused to open an emergency SEP.  In September, active membership enrolled through CoveredCA reached a new all-time high, 1,551,470.  

Driven largely by the boost in SEP enrollment, plan selections as of the end of OE 2021 in California finally surpassed their 2016 high point of 1,575,340, reaching 1,625,546. (The term "plan selections" acknowledges that not all those who "enroll" in plans during OE make a first payment and thus "effectuate" enrollment and become, in CoveredCA parlance, "active members").  

While plan selections as of the end of OE have always served as the headline number for ACA marketplace enrollment, they provide a somewhat misleading picture. Every year, an average of about 10% of those who "enroll" in plans during OE never pay their first premiums, and attrition continues throughout the year, as disenrollments exceed SEP enrollments -- at least through 2019, the last year for which monthly enrollment has been published.  But attrition has been shrinking beginning in 2018, perhaps because the silver loading that began that year sharply reduced net-of-subsidy premiums for many enrollees, including a substantial number who paid zero premium.  In 2016, national enrollment as of December was 28% below the end-of-OE total for plan selections. In 2019, December enrollment was just 20% below the end-of-OE tally.

Want a SEP? You'll have to schlep...CMS ends application streamlining on HealthCare.gov

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Update, 7/29/20: CMS confirms that it has reverted to the standard pre-crisis SEP verification process,  "as part of its efforts to safeguard taxpayer funds, promote market stability, and ensure affordable premiums."  As noted below, insurers were not calling for this change -- they are not concerned that looser SEP verification at this point will worsen the risk pool. As for safeguarding taxpayer funds, inhibiting marketplace enrollment will always do that. Meanwhile, HHS has been showering billions in CARES Act relief funds on the nation's wealthiest hospital systems, many of which hold huge reserves, while safety net hospitals go begging.

In late March, as twelve of the thirteen state-based ACA marketplaces opened emergency Special Enrollment Periods in which anyone who lacked health insurance could enroll, CMS was rumored to be on the brink of following suit in HealthCare.gov, the federal exchange used by 38 states.

Ordinarily, enrollment in ACA marketplace health plans is only open to all during an Open Enrollment season, which on HealthCare.gov runs from November 1 to December 15.  Those seeking coverage at other times must apply for a Special Enrollment Period and provide documentation showing that they had a qualifying life change, most often loss of health insurance. The emergency SEPs in some states did away with that requirement, functioning as in Open Enrollment. Others required mere attestation by phone or box-checking of loss of coverage or other life change, without documentation. (I reviewed various emergency SEP processes and presentations here.)

HHS ultimately declined to open an emergency SEP in HealthCare.gov. Reportedly the agency was ready to do so, but the Trump White House - killed it. Putting the marketplace forward as a vital service in time of intense need was a bridge too far for Trump & Co.  CMS did, however, accept attestation of loss of coverage prior to enrollment, with documentation to be supplied later. That change occurred around April 20.

Now, that limited but important accommodation has ended. Jenny Hogue, a health insurance broker based in Murphy, Texas, got wind of the change early this week. Shelli Quenga, director of programs at the South Carolina-based Palmetto Project, which provides marketplace enrollment assistance as a nonprofit brokerage, confirmed this to me, as did Jodi Ray, Director of the Florida Covering Kids and Families Project at the University of South Florida. "We have had appointments in the past week where consumers were asked for documentation to be uploaded," Ray emailed.

ACA enrollment in a pandemic: What we know so far

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Roughly 30 million Americans have filed jobless claims in the last six weeks. Slightly fewer than half that number may have also lost health insurance, according to an analysis by the Economic Policy Institute.*

The Urban Institute estimates that 59% of those in industries most vulnerable to job loss who lose job-based coverage will have access to government-supported insurance -- Medicaid, CHIP, or the ACA marketplace. How many accept the help is a different question.

The SEP imperative

The answer may depend in part on how wide the ACA online exchanges open the door. Normally, the uninsured can seek coverage only during a limited Open Enrollment Period (Nov. 1 - Dec. 15 in the federal exchange, longer in the 13 state-based exchanges), unless a change in life circumstances during the off-season renders them newly eligible. In that case they are granted a Special Enrollment Period (SEP). Applying for a SEP adds steps to the already complicated ACA enrollment process. Under normal circumstances, an applicant has to upload or mail in proof of loss of coverage, or proof of another SEP trigger, such as marriage.