Medicaid expansion to just 100% FPL: What's the effect on marketplace risk pool?

Utah legislators voted this week to contravene the will of Utah voters, expressed in a 2018 referendum, by limiting the ACA Medicaid expansion to adults with incomes up to 100% of the Federal Poverty Level, instead of the 138% FPL threshold stipulated by the ACA statute and the referendum.

The more limited expansion would be bad for Utahns in the 101-138% FPL range, as explained below, though it would save the state some outlays (if approved by CMS), since the federal government pays 100% of marketplace subsidies and "only" 90% of premiums for the Medicaid expansion population.

Leaving aside for a moment the effect on low income Utahns, and on state finances, I want to consider a tertiary question: How would expansion affect the risk pool in the state's ACA marketplace? (David Anderson has touched on this, at least on Twitter, and may be looking at it in more depth.)

In 2016 the answer would have been straightforward: the 101-138% FPL population is less healthy on average than higher income enrollees, and so raises costs and premiums. A 2016 CMS study estimated that premiums are about 7 percent lower in expansion states, controlling for a variety of other factors.

Does silver loading improve the risk pool?

The picture has been clouded, however, by "silver loading" -- state marketplaces' adaptation to Trump's cutoff of direct reimbursement of insurers for Cost Sharing Reduction subsidies that they are obligated to provide to low income enrollees who select silver plans. Those subsidies are highest in the 100-150% FPL range, where they raise the actuarial value of a silver plan from a baseline of 70% to 94%.

One more offset from silver loading

It seems clear that the discounts in bronze and gold plans created by silver loading -- the pricing in of Cost Sharing Reduction into silver plans only after Trump cut off direct reimbursement for the benefit* -- have partly offset enrollment losses in the ACA marketplace caused by other forms of sabotage, e.g., the gutting of federal funding for advertising and enrollment assistance and repeal of the individual mandate penalty. Silver loading may have boosted enrollment by 3-4% in 2018.

The effects of silver loading are likely more intense in states that have rejected the ACA Medicaid expansion. Roughly a third of enrollees in those states would be Medicaid-eligible had the state expanded, and about 90% of enrollees in the should-have-been-in-Medicaid income range (100-138% FPL) select silver plans and so access the strongest form of CSR, available up to 150% FPL.  As noted in my last post, more intense silver loading in nonexpansion states may very well be a major factor in why enrollment losses were smaller in nonexpansion states on HealthCare.gov than in expansion states on the platform (though expansion states with their own marketplaces have done better than both).

Silver loading may provide a second form of "offset" to nonexpansion states. In 2016, a CMS analysis concluded that premiums in Medicaid expansion states were about 7% lower than in nonexpansion states,, controlling for various other factors. That's presumably because this lowest income cohort (100-138% FPL) has more intense health needs on average than enrollees at higher income levels.

Higher health plan prices may bring *more* young buyers into the exchanges

In its latest ACA enrollment snapshot, CMS is touting an increased percentage of younger enrollees compared to last year.

As of the Dec. 17 deadline to obtain coverage beginning Jan. 1, enrollees under age 35 comprised 35% of all HealthCare.gov customers, compared to 33% in the year prior (that includes children, who last year accounted for about 7% of enrollees on the federal exchange). Among new enrollees only, 41% are under 35 this year, compared to 38% last year.

The modest de-aging of the risk pool is good news, and, according to Sarah Kliff, relieves a worry:

Obamacare premiums went up a lot faster for 2016 coverage (the year this current open enrollment covers) than they did for 2015. That created some worry that young people might not sign up in high numbers. Because younger people tend to have fewer medical needs, they tend to be more price sensitive and willing to forgo coverage in the face of a premium spike.

It's possible, though, that the price spike actually brought more young customers into the marketplace.

The Romance of the Rose, health policy edition

#Healthpolicyvalentines are a thing on Twitter. So, to aggregate my morning fun:

Roses are red,
Violets are blue.
I logged on Kynect,
And covered you.

        *     *     *

Violets are blue,
Roses are rouge.
Your income is low,
Your subsidy's huge. 

        *     *     *

Red is the rose,
And violet the heather.
We all have to jump
In the risk pool together. 

        *     *     *

Yellow's the daisy,
And white the azalea
I want the health coverage
They get in Westphalia.

        *     *     *

Azaleas are monochrome,
Daylilies, variegated.
My love for y'all
Is community-rated.

        *     *     *