Silver plan selection dropped among new enrollees in California in 2016

Something went wrong in Covered California's 2016 open enrollment [or maybe not- see update, 6/7].

Among the 439,400 new enrollees (31% of total enrollees), bronze plan selection spiked to 31.9%, compared to 24.9% of those enrolled as of June 2015. Silver plan selection among new enrollees was 58.2%, compared to 64.6% as of June 2015 (the data is available here).

Among enrollees in income ranges that are eligible for Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, silver selection dropped from 75.8% as of June 2015 to 68.1% among new enrollees in 2016.

The CSR benefit weakens sharply at 201% FPL. Among those in the income range for "strong" CSR, that is, those with incomes up to 200% FPL, silver selection dropped from 82.2% as of June 2015 to 75.0% for those who enrolled for the first time in 2016.

Cost Sharing Reduction in Covered California

(I'm hoping that dry title sounds like a pop song lyric.)

Covered California today released private plan enrollment data updated to June 2015. The report (available here under "June 2015 profile") shows that California's CSR takeup rate is in line with national averages.

By CSR takeup, I mean the rate at which California buyers whose incomes qualify them for Cost Sharing Reduction (CSR) subsidies selected silver plans and so accessed the benefit, which is available only with silver plans. As in the country at large, 76% of all CSR-eligibles in California bought silver.

Since I've described how CSR works dozens of times, I'd like to cut to the chart here. A quick rundown of the basics is below.

Income level	CSR-eligible	CSR accessed	% CSR accessed
Under 150% FPL (AV 94%)	219,260	195,090	88.9%
150-200% FPL (AV 87%)	438,730	345,720	79.3%
200-250 FPL (AV 73%)	221,310	125,650	56.8%
Total Under 200% FPL	657,990	540,810	82.2%
Under 250% FPL (Total CSR eligible)	879,300	666,460	75.8%

Mysteries of the Maryland Marketplace

(Update post here)

As I've noted before, Connecticut's ACA exchange has been a market leader in steering private plan buyers whose incomes qualifying them for Cost Sharing Reduction (CSR) subsidies into silver-level plans (CSR is available only with silver). Also noted, back in January: When Maryland cloned Connecticut's technology and web interface in 2015, silver plan takeup improved.

Now, Maryland Health Connection, the state's ACA exchange, is reporting a market-leading level of silver plan selection among CSR-eligible buyers -- that is, buyers with incomes up to 250% of the Federal Poverty Level (FPL).  Nationally, about 76% of private plan enrollees who qualify for CSR buy silver plans and obtain the benefit (coincidentally, CSR-eligibles also make up about three quarters of all marketplace customers). Yesterday, Maryland announced that 86% of CSR-eligible enrollees in the state bought silver and accessed the benefit.

That's all the more the more striking in that just 62% of all buyers on the Maryland exchange selected silver, versus 68% nationally. The numbers indicate:

Some low-income ACA shoppers bought gold plans*

* But not enough to cover Avalere's estimate of CSR-forfeiters

On August 19, Avalere Health published an analysis spotlighting ACA private plan buyers who failed to access the Cost Sharing Reduction (CSR) subsidies that are available to applicants with incomes up to 250% of the Federal Poverty Level (FPL) -- but only if they buy silver plans. Avalere estimated that about 27% of CSR-eligible buyers forfeited the subsidy by buying plans in metal levels other than silver -- usually the cheapest bronze plans, which carry very high deductibles.

In a response, I argued that Avalere had somewhat lowballed CSR takeup by overestimating the number of private plan buyers who were eligible for CSR. The numerator of the equation is not in doubt: an ACA enrollment update published by CMS in June pegged total CSR enrollment at 5,850,936 as of March 31. But the denominator (CSR-eligibles) is based on extrapolations from incomplete income breakouts of ACA private plan customers, provided by HHS in March for healthcare.gov states alone. Avalere assumed that 8.1 million of those still enrolled as of March 31 were CSR-eligible; I estimate that about 7.7 million enrollees were eligible, and that therefore, about 76% of CSR-eligibles accessed the benefit.

The difference stems from two factors: what you assume about the roughly 6% of enrollees for whom income data was unavailable, and how you estimate the percentage of CSR-eligibles in state-based exchanges, for whom income data was not included in federal enrollment reports. I assume that income distribution in the SBMs is closer to that of those healthcare.gov states that accepted the Medicaid expansion than to the overall average for healthcare.gov states, which is dominated by states that refused to expand Medicaid.

CSR-eligibles who bought neither silver nor bronze

I was struck today by additional evidence that Avalere somewhat overestimated the number of private plan holders who are eligible for CSR. According to their analysis, 2.2 million plan holders renounced the benefit by buying non-silver plans. The assumption is that those who leave CSR on the table mostly buy bronze plans, which have lower premiums. But the total number of bronze plan buyers is a known quantity: 2,164,116.  And we know that bronze plan buyers are more concentrated at higher income levels. Among buyers eligible for any kind of subsidy (not all of whom were CSR-eligible), 19% bought bronze. Among those who earned too much to qualify for subsidies, 35% chose bronze.

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.