"How stupid is American healthcare?"

Somehow I took this from Adrianna McIntyre as an irresistible challenge:

but there are so many ways to say "American health care system is stupid"! https://t.co/E6MuIyX0Jq

— Adrianna McIntyre (@onceuponA) April 30, 2021

And so...

Free silver plans at incomes above 150% FPL

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The American Rescue Plan enacted last month radically though temporarily boosted premiums in the ACA marketplace. The premium paid by enrollees for the benchmark (second cheapest) silver plan is now set at $0 for enrollees with household incomes up to 150% of the Federal Poverty Level, and at 0-2% of income for enrollees with incomes in the 150-200% FPL range. That tops out at $43 per month for a single person with an income of $25,520.

Bronze plans are now available at zero premium to almost any enrollee with an income below 200% FPL (and to a fair number at higher incomes).  But bronze plan deductibles average $6,921.  At incomes up to 200% FPL, silver plans come with strong Cost Sharing Reduction (CSR), which brings deductibles down to an average of $177 for enrollees with incomes up to 150% FPL and $800 in the 150-200% FPL range. The contrast is similarly dramatic in annual out-of-pocket maximums, which usually top $8,000 in bronze plans. CSR brings them down to an average of $1189 at incomes up to 150% FPL and $2529 at 150-200% FPL. 

Prior to the subsidy boost, increasing numbers of enrollees with incomes below 200% FPL were selecting bronze plans, especially in the 150-200% FPL range, where benchmark silver topped out at $135/month for an individual (see The darker side of free bronze). The newly enhanced subsidies should reverse that trend. Still, even modest premiums are often experienced as steep at low incomes, and zero-premium plans remove administrative friction that deters some enrollees (arranging and executing on monthly premium payment can be surprisingly difficult). 

The dark side of free bronze plans: Erosion of CSR silver enrollment accelerates

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While the 2021 Open Enrollment Report for the ACA marketplace released by CMS yesterday shows an overall increase in enrollment over 2020, the attendant Public Use Files show acceleration in a troubling trend: decreased selection of silver plans by enrollees with incomes below 200% of the Federal Poverty Level. Selecting bronze below that income threshold, as almost all who don't select silver plans do, means forgoing the strong Cost Sharing Reduction (CSR) that attaches to silver plans only. 

Silver Plan Selection at 100-200% FPL
HealthCare.gov states

Year	Total enrolled	Silver enrolled	Percent silver
2017	5,258,797	4,574,172	87.0%
2018	4,865,014	4,152,230	85.4%
2019	4,712,094	3,944,471	83.7%
2020	4,725,360	3,864,275	81.8%
2021	4,933,622	3,830,086	77.6%

Source (all enrollment tables): CMS State-level Public Use Files. See note below.

For enrollees below the 200% FPL income threshold, silver plans are enhanced by strong Cost Sharing Reduction subsidies that sharply reduce out-of-pocket costs. CSR raises the actuarial value of a silver plan (the percentage of the average enrollee's medical costs allegedly* paid by the plan) to 94% for enrollees with incomes up to 150% FPL and to 87% for those with incomes in the (150-200% FPL) range.  Bronze plans have an actuarial value of approximately 60%. Here's how that difference translates into deductibles in the 36 states using the federal exchange, HealthCare.gov, according to the OE Report:

ACA 2.0 -- how's it going so far?

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On a temporary basis, the health insurance-related provisions of the American Rescue Plan Act (ARPA) signed into law on March 11 moved the Affordable Care Act much closer to living up to its name. Major boosts to premium subsidies effective through 2022 at every income level -- including an absolute cap on premiums for a benchmark plan as a percentage of income for every legally present person who lacks affordable access to other insurance -- credibly put coverage within financial reach of everyone motivated to seek it, albeit with more complexity of process and exposure to out-of-pocket costs than a truly universal system would require. That's a BFD, as a former vice president might say.

The changes became effective immediately and retroactively --  three months after the end of Open Enrollment for 2021 and with an emergency Special Enrollment Period still in progress. So, almost six weeks in, how's it going? A few notes below on implementation, benefit design, and future prospects.

• Fixing a plane in mid-flight (as the emergency SEP is effectively an Open Enrollment period), federal and sometimes state governments have moved with impressive swiftness. While subsidy boosts for those already enrolled were retroactive to Jan. 1, and would be credited eventually by the IRS, HealthCare.gov got the new subsidy schedule loaded on April 1, enabling enrollees to update their applications and get the increase subsidies applied to their monthly payments as of May 1. Most of the 15 state-based marketplaces have followed suit, or set a date by which it will be done (see Charles Gaba's chart at point #2 here). On April 9, the IRS issued guidance enabling 2020 enrollees who underestimated their income and so owed back excess tax credits to take advantage of an ARPA provision forgiving that payback, announcing that the form that details tax credits paid out does not have to be filed at all, and that the IRS will credit back excess APTC already paid back without any further action from the tax filer. 

Can free silver close much of the "upper coverage gap" in nonexpansion states?

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Update, 5/4/21: New data via the CMS state-level public use files for 2021 shows that enrollment at100-138% FPL in nonexpansion states increased dramatically in 2021. See this post for an update.

The principle harm wrought by states that refused to enact the ACA Medicaid expansion after the Supreme Court rendered expansion optional is well known. More than 2 million people with incomes below 100% the Federal Poverty Level (FPL) in the fourteen states that have not yet enacted the expansion are uninsured and eligible neither for Medicaid nor for ACA marketplace subsidies, according to KFF estimates.

A secondary, less recognized harm is imposed on nonexpansion state residents whom the ACA intended to be at the upper end of eligibility for Medicaid, those with incomes in the 100-138% FPL range. In nonexpansion states, residents in this income category are eligible for marketplace subsidies. Until the American Rescue Plan Act (ARPA) was enacted last month, a benchmark silver plan with strong Cost Sharing Reduction would cost enrollees in this income range 2% of income, or a maximum of $29 per month for a single person with an annual income of 138% FPL (currently $17,609). Thanks to ARPA, benchmark silver is now free for enrollees in this income range (and up to 150% FPL).

On paper, even the pre-ARPA offering doesn't sound like a bad deal. The actuarial value of silver in this income bracket is 94%; the average deductible is around $200, and the average annual out-of-pocket maximum is about $1100. But takeup, as I noted in my last post, has been poor. Recent KFF estimates of the uninsured in this income range in nonexpansion states, set against actual enrollment at this income level in 2020, suggest that only about 53% of those eligible have actually enrolled. Take Florida out of the equation, and the takeup rate drops to 43%. 

In this post I'd like to flip the script: what if we make Florida the equation, rather than taking it out? Something in the state's marketplace is going relatively right, and has since the launch of the ACA marketplace.  In Florida, to the extent KFF's estimates of the uninsured are on target, 72% of subsidy-eligible people in the 100-138% FPL bracket are enrolled. That exceeds takeup at 100-138% FPL in the other 11 nonexpansion states tracked by KFF* by almost 30 percentage points. If those states attained Florida takeup rates, the ranks of the uninsured in this category would drop by over 700,000 -- about half of them in Texas (Figure 1).

In nonexpansion states, what percentage of near-poor adults (100-138% FPL) enroll in marketplace coverage?

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Update, 5/4/21: New data via the CMS state-level public use files for 2021 shows that enrollment at 100-138% FPL in nonexpansion states increased dramatically in 2021. See this post for an update.

In a brief estimating how many people remain in the "coverage gap" -- uninsured poor adults in states that have refused to enact the ACA Medicaid expansion -- the Kaiser Family Foundation also sheds a sidelight on a question I've been pondering.

It's this: In nonexpansion states, what percentage of those in the 100-138% FPL income bracket, who would be eligible for Medicaid had their states enacted the expansion, enroll in the marketplace coverage that's available on relatively favorable terms?

In expansion states, eligibility for marketplace subsidies begins at 138% FPL; people below that income level are eligible for Medicaid. In nonexpansion states, marketplace subsidy eligibility begins at 100% FPL. People with incomes in the 100-138% FPL income range, who "should" be in Medicaid, can purchase a benchmark silver plan with strong Cost Sharing Reduction for 2% of income, or a maximum of $29 per month at the high end. The actuarial value of silver at that income level is 94%; the average deductible is around $200, and the average annual out-of-pocket maximum is about $1100.

Where Medicaid enrollment growth may be concentrated

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I just stumbled on a little Medicaid factoid (ex-post, as always...) that made my eyes pop.  

As I've been noting for months, enrollment growth during the pandemic in the ACA Medicaid expansion population has been about double the rate of overall Medicaid enrollment growth -- about 30% for expansion population, February 2020 to February 2021, versus about 15% overall. 

The locus of rapid enrollment growth can perhaps be narrowed further. Arizona breaks out the ACA expansion population into two income categories: 0-100% FPL and 100-138% FPL. From April 2020 to April 2021, enrollment in the 0-100% FPL category increased by 21% from 133,514 to 204, 298.  In the 100-138% FPL category, enrollment increased by 94%, from 76,121 to 147,775.

ACA's emergency Special Enrollment Period most effective in states that have not expanded Medicaid

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CMS has released a report showing strong response in the first six weeks to the emergency Special Enrollment Period for the ACA marketplace that commenced on February 15. The emergency SEP, now extended to August 31, allows anyone who is uninsured to enroll in marketplace coverage, and allows current enrollees to change plans. From February 15 through March 31, 528,000 people enrolled via SEP this year, compared to 209,000 in 2020 and 171,000 in 2019.

The CMS report also highlights increased relative enrollment shares for black and lower income enrollees. In particular, the SEP is being accessed in large numbers by enrollees with incomes in the 100-138% FPL range -- that is, enrollees in states that have refused or not yet enacted the ACA Medicaid expansion who would be eligible for Medicaid had their states already embraced the expansion:

Among consumers requesting financial assistance, 41% have a household income between 100% and 138% of the federal poverty level, compared to 38% in 2020 and 33% in 2019.

The SEP continues a 2021 pattern: the pandemic, and government action to mitigate its financial impact, have boosted enrollment more in nonexpansion than in expansion states. In the Open Enrollment period for 2021, enrollment increased by 10% in nonexpansion states and was virtually flat in expansion states (up slightly in states that run their own exchanges, down slightly in expansion states that use HealthCare.gov).  

In the first six weeks of the emergency SEP, enrollment in expansion states using HealthCare.gov was up 95% over same-period SEP enrollment in 2020. In the nonexpansion states (all of which use HealthCare.gov), enrollment was up 176% year-over-year. Among the 36 states using HealthCare.gov in 2021, nonexpansion states accounted for 70% of SEP enrollment from Feb. 15--March 31 in 2020, and 77% this year.  

Here's the state-by-state breakout:

Is the U.S. uninsured rate at an all-time low?

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Enough states have reported Medicaid tallies through February to posit that the pandemic has increased enrollment by more than ten million nationally since February 2020. Adjusting for the usual difference* between CMS's official totals (now posted through November**) and my sample below (based on state monthly reports), year-over-year enrollment growth since February 2020 is likely about 14.8%, and total enrollment likely stands at about 81.7 million. A quarter of the U.S. population is enrolled in Medicaid.

I don't think we've fully fathomed the effect on access to health insurance of the pandemic, the battered and flawed but still functioning and funded ACA programs in place as the pandemic hit, and pandemic relief measures.  Consider...

The Families First Act effectively required states to pause Medicaid disenrollments for the duration of the Covid-19 emergency, and enrollment will continue to grow until that moratorium ends.***  Enrollment growth among those rendered eligible by the ACA Medicaid expansion is close to 30%. In the ACA marketplace, average monthly enrollment in 2021 will probably exceed 2019 enrollment by at least a million, perhaps more, spurred by extended Special Enrollment Periods and subsidies enhanced by the American Rescue Plan Act. As the population ages, Medicare enrollment grows by about 1.5 million yearly. Meanwhile, the huge job losses triggered by the pandemic appear to have had only a modest effect on employer-sponsored insurance: enrollment through September was down by just 2-3 million, according to a KFF estimate.

Will 60-64 year-olds have a choice between Medicare and Obamacare? What will that look like?

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I turned 62 recently. Yesterday, for the first time, I took seriously the possibility that my wife and I might be enrolled in Medicare before we turn 65.

According to the Wall Street Journal's Stephanie Amour and Kristina Peterson, the Democrats' next healthcare initiative, envisioned for spring 2022, is likely to contain

measures to reduce drug prices and expand health coverage, lawmakers said. Proposals to expand Medicare eligibility from age 65 to 60 and to enable the federal government to negotiate drug prices in the health program for seniors—both of which President Biden supported on the campaign trail—are also likely to be included.

I can think of a lot of reasons these measures -- paired so that the prescription drug savings will finance the expanded eligibility -- may not happen.  But the odds that they will be enacted are not negligible. Democrats' success holding together to pass the $1.9 trillion Covid relief package have made a lot of bold initiatives seem possible.

If Democrats do manage to drop the Medicare eligibility age, they are also likely to make permanent the major increases to premium subsidies in the ACA marketplace enacted through 2022 in the Covid relief bill, the American Rescue Plan Act. And the two initiatives could overlap -- or clash -- to some degree.

The possibility of passing all of the above raises questions: will Medicare be offered to 60-65 year-olds on the same terms as Medicare for people over age 65?  Will enrollment delayed past age 60 be penalized on the same terms as enrollment delayed past age 65 at present? If enrollment at 60-65 is optional, will those who lack access to employer-sponsored insurance also be eligible for subsidized ACA marketplace coverage? -- will they have a choice between the two programs?

If Medicare is indeed subsidized as heavily at ages 60-64 as at age 65 and over, and if enrollment is optional, and if the ARPA subsidy schedule for the ACA marketplace (or something close to it) becomes permanent, some 60-65 year-olds will have a tough choice to make between Medicare and marketplace coverage. 

Broadly speaking, those with incomes up to 200% of the Federal Poverty Level (FPL) will likely find lower costs in the marketplace -- if they're not dually eligible for Medicare and Medicaid. Those with incomes over 400% FPL will likely favor Medicare.  In between is a gray area, with tradeoffs that are charted and discussed below.

An American Rescue Plan benefit you'll have to wait for

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UPDATE: On April 9, the IRS solved the problem described, announcing that 2020 marketplace enrollees who received APTC do not have to file Form 8962. 

The Internal Revenue Service announced today that taxpayers with excess APTC for 2020 are not required to file Form 8962, Premium Tax Credit, or report an excess advance Premium Tax Credit repayment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they file.

Those who filed prior to the passage of the American Rescue Plan Act and paid back excess APTC do not have to file an amended return; the IRS will reimburse them.

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In addition to increasing premium subsidies for 2021 and 2022 in the ACA marketplace, the American Rescue Plan Act signed into law by President Biden on March 11 provides an important benefit to 2020 marketplace enrollees. Section 9662 of ARPA stipulates that those enrollees who underestimated their income and so would normally have to pay back some the Advanced Premium Tax Credits (APTC) received will not have to pay back the excess APTC. 

That includes people who estimated their incomes at below 400% of the Federal Poverty Level, the cap for APTC eligibility, but ended up with a declared income above that threshold. Normally, they would have to pay back all APTC received. This year, they owe nothing.

That is not a trivial benefit. According to IRS estimates,* in 2019 3.2 million tax filing households paid back a portion of the APTC they received in 2018, with paybacks totaling $4.4 billion, or about $1,375 per household.  Estimating 1.7 enrollees per filing household** suggests payback of about $800 per enrollee. Similarly, the CBO report*** on the costs of ARPA estimated that APTC forgiveness for 2020 (when total enrollment was nearly identical to that of 2018) would cost $4.7 billion in 2021. (See Charles Gaba's detailed analysis here.)

Should younger enrollees in the ACA marketplace be more heavily subsidized?

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Enrollment in the ACA marketplace skews old.  In 2020, only 26% of enrollees were in the 18-34 age range, while 28% were over age 55. That creates two problems: 1) a lot of uninsured young adults, and 2) a high-cost risk pool, which means higher costs for the federal government in premium subsidies.

The healthcare provisions in the American Rescue Plan (ARP) signed into law by President Biden on March 11 radically reduce the percentage of income paid by ACA marketplace enrollees for a benchmark silver plan (the second cheapest silver plan in each rating area). But the reductions are most stark at the bottom and top of the income scale, as the table below (from the CBO's February analysis of the legislation in progress) illustrates.

Enrollees with incomes ranging from 250% FPL up to, say, 600% FPL may still find premiums a heavy lift -- and younger adults are disproportionately likely to forego them. A bill introduced in the House by Florida Democrats Stephanie Murphy and Donna Shalala, HR 6545, the Health Insurance Marketplace Affordability Act, aims to entice younger adults into the marketplace by increasing subsidies for younger adults in inverse ratio to the increase in premiums as age rises. The bill will soon be reintroduced to mesh with the ARP.

Medicaid expansion enrollment grew nearly 30% year-over-year in 19-state sample

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Time for an update on Medicaid expansion enrollment growth since the pandemic struck. Below is a sampling of 19 expansion states through January of this year, and 14 states through February.

Maintaining the assumption, explained here, that relatively slow growth in California would push the national total down by about 2.5 percentage points, these tallies still point toward year-over-year enrollment growth pushing 30% from February 2020 to February 2021. If that's right, then Medicaid enrollment among those rendered eligible by ACA expansion criteria (adults with income up to 138% FPL) may exceed 19 million nationally and may be pushing 20 million.  That is, if this sampling of a bit more than a third of total expansion enrollment represents all expansion states more or less accurately, again accounting for slower growth in California.

The American Rescue Plan Act makes free coverage available to many below 100% FPL in nonexpansion states

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An odd provision  the American Rescue Plan Act that President Biden signed yesterday provides that anyone who receives any unemployment insurance income this year will be deemed to have income of no more than 133% of the Federal Poverty Level (FPL), qualifying them for a free silver plan in the ACA marketplace. 

Silver plans at that income come with the highest Cost Sharing Reduction (CSR), raising the plan's actuarial value to 94%, which translates to an average deductible of about $200 and an average cap on annual out-of-pocket costs of about $1100. The plan is free because ARPA zeroes out premiums for a benchmark silver plan at incomes up to 150% FPL.

When I first read about this provision, I thought that maybe it was intended in part as one more way to chip away at the "coverage gap" in the twelve remaining states that have refused to enact the ACA Medicaid expansion (rendered optional to states by the Supreme Court in 2012). In those states, eligibility for ACA marketplace subsidies begins at 100% FPL, and families with incomes below that threshold get no help obtaining coverage. The Kaiser Family Foundation estimates that about 2.2 million people in nonexpansion states (chief among them Texas, Florida, Georgia and North Carolina) are in the coverage gap.

In Memoriam: Jules B. Sprung

My father, Jules Sprung, died this past Saturday after a short hospital stay -- of kidney failure specifically, and old age generally. He was very frail, but alert and engaged until his very last days in the hospital. My mother has taken meticulous loving care of him as he very gradually lost the ability to take care of himself. 

We miss him dearly but are at peace with the conclusion of a life well lived. An obituary is below. Thanks to Dan Woog, author of the blog 06880, a chronicle of daily life in Westport, CT, for publishing a skillfully edited version.

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Jules B. Sprung, a resident of Westport with his wife Barbara since 1976, died on March 6 in Norwalk Hospital. The cause was kidney failure. He was 92.

Jules founded and ran two mail-order office supply companies, Hudson Pen, Inc. and Sarand, Inc., selling the latter in 1988 and working afterward as a marketing consultant. Sarand, based in New York City, employed dozens of people from the mid-seventies through the 1980s.

In his retirement, Jules taught swimming classes for children for many years at the Westport YMCA, where he was an honored presence at the pool until the pandemic curtailed operations in 2020.  He was also president of the Indian River Green condo complex on Saugatuck Road in Westport, where he and Barbara moved in 2002.

The ACA as it should have been -- sort of, for a while at least

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Strictly speaking, by my my lights, "the ACA as it should have been" would be "Medicare for all who want it": a public plan paying Medicare rates to providers, accepted by all providers who accept Medicare, with competing private plans paying similar rates to providers and probably offering somewhat more generous coverage as a tradeoff for limitations in provider choice. These plans would be available to all, including those with access to employer-sponsored insurance. Oh, and add an OOP cap -- a cap on annual out-of-pocket costs -- to the public plan -- as we should do for traditional Medicare.

In the political universe we're bound by, however, "the ACA as it should have been" denotes the ACA more or less as is, but with subsidies generous enough to make coverage in the ACA marketplace truly affordable to most Americans who lack access to other insurance -- excluding (always, alas) undocumented immigrants.  

And that is about to happen! -- temporarily at least -- when Biden signs the American Rescue Plan Act of 2021 later this week (see Section 9661).   It's an eye-rubbing moment for progressives who've dreamed fruitlessly for a decade of an Affordable Care Act offering affordable coverage to almost all comers.

The Kaiser Family Foundation is trying to tell us something

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The Kaiser Family Foundation is one of the most reliable and comprehensive source of healthcare data and analysis in the U.S. Its authority rests in part on maintaining an implicit policy neutrality, letting facts speak for themselves. But sometimes facts speak loudly, and that's the case with a remarkable brief detailing the extent to which the United States' failure to set payment rates for providers, or compel all payers to negotiate common rates, drives our out-of-control spending on healthcare, and our failure to provide affordable access to all.

The brief is an emperor-has-no-clothes declaration, aggregating facts well known to healthcare scholars and simply spotlighting the consequences of our collective failure -- unique among wealthy countries -- to curb the market (and political!) power of hospitals and doctors by forcing them to deal with all payers as a unit. It's a slingshot aimed at an industry Goliath preparing a nuclear arsenal of lobbying and propaganda against any initiative that aims to expand the footprint of government payment rates.

Does mandatory maximum silver loading require a risk adjustment fix?

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I want to address a somewhat technical issue concerning regulatory action to require that gold plans in the ACA marketplace be priced below silver plans -- that is, regulatory action on the state or federal level mandating maximal silver loading.

Gold plans should be priced below silver plans because silver plans --on average -- carry a higher actuarial value than gold plans. "Actuarial value" refers to the percentage of the average enrollee's costs covered by the plan, according to a formula created by CMS (that formula could use adjustment, but that's another story). Gold plans have an AV of 80%, plus or minus a few percentage points. Silver plans have a baseline AV of 70%, but that's only for enrollees with incomes above 250% of the Federal Poverty Level (FPL). Below that threshold a secondary subsidy, Cost Sharing Reduction (CSR), available only with silver plans, boosts AV to 73%, 87%, or 94%, rising as income falls.  Most silver plan enrollees obtain AV of 94% or 87%.

In Health Affairs: The Biden administration should complete the silver loading revolution

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The Covid relief legislation making its way through Congress would vastly increase premium subsidies in the ACA marketplace for two years but would not touch out-of-pocket costs. Premium subsidies would still be set against a silver benchmark -- that is, designed to make the second-cheapest silver plan "affordable." At incomes over 250% FPL, silver plans have deductibles averaging $4816.

In Health Affairs, David Anderson and I have a post positing that the Biden administration can complement the subsidy boosts by requiring insurers to price gold plans below silver plans. That is, by requiring full "silver loading."

In The American Prospect: My Take on Jonathan Cohn's The Ten Year War

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I have a review in The American Prospect of Jonathan's Cohn's inside-the-creators' heads chronicle of the ACA's embattled formation and enactment:

Jonathan Cohn, a leading contemporaneous chronicler of the ACA’s formation and enactment, and now author of The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage, is well aware of these shortcomings and faulty assumptions, as well as of the law’s resilience and partial success, such as reducing the uninsured population by about 35 to 40 percent. The book’s chief value, for me at least, lies in illuminating the creators’ perspectives at various crunch points in the law’s conception and enactment.

Cohn takes us back to a long time ago, in a galaxy far, far away, in which Democrats still hoped to win Republican support for major legislation...

The nuance with which Cohn captures the various players' assumptions and motives, and the pressures brought to bear on them, provides some real retroactive clarity, from what already feels like a substantial historical distance. I hope you'll read the review, which relies on substantial excerpts.