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.

----

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.

---

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.

Medicaid enrollment likely reaches 81 million in January

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Chart updated 3/3/21

This is an update to my recent post estimating total national Medicaid enrollment at upwards of 80 million through December, up from 71.2 million in February 2020, the last month before the pandemic struck the economy.

I've added December updates from four states -- including the big one, California -- to the sample, as well as adding Nebraska, which enacted the ACA Medicaid expansion beginning in October. As I forecast, continued relatively slow growth in California drops the full-sample rate of increase by about two and a half percentage points.  

As always, the official CMS tally for all states, currently stuck in September, is likely to show a somewhat smaller increase than my sample. For September, my sample showed an increase of 9.7% over February, while CMS currently shows a 9.4% increase in the same period.  Conservatively, then, I'll posit that CMS will show a 12.5% increase from February through December 2020, which would put national enrollment at 80.1 million.  (The sample consists of states for which I can find monthly enrollment reports.)[Update, 4/5/21: CMS's preliminary November total shows an increase of 11.6% since February, as I forecast on New  Year's Eve, compared to the 12.0% increase for the same period charted in my sample below.*]

Obama's assumptions about healthcare reform, in 2009 and today

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Jonathan Cohn today published an adapted excerpt from his book about the Affordable Care Act, The Ten Year War, coming out on Tuesday. The article's centerpiece is Obama's own assessment of what went right and wrong in the design, passage, and enactment of the ACA.  Of the ACA's basic design, which had become a consensus Democratic by the time Obama was elected, Cohn notes, "It was a far cry from the government-run insurance plan that Harry Truman once championed, but Democratic leaders embraced it as the best they could get..."

 ― and so did Obama, who repeated in our interview his belief that something like a government-run, “single-payer” system would probably work best, but creating one right away would be too difficult. 

“We have a legacy system that is one-sixth of the economy,” Obama said. “The idea that you could, in some way, dismantle that entire system ― or even transition it entirely ― to a single payer system looked politically impractical and probably really disruptive. ... The best chance to actually get people healthier was going to be to design a system that acknowledged 85% of the American people have health insurance and that plugged the gap for those 15% who don’t.”

Obama's neat foreclosure of other possibilities here reminds me of the technique deployed throughout his memoir, A Promised Land, of showcasing his undeniable rationality within a framework bound by self-imposed limits, or limits imposed by his choice of advisers, or -- sometimes -- by what was politically possible.  I see two fallacies here.

A public option by inches: Bennet and Kaine's Medicare-X

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This week Democratic Senators Michael Bennet (CO) and Tim Kaine (VA) introduced an updated version of their Medicare-X Choice Act, first introduced in 2017 and again in  2019 (summary here, bill here). The bill would introduce a strong public option into the ACA marketplace and small group markets, paying Medicare rates to providers in most markets, though up to 150% Medicare in rural markets. It would also improve subsidies at every income level on a schedule that's become the Democratic legislative default -- e.g., in the Coronavirus relief legislation. Enrollees would pay the following percentages of income for a benchmark silver plan:

Note that benchmark coverage is free at incomes up to 150% FPL (currently about $19k/year for an individual), and there is no income cap on subsidies: no one who lacks access to other insurance (e.g., an employer-sponsored plan) would pay more than 8.5% of income for benchmark silver. The 2019 version capped subsidies at 13% of income -- a measure of how far Democrats have come in adjusting their concept of affordability.

Compared to the healthcare reform plan Joe Biden introduced as a candidate in 2020, the bill has two major limitations. First, it does not offer subsidy eligibility to people who have access to other "affordable" insurance, including an offer of insurance from an employer with a premium below 9.5% of income. (The bill does fix the family glitch, offering subsidy eligibility to employees with families if the employer's family plan costs more than 9.5% of income.) It is not "Medicare for all who want it," notwithstanding presidential candidate Bennet's past claims to the contrary.  

Health Policy Valentines 2021: Institutional edition

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Americans don't have much faith in government, and it's hard to think of our society as one that's pulling together in the face of the pandemic and its revelation of our systemic inequities. But it's not all dysfunction, oligarchy, rising fascism and disregard for the common good.  And we do have a serious new bid from the Biden administration for good government.

This year's #healthpolicyvalentines are from various organs of government and other institutions to the American people.

From the Biden Coronavirus task force

Producing and dispensing fact
is our core Defense Production Act

From SCOTUS

Inseverable?
Did I hear Roberts scoff?
The vestigial mandate
will be cut off.

Obama's inside-out view of the public option

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I have been slowly working my way through Obama's memoir with a kind of wariness of being emotionally sucked in. Like all political memoirists, Obama presents himself as having made the best decisions he could given what he knew at the time. True, in the sense that his motives were good, his process was good, and his intellect is good. But still self-serving, and sometimes disingenuous.  

For all Obama's solicitation of a wide range of views, his narrative presents the predominance of certain views and voices as a given.  For example, regarding the size of the stimulus, Obama recounts this mid-December exchange:

Immediately after the election, examining the worsening data, we had raised the number to $500 billion. The team now recommended something even bigger. Christy mentioned a trillion dollars, causing Rahm to sputter like a cartoon character spitting out a bad meal. “There’s no fucking way,” Rahm said. Given the public’s anger over the hundreds of billions of dollars already spent on the bank bailout, he said, any number that began “with a t” would be a nonstarter with lots of Democrats, not to mention Republicans. I turned to Joe, who nodded in assent.

And that's it: political reality foreclosed, while Larry Summers foreclosed on the economic argument for more stimulus-- and Christine Romer's input is reduced to a "mention."  In Obama's telling, the stimulus his administration proposed was audaciously gargantuan by any current standard. 

Under Covid relief bill, no Obamacare enrollee should have coverage less than valuable than gold

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It's here! After five years in which progressives have dreamed of boosting the generosity of subsidies in the ACA marketplace, the framework for half the Covid relief bill released by the House Ways and Means yesterday would do so temporarily, for 2021 and 2022. The subsidy schedule is even more generous than that of the Affordable Care Enhancement Act passed by the House last June (and left to die in the Senate, natch). Here are the percentages of income required to purchase a benchmark (second cheapest) silver plan (Part 7, beginning on p. 83):

Keep in mind that Cost Sharing Reduction (CSR) raises the actuarial value of a silver plan from a baseline of 70% (which leaves very high out-of-pocket costs) to 94% at incomes up to 150% FPL (where it's free) and to 87% -- better than most employer-sponsored plans at incomes ranging from 150-200% FPL.  This radical change may happen fast, and be effective immediately. The implications are kind of dizzying. Three notes:

Raised minimum wage creates an imperative to improve ACA marketplace subsidies at low incomes

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David Dayen flags a paper by UC-Berkeley economist Michael Reich that finds a budget impact from raising the minimum wage (which should render eligible for the reconciliation bill). The paper

found $65.4 billion per year in savings, through a combination of increased tax revenues on higher wages and reduced federal expenditures on safety net programs due to eligibility thresholds. 

As Dayen points out, the federal savings are not in themselves something to cheer about:

Increased taxes on higher wages still put a worker out ahead, to be sure. But reductions in federal benefits could create a treadmill effect, with the government taking away what the private sector is forced to pay out. As $15 an hour isn’t really a living wage in much of the country, clawing back benefits isn’t a perfect scenario. 

One of the benefits that some people will earn themselves out of as the minimum wage rises is Medicaid. Eligibility for Medicaid as expanded by the ACA is offered to adults with incomes up to 138% of the Federal Poverty Level ($1,468 per month for an individual, $1,303/month for a family of four). To date, 38 states plus D.C. have enacted or will soon enact the expansion, with the last two of those, Oklahoma and Missouri, scheduled to expand eligibility in July of this year.)

Estimate: ACA Medicaid expansion enrollment may have grown 25% from February to December 2020

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As Covid-19 burned its swath through the U.S. in December, Medicaid enrollment in the ACA expansion category (adults with monthly incomes up to 138% of the Federal Poverty Level) continued the rapid growth that started with the pandemic.

Enrolment increased 2.7% from November in the 17 states for which I've been able to locate monthly expansion-category enrollment reported through December. In those 17 states, enrollment increased 27.6% from February 2020 -- the last month in which the economy was unaffected by the pandemic -- through December.

Medicaid enrollment likely near 80 million in December

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I am pretty confident that total Medicaid enrollment, which stood at 71.2 million in February 2020 according to CMS's adjusted total, is now in the neighborhood of 80 million.*

CMS's official tally through September shows a 9.4% increase from February. My tally below, based on monthly enrollment reports in 33 states, shows a 9.7% increase from February through September, 11.8% through November, and a likely further 1% increase in December (California will as usual drag the all-state percentage increase down a bit). A 12.4% increase from February through December would suggest 80 million total enrollees -- pretty close to a quarter of the U.S. population.

ACA marketplace coverage can be as generous as the Biden administration wants it to be

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A core Democratic party campaign promise was to "build on" the Affordable Care Act -- which at a minimum means making coverage obtained in the ACA marketplace far more affordable.  The party now has the narrowest possible majority in the Senate, along with a narrowed majority in the House, and the presidency.  To what extent will they deliver, and by what means?

As noted in the last two posts, the current mainstream Democratic proposal, as expressed in the Affordable Care Enhancement Act that passed the House last June, includes generous boosts to ACA marketplace subsidies at every income level, capping premiums for a benchmark silver plan at a maximum of 8.5% of income, no matter how high the income. Those "enhancements" may well get watered down in legislation that must pass via reconciliation with zero defections from the most conservative party members. 

Whether in place of or to complement legislation, the Biden administration can take regulatory action on multiple fronts that would have a major impact on the coverage that marketplace enrollees get for their money. Stan Dorn and Frederick Isasi of Families USA recently proposed some half-dozen regulatory measures to improve affordability, along with other steps to streamline enrollment and expand eligibility. 

Here I want to focus on one arcane-sounding proposal, described briefly in the Families USA package, that could radically (or not so radically) increase the value of coverage at each of the ACA's metal levels.  Those levels are set by "actuarial value" (AV), the percentage of the average enrollee's yearly costs that a plan is designed to cover, as determined by a formula promulgated by a division of CMS.  By statute, plans in the ACA marketplace conform (with some wiggle room) to four AV levels: bronze (60% AV), silver (70% AV), gold (80% AV) and platinum (90% AV).

Revaluing AV

The regulatory action in question, conceived by health insurance professional Gabriel McGlamery and healthcare policy researcher David Anderson, is to change the basis by which the AV of plans at the ACA metal levels is calculated by excluding enrollees with predictably high costs from the calculation. Doing so would raise effective AV at each metal level.  

ACA Hunger Games, Part II

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I'd like to revisit the "hunger games" scenario for legislation to improve the ACA posited in the last post. In brief: assume that Democrats, forced to accommodate their most conservative members to get all 51 of their Senate votes on board for any legislation passed through reconciliation, pare back the broad expansion of premium subsidies for ACA marketplace coverage they've proposed elsewhere -- e.g., in candidate Biden's health care plan and in the House-passed Affordable Care Enhancement Act of 2020 (ACEA). If forced to scale back, should they:

a. Concentrate on the currently unsubsidized, for whom coverage is often truly unaffordable, capping premiums for a benchmark plan as a percentage of income (e.g., 8.5% as in the ACEA, but probably higher)?

b. Concentrate on lower incomes, where takeup among the subsidy-eligible has been poor? (See the last post for the ACEA subsidy scale and how it compares to current law.)

c. Spread whatever enhanced subsidy money they can muster across all income groups?

If Democrats get skimpy with ACA enhancement, who should get half a loaf?

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With a 50-50 Senate under Democratic control, how far will the Democrats go in rendering health insurance more affordable for those who currently find it unaffordable?

The Affordable Care Enhancement Act passed by the Democratic House last June would reduce the percentage of income paid for a benchmark silver plan in the ACA marketplace at every income level -- and remove the income cap on subsidy eligibility, currently 400% of the Federal Poverty Level ($51,040 for an individual, $104,800 for a family of four). Premiums for a benchmark silver plan would range from $0 (at incomes up to 150% FPL) to 8.5% of income. Here's the scale established by the bill:

The 117th Congress should end Medicaid Estate Recovery for the ACA Medicaid expansion population

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n.b. 4/7/21: see update from 2021 MACPAC report at bottom

Democrats have big plans on the healthcare front, only some of which they're likely to push through Congress with a threadbare Senate majority. Look for some sweetening of ACA marketplace subsidies and meaningful action to contain prescription drug prices. 

First, though, some housekeeping. The first healthcare bill advanced in the 117th Congress will likely render moot Texas v. California,  the suit now before the Supreme Court seeking to have the ACA declared unconstitutional. A single sentence, either restoring an individual mandate penalty of $1 or repealing the mandate and declaring in severable from the rest of the ACA, should suffice.

For their second act, Democrats should take up a bill introduced just last month by Rep. Steve King (R). Yes, that Steve King, ex of Iowa's 4th District, the notorious racist who was defeated in a primary last June and is no longer in the House.

Balance billing arbitration tilts toward providers in New Jersey -- less so in new federal law

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 A study published in Health Affairs by Benjamin Chartock, Loren Adler et al. finds that the arbitration of out-of-network bills established by New Jersey's balance billing protection law has yielded extraordinarily high payments to providers:

Arbitration awards were considerably higher than typical in-network payment amounts  Compared with the HCCI data, we found that the mean and median arbitration awards were 9.0 and 5.7 times higher, respectively, than the median in-network price for the same set of services, with 31 percent of cases decided for amounts more than ten times the median in network price (exhibit 1). Because commercial insurers tend to pay more than Medicare, the contrast is even starker with Medicare rates. The mean and median arbitration awards were 12.8 and 8.5 times Medicare prices, respectively, with 45 percent of cases awarded at amounts more than 10 times what Medicare would have paid (exhibit 2). In both comparisons, the large divergence between the relative mean and median awards primarily stemmed from the skewness of arbitrated payment amounts  

The New Jersey law mandates "baseball" arbitration, in which arbitrators must rule in favor of one of the two competing bids, rather than than splitting the difference. The study authors note that arbitration awards in New Jersey track pretty closely with the 80th percentile of billed charges -- which are many times higher than in-network rates:

At the New Year, pause to celebrate Medicaid

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Let's ring out 2020 with a final tracking of Medicaid enrollment during the pandemic.

In this 33-state sample, based on state monthly reports, Medicaid enrollment increased 11.1% from February through October, and an estimated 12.1%* from February through November. 

Since the increase reported in CMS's official tallies, currently running through a preliminary August report, generally show about a half percentage point slower growth** than my more up-to-date tally (8.3% vs. 8.8% for August), I imagine that CMS will show an increase of about 11.6%, February through November. That would mean 79.4 million people enrolled through November, an increase of about 8.25 million since February. [Update, 4/5/21: CMS's preliminary November total does indeed show an increase of 11.6% since February.]

The ACA as pandemic safety net

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In the New York Times Upshot, Margot Sanger-Katz, Sarah Kliff and Quocktrung Bui report that the health insurance safety net as bolstered by the ACA, patchy though it is, appears to have held the uninsured rate close to steady during the pandemic months. In brief: Medicaid enrollment in the ACA expansion category is up more than 20% since February; ACA marketplace enrollment in 36 HealthCare.gov states is up 6.6% for 2021, and losses of employer-sponsored health insurance appear relatively modest.

I have been tracking these developments as they unfold. Some of the posts below corroborate the core findings cited in Upshot, and some supplement those findings. In reverse chronological order:

• ACA marketplace enrollment was already up by more than 6% year-over-year by June 2020. 

• Medicaid enrollment among those rendered eligible by the ACA Medicaid expansion is up more than 20% since February and likely exceeds 18 million.

• In states that have so far refused to enact the ACA Medicaid expansion, the ACA marketplace has picked up some slack: in nonexpansion states, marketplace enrollment is up 10% in 2021.

In response to the pandemic, ACA marketplace enrollment was likely up 6 percent-plus by June 2020, year-over-year

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See June 2021 update below the first chart.

CMS has released average monthly effectuated enrollment in the ACA marketplace for the first half of 2020. Combined with updated data about enrollment from February through May 2020 via the Special Enrollment Periods (SEPs) granted to people who lose access to other insurance or undergo other "life changes" outside the annual Open Enrollment period, the new data offers some measure of the extent to which Americans turned to the marketplace in response to loss of employer coverage triggered by the pandemic.

While total enrollments as of the end of Open Enrollment* were nearly identical in 2019 and 2020 (total plan selections down by 0.03%), average monthly enrollment through June (10,543,098) was up 3.4% in 2020 compared to June 2019 (10,194,206).

The average monthly enrollment comparison probably understates the impact of increased enrollment via SEP and improved retention during the pandemic months. The averages include monthly totals for January through March, when the pandemic's effects were zero to minimal. In June 2019,** effectuated enrollment was 9,797,989, 7.4% below the total for February 2019. We don't yet have a comparable figure for June 2020: it will be included in the effectuated enrollment snapshot for February 2021, which probably won't drop until this summer. But the year-over-year increase as of June 2020 was almost certainly well above the 3.4% half-year increase in average enrollment, and the increase likely continued to grow throughout 2020.

At pandemic's peak, Medicaid expansion enrollment is keeping pace

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Deep into fall and a resurgent pandemic, Medicaid enrollment growth among those rendered eligible by the ACA expansion (adults with incomes up to 138% FPL, or $1,468/month for an individual) shows no sign of abating. 

In the 18-state sample below, representing about 36% of the "expansion" population in the 37 states (including D.C.) that have have enacted the ACA expansion thus far, enrollment in this category increased 22.1% from February through October. In fourteen states that have reported through November, enrollment is up 24.7% since October. Month-to-month, enrollment increased 2.2% from September to October (18 states) and 2.3% October to November (14 states). 

Pandemic Medicaid Expansion Enrollment in 18 States

February through November

ACA marketplace enrollment up 10% in states that haven't expanded Medicaid

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CMS has reported* preliminary final 2021 enrollment figures in the ACA marketplace for the 36 states using the federal exchange, HealthCare.gov. In this pandemic year, enrollment in those states is up 6.6% compared to 2020 -- the first year of enrollment increase as of the end of Open Enrollment** since 2016.

Of course, enrollment increase is not uniform across those states -- every state market is different. Charles Gaba has helpfully broken out the 2020 vs. 2021 totals by state, and kindly lent me his charts. From the state totals one obvious pattern leaps out: enrollment is up 9.7% in states that have not enacted the ACA Medicaid expansion -- and down 0.5% in states that have expanded the expansion (including Nebraska, which opened the Medicaid expansion doors in October of this year). Below is Charles' chart broken out by expansion/nonexpansion.

ACA marketplace enrollment 2020 vs. 2021: Non-expansion states using HealthCare.gov 

NJ legislature rushing to enable de facto for-profit conversion of Horizon Blue Cross Blue Shield

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After 25 years of trying, Horizon Blue Cross Blue Shield of New Jersey, which provides health insurance to more than a third of the state's residents, is on the brink of pushing through the legislature a bill (S3218/A5119) enabling de facto for-profit conversion, or at least a stepping stone to such conversion. The bill has passed through key committees and is scheduled for a floor vote tomorrow (Dec. 17).

The complex bill, obviously written by Horizon executives, reorganizes the current nonprofit established by statute as a nonprofit -- but not charitable -- mutual holding company, with the insurer becoming a for-profit subsidiary, and the holding company empowered to create more for-profit subsidiaries, all of which can sell stock to investors. Horizon would pay $600 million up front to the state as compensation for a favorable change in its tax status, with a dubious commitment to contribute another $650 billion over nearly two decades, dependent on its degree of profitability. That money will go into the state's general fund -- not into a health foundation as in other states that have authorized conversion. Horizon has an estimated $7 billion in assets that as of now belong by statute to the people of New Jersey.

The state's dominant Democratic party is behind this legislation -- whether because of Horizon's powerful position in the state, credence lent to the company's happy talk about investment in new technologies and its existing charitable programs, or desperation for cash in the wake of the pandemic's devastation. 

The Trumping of the American Mind: Michelle Goldberg vs. Corey Robin

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Probably no one understands American conservatism and the European conservatism it grew out of better than Corey Robin, author of The Reactionary Mind: Conservatism from Edmund Burke to Sarah Palin. Goodreads summarizes:

Tracing conservatism back to its roots in the reaction against the French Revolution, Robin argues that the right is fundamentally inspired by a hostility to emancipating the lower orders. Some conservatives endorse the free market, others oppose it. Some criticize the state, others celebrate it. Underlying these differences is the impulse to defend power and privilege against movements demanding freedom and equality.

When it comes to Trump, however, Robin seems to be a classic case of a scholar blinkered by his own knowledge. In an interview with David Klion, he said:

As long as no one is thrown off Medicaid, will enrollment keep growing by 1% per month?

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I am beginning to wonder. I gather that no one has a precise idea what percentage of Medicaid enrollees are disenrolled every month by state income checks and eligibility redeterminations. The Families First Act paused those disenrollments for the duration of the national emergency -- as of now, through the end of March -- though a new interim final rule issued by Seema Verma's CMS appears to give states a green light to deem some past enrollments "invalid" and void them.

Of course, people continue to disenroll from Medicaid -- when they get a job with affordable insurance, or marry someone with insurance, or move, or age into Medicare (at which point the income thresholds for Medicaid drop in most states), or age out of CHIP, or die...etc. etc. It also seems clear that with 5 million more unemployed in November than in February, despite a snap-back from 14 million newly unemployed at the May peak, demand for Medicaid has grown.

At the same time, the Kaiser Family Foundation recently found that the ranks of those insured through employers have decreased only modestly (-1.5%) in the pandemic. Medicaid enrollment, meanwhile, has continued to grow by 1% per month or more in recent months -- at least by my compilation of state monthly enrollment reports, which shows somewhat more growth that CMS's time-lagged official monthly tally.* Certainly a significant portion, and possibly a very large portion of the enrollment growth is a result of the pause in disenrollments.

From those wonderful folks who brought you ACA nullification....

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Does the rogue's gallery of state attorneys general asking the Supreme Court to end American democracy by overturning presidential election results in Georgia, Michigan, Wisconsin and Pennsylvania look familiar? Here are the states that joined an amicus brief in support of the suit filed by indicted Texas attorney general Ken Paxton alleging that all of those states' certified election results are the product of massive but utterly undocumented fraud:

All of these states except Oklahoma and Montana* are plaintiffs in California v. Texas, the suit arguing that when the Republican Congress zeroed out the ACA individual mandate penalty in December 2017, they rendered the entire sprawling law unconstitutional, either by accident or by stealth.

Insured Americans' MOOP exposure rises relentlessly

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After premium increases exceeding 20% roiled the ACA marketplace in 2017 and 2018, premiums have been essentially flat for three years. That's good news for unsubsidized enrollees, who left the market in droves in 2017-18. The flat premiums reflect a stable market, to which insurers have been returning.

Premiums are only half of the affordability equation, however. For those who require substantial medical care, out-of-pocket costs can loom even larger. And these costs have been rising relentlessly, reflecting the degree to which medical inflation continues to outpace overall inflation, particularly in private insurance.

While deductibles are the most familiar proxy for out-of-pocket costs, the ACA's statutory annual out-of-pocket maximum (MOOP) is an at least equally important measure. The MOOP represents an enrollee's total exposure in a healthcare system in which a short hospital stay will likely hit the cap. The MOOP, moreover, applies to employer-sponsored insurance as well. Every year, the Center for Medicare and Medicaid Services (CMS) resets the highest allowable MOOP.

The MOOP cap has been rising relentlessly since the inception of the ACA marketplace, from $6,300 for an individual in 2014 to a proposed $9,100 in 2022 - a 44% increase over 9 years. (MOOP for a couple or family is double the individual amount.). The yearly increase is calculated to reflect the average increase in commercial market premiums, which in turn presumably reflects the cost of care paid for by commercial plans. For comparison, median household income increased 16% from 2014 to 2020; the maximum allowable MOOP increased 29% in that span.