Fewer Americans qualify for ACA marketplace subsidies

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Regardless of whether ACA marketplace enrollment for 2020 is lagging 2019 totals, one persistent marketplace headwind that should get more attention is the long economic recovery. In an article by Bloomberg's Sara Hansard, Andrew Strohman of the American Action Forum puts one finger to this wind:

Unemployment is now about 3.6%, compared with 4% in January. “You could see some more people taking up employer-sponsored insurance rather than enrolling in the individual market,” Strohman said.

Regardless of whether more people are in jobs that offer affordable insurance, the population with incomes in ACA subsidy range (100-400% of the Federal Poverty Level in states that have refused the Medicaid expansion, 138-400% FPL in states that have implemented it) has shrunk since the ACA marketplace launched in 2014. At the same time, the population with incomes above 400% FPL (and so ineligible for ACA subsidies) has swelled.

Just how poor is ACA marketplace takeup?

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If you hadn't looked at the Kaiser Family Foundation's Marketplace Enrollment as a Share of the Potential Population for a while, or the variant for subsidy-eligible enrollment, you would get the impression that the takeup of marketplace offerings has fallen sharply.

That's true, among the unsubsidized, who accounted for 42% of marketplace enrollment in 2016 vs. just 27% this year (see Figure 3 here).  And the picture has never been pretty. But marketplace failure is not as dire as these charts might lead you to believe. And the apparent falloff in enrollment takeup among the subsidy-eligible is an illusion, born of changing methodology and snapshots of different points in the yearly enrollment cycle.

The Kaiser charts that were live through 2017 (and maybe later) reflected enrollment as of March 31, 2016, i.e. after CMS's first-quarter effectuated enrollment snapshot for that year, at which point 87% of those who had selected plans as of the end of Open Enrollment had effectuated (and maintained) coverage. Reported takeup among the population estimated to be eligible for subsidies was 64%. Takeup among all who were eligible for marketplace coverage (i.e., lacking access to employer coverage or public programs like Medicaid and Medicare) was estimated at 40%.  In the current charts, based on enrollment in December 2018, takeup among the subsidy-eligible is estimated at 46%, and among all who might buy marketplace plans at 34%. 

Yow. But...

The Kaiser Family Foundation is shaping (or showing the shape of) our healthcare debate

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There is a subtext to Abby Goodnough's excellent overview of voters' preference for a public option or Medicare buy-in over Medicare for All:  the extent to which the Kaiser Family Foundation and its tracking poll of voters' healthcare concerns and perceptions are shaping the debate.

Voters cited in Goodnough's piece reflect the concerns about M4A flagged in Kaiser polls:

About two-thirds of voters like the idea of a public option or Medicare buy-in, according to several recent national polls. This month, the Kaiser Family Foundation tracking poll, which has asked voters about the plan four times since July, found that 65 percent of the public favors the idea, compared with 53 percent who support “Medicare for all.” Large majorities of Democrats and independents favored a public option in Kaiser’s November poll, as did 41 percent of Republicans — roughly the same level as earlier Kaiser polls found but down from an unusual spike of 58 percent in October....

In Health Affairs: Silver loading goes into reverse, cont.

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A Health Affairs blog post by David Anderson, me, and Coleman Drake probes the likely impact of reduced silver loading effects in the ACA marketplace this year. In brief, there are fewer counties nationwide where plans below the benchmark are free to many enrollees, and fewer counties where gold plans cost less than benchmark silver. 

One profound impact may be where potential spreads are narrowest: between benchmark silver and the cheapest silver plan in each region.

The reduced silver spread, while small in dollars, may have a profound impact. At incomes up to 200 percent of poverty, the value of CSR—a free added benefit—exceeds the value of most bronze and gold plan discounts generated by silver loading. Accordingly, enrollees with incomes in the 100–200 percent of poverty range—56 percent of all enrollees in HealthCare.gov states in 2019—have mostly stuck to silver plans: According to Aron-Dine, 84 percent of enrollees in this income bracket selected silver in 2019, down slightly from 87 percent in 2017. In that same period, enrollees with incomes in the 200–400 percent of poverty range, for whom CSR is unavailable or negligible, took broad advantage of discounts in bronze and gold plans, reducing their silver selection from 60 percent in 2017 to 35 percent in 2019.

Another Hanukkah miracle due in Week 7 of ACA Open Enrollment for 2020?

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Last year, enrollment in the ACA marketplace in the 39 states using HealthCare.gov trailed the prior-year enrollment pretty dramatically in each of CMS's "weekly enrollment snapshots."  By the end of Week 6, enrollment was at 88.3% of the total at the same point in December 2017.  Then lo, at the end of Week 7 the gap had shrunk from 12% to 4%.  What caused the late surge?

The surge was illusory. Week 1 was a day short last year. That was no mystery, and trackers accounted for it, noting that first-week enrollments stood at about 125,000 per day. What was not fully accounted for in advance was that the extra day made up in Week 7, which had seven enrollment days last year vs. just six in 2017, carried a lot more weight than the shorted November day, as enrollment is much heavier at the end of the season. As I noted at the time:

Hey blue states: How about offering a public option off-exchange only?

Louise Norris, clearest of expositors, has some mildly ambiguous wording here that set off a lightbulb:

Colorado enacted legislation in 2019 that directed the state to explore ways to create a public option health insurance program that could offer a lower-cost alternative for people who buy their own health insurance.

Eureka: Why doesn't a state offer a public option off-exchange only? That would solve the dilemma caused by the ACA's underfunded subsidies: measures that reduce ACA marketplace premiums for unsubsidized  buyers tend to raise them for subsidized buyers.  (Colorado is not moving toward this option.) N.B. in most states, ACA-compliant plans are offered off-exchange as well as on-exchange. This public option would be ACA compliant.

I almost got snared in the short-term health insurance market

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Sarah Gantz, a Philadelphia Inquirer reporter, has done some great work spotlighting people who were snared by sales pitches for short-term health plans that left them with huge bills when they got seriously ill or injured. Her latest concerns a woman who got stuck with a $36,000 bill when her fixed indemnity plan covered only a small fraction of the tab for surgery after she broke her wrist and back (!) -- (the latter doesn't seem to have caused lasting damage):

Martin thought she’d bought a comprehensive health insurance plan through the government-regulated Affordable Care Act marketplace, healthcare.gov. But she really visited a website cunningly crafted to look like an ACA portal, which put her in contact by phone with a salesman. He sold her plan that turned out to offer only minimal coverage, and when Martin needed help, his number was disconnected.

The larger point is that since the Trump administration changed the rules to enable so called short-term, limited duration (STLD) plans to extend plan terms to up to a year, and touted them as a cheap alternative to ACA-compliant plans, deceptive marketing for such plans has exploded. Robocalls, websites meant to snare people seeking HealthCare.gov (with help from Google ads), and hard-sell-quick-sell phone techniques are well chronicled by Gantz.

Louise Norris, a broker of individual market insurance who puts her clients' interests first (and has compiled a virtual encyclopedia on the subject at healthinsurance.org), acknowledges that there is a role for STLD plans, and that not all of them are terrible. But the market is honeycombed with coverage traps.  In fact, Louise helped me, and someone I was helping, avoid perhaps the subtlest of snares in the STLD market.

Elizabeth Warren crosses a rhetorical Rubicon

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For almost two years, I have complained at intervals that Elizabeth Warren is faking it on healthcare --- that is, blaming U.S. healthcare dysfunction entirely on the rapine of health insurers and pharma, while giving healthcare providers a pass.

In presenting her plan to finance Bernie-brand Medicare for All, Warren leads with this rhetorical reflex but then, finally, departs from it. She has to, as the plan's viability depends on cutting off providers' most lucrative revenue sources.

Warren's first rhetorical strike in this manifesto is against the usual suspects:

Elizabeth Warren's healthcare two-step

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I owe a debt of gratitude to a Jacobin writer, Tim Higginbotham, who lambastes Elizabeth Warren for a) going into what he regards as unproductive detail about the financing of Medicare for All and b) signaling that she doesn't intend to enact M4A any time soon.

It's the latter that interests me. It solves something of a riddle. And unlike Higginbotham, I approve of this message. I think there may be a kind of deep realism in it, not severable from real commitment to major structural change.

Higginbotham notes that Warren's pay-fors depend in part on enacting other major legislation, and that her language accordingly projects Medicare for All into an..eventuality:

Warren’s remaining financing methods bring us to the biggest problem with her plan: its clear lack of urgency. Warren argues that her plan for comprehensive immigration reform could free up $400 billion toward Medicare for All over ten years, while cutting the dangerous military slush fund will free up another $798 billion.

On their own these are important goals, but using major political fights like these to cobble together funding for Medicare for All is a fairly good tell that Warren’s plan is not designed to be implemented anytime soon. This is further evidenced by the language in Warren’s Medium post about her plan: she describes Medicare for All as a “long-term” goal seven times, while couching the rest of the post in similar language (such as saying she wants to move to a Medicare for All system “eventually”).

That's absolutely right. And in fact, near the end of her Medium piece introducing her M4A funding plan, Warren makes it explicit that she won't be fighting to enact BernieCare from day 1, 2021:

Of course, moving to this kind of system will not be easy and will not happen overnight. This is why every serious proposal for Medicare for All contemplates a significant transition period.

How would a 20% drop in base ACA marketplace premiums affect enrollment?

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My last post delved into the paradox of reinsurance in the ACA marketplace: lower base premiums tend to produce higher premiums for subsidized buyers who select plans that cost less than the benchmark (second cheapest silver) plan. Lower premiums also tend to reduce bronze plan discounts generated by silver loading* -- though potentially increasing gold plan discounts.

Just how much do premiums reductions reduce discounts in below-benchmark plans? The effects can be sampled with reference to the average premium nationwide for the lowest cost plan (LCP) at each metal level in 2020, courtesy of the Kaiser Family Foundation.

Below, I compare net-of-subsidy premiums for those averages to net-of-subsidy premiums when those base premiums are cut by 20%. That's the average reduction effected by the seven state reinsurance programs already in operation, according to Avalere. The 20% reduction is compared to what premiums would have been absent the reinsurance, not what they were in the previous year.  In New Jersey, for example, reinsurance cut premiums by 15% in 2019, and a state individual mandate by an additional 7% -- but premiums were 9% below 2018 levels. Still, let's stick with 20% to make the effect easily visible.

Should states pursue reinsurance for their ACA marketplaces?

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While sabotaging the ACA marketplace on multiple fronts, the Trump administration has from the beginning supported one means of keeping premiums down: encouraging states to submit waiver proposals seeking federal funding for reinsurance programs.

These programs partially reimburse insurers for costs incurred by individual enrollees that cross a certain threshold. In New Jersey for example, the program pays 60% of an enrollee's costs exceeding $40,000 per year, up to a threshold of $250,000. To date, CMS has approved 12 state reinsurance waiver proposals, 7 of them implemented by 2019.

The ACA marketplace began life with a national federally funded reinsurance program, but it sunset after three years (2014-2016). Not coincidentally, premiums nationwide rose by about 25% in that year -- a year of correction, in which insurers also recognized that they had significantly underpriced coverage in the ACA's first three years. They recovered profitability in 2017.

By reducing premiums, reinsurance also reduces premium subsidies. Trump's HHS has proved willing to pass much of the savings through to the states, providing tens-to-hundreds of millions of dollars annually to the approved programs.

The case against reinsurance

Some progressives, however, have concluded that reinsurance is a poor use of state resources. The ACA benefit structure subjects these programs to a Catch-22: Reducing base premiums tends to raise premiums for subsidized enrollees.

Looks like New Jersey's reinsurance trade-off paid off

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New Jersey's Department of Banking and Insurance has published second quarter enrollment numbers for the state's individual market for health insurance. Some upside surprises:

New Jersey Individual Market Enrollment, Second Quarter 2018 to Second Quarter 2019

Venue	Q2 2019	Q2 2018	# change	% change
On-exchange	220,217	222,696	(2,479)	-1.1%
Off-exchange	92,798	85,361	7,437	+8.7%
Total	313,015	308,057	4,958	+1.6%

• Off-exchange enrollment is up from the first quarter -- unusual, because anyone enrolling after December 15, 2018 would have to qualify for a Special Enrollment Period. In Q1, off-exchange enrollment was up 2.98% year-over-year. In Q2, it's up 8.7% over Q2  2018, to 92,798. 


• On-exchange enrollment, which was down a disappointing 7.1% as of the end of Open Enrollment, has had much lighter attrition than in previous years. It's down just 1.6% since Q1, compared to an average Q1-to-Q2 drop of  6.8% in the three previous years. Accordingly, it's down just 1.1% from Q2 2018.


• Total individual market enrollment is up 1.6% compared to Q2 2018.  That's all in ACA-compliant plans, as New Jersey bans the lightly regulated, medically underwritten short-term plans promoted by the Trump administration.

New Jersey's 2019 experience is something of a case study for what you might call the reinsurance tradeoff.

Silver loading 2020 update: The sky isn't falling

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Last week I noted that the discounts for subsidized ACA marketplace enrollees generated by silver loading (see explanation at bottom)* are likely to be somewhat reduced in 2020, given that a) average unsubsidized premiums are down 3-4%, b) and average premiums for the benchmark silver plan are down more sharply (-4%) than average premiums for the cheapest plan at each metal level (-3%).

Let's see how price spreads and discounts at each metal level have changed in the counties with the highest marketplace enrollment nationwide. Together, these 9 counties hold 16% of all on-exchange ACA marketplace enrollment.

Oscar throws a wild card into the 2020 ACA marketplace

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Re the premise of my prior post -- that discounts in bronze and gold plans will be weaker in the 2020 ACA marketplace:  I've stumbled on a wild card, and it's pretty wild. Let's start where we did yesterday:

CMS has published ACA marketplace premiums for 2020.  The top-line news is that premiums have dropped 3-4%.  The key point for subsidized enrollees (69% of the ACA-compliant market) is that silver loading has gone into reverse -- and consequently there will be fewer discounted plans available. That's because benchmark silver plan premiums -- the second-cheapest silver plan in each market, which determines subsidy size -- have dropped more sharply (-4%)  than average premiums for the cheapest plan at each metal level (-3%).

Okay, so discounts stemming from silver loading* may be reduced on average, and in particular, discounts in cheapest silver may be the most impaired. Now for the wild card: Oscar is offering a $0 deductible bronze plan in Florida and Texas (and maybe elsewhere, but those two states account for a quarter of all ACA marketplace enrollment). In Miami, for a 40 year-old at an income of $17,300 -- about 140% FPL -- it's zero premium too; at $24,900 income (just below 200% FPL) it's $79/month.

Silver loading goes into reverse in 2020

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CMS has published ACA marketplace premiums for 2020.  The top-line news is that premiums have dropped 3-4%.  The key point for subsidized enrollees (69% of the ACA-compliant market) is that silver loading has gone into reverse -- and consequently there will be fewer discounted plans available. That's because benchmark silver plan premiums -- the second-cheapest silver plan in each market, which determines subsidy size -- have dropped more sharply (-4%)  than average premiums for the cheapest plan at each metal level (-3%).

Silver loading, recall, is the byproduct of Trump's October 2017 cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are required to provide to low income marketplace enrollees who select silver plans. Faced with the cutoff at the brink of open enrollment for 2018, most state insurance departments allowed or encouraged insurers to price CSR into silver premiums only. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans.

What is Elizabeth Warren cooking up?

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Quick, what's the difference in the way the Des Moines Register and the New York Times quoted Elizabeth Warren's recent I'll-have-a-plan promise?

Des Moines:

"Right now, the cost estimates on Medicare for All vary by trillions and trillions of dollars. And the different revenue streams for how to fund it — there are a lot of them," she said to a crowd of about 475 at Simpson College. "So this is something I’ve been working on for months and months and it’s got just a little more work until it's finished."

New York:

“I plan over the next few weeks to put out a plan that talks about, specifically, the cost of Medicare for all and, specifically, how we pay for it,” she told the crowd at the event, held at Simpson College.

On Trump's fight to uninsure people

Up now on healthinsurance.org:
Courts resist Trump's assault on benefits for immigrants and the poor - so far

Rule of law, for now

It is contingently heartening that Trump administration's most egregious and damaging attempts to restrict government-supported access to healthcare for immigrants and low income people have so far been slapped down by the courts.  That is, Medicaid work requirements in Kentucky and Arkansas, and the public charge rule, stayed nationally for now.

The counterpoints are many: these stays were all imposed by Clinton and Obama appointees; the Supreme Court could overturn all; the stayed public charge rule is still having a chilling effect, inducing immigrants to forgo vital services for their children as well as themselves; and an ideologically blinkered 5th Circuit may be on the brink of striking down or impairing the ACA - in which case its fate may depend on aged liberal justices surviving through next June.  Our institutional resilience is the sound of one hand clapping.

I have a post in progress for healthinsurance.org to this effect -- this one's a placeholder.  [update, 10/22: here it is].

Privatizing Medicare: Paul Ryan's soul goes marching on

ICYM the prior post on Trump's executive order aiming to advance the privatization of Medicare on multiple fronts, I've had the chance to refine it twice, on BlueWaveNJ and at medicareresources.org (hence the blogging drought here).

The short version (from the medicareresources.org post):

Issued on October 3, Trump’s order instructs the Secretary of Health and Human Services (HHS) to take steps aiming to

• “Voucherize” Medicare in the manner proposed by Paul Ryan – that is, let private Medicare Advantage plans set prices for traditional Medicare, rather than vice versa as at present.

• Create a private insurance market outside of Medicare for wealthy seniors that would likely lure doctors away from participation in Medicare.

• Subject Medicare enrollees to the joys of “balance billing” – getting billed by providers for amount in excess of their normal share of the Medicare bill.

Trump's bid to destroy Medicare

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It's clear that Trump is working to destroy U.S. democracy -- selling U.S. aid and favors to countries in exchange for pursuing trumped-up charges against his political opponents.

Now he's following up via executive order with a bid to destroy Medicare.

In the runaway train that is U.S. healthcare costs, Medicare (and Medicaid) is the only substantial brake, in that the government sets prices paid to providers, albeit with outsized provider input. Medicare hospital rates are about half* those paid on average by commercial insurers. Rates paid to physicians average about 78% of commercial rates -- and in high-demand specialties and regions with few providers, commercial insurers often pay four, five and six times Medicare rates.

In countries that successfully offer universal coverage, the government either serves as the sole payer, sets rates for all payers, or oversees all-payer negotiations. The U.S. alone leaves commercial insurers to be divided and conquered by payers. That's the main reason U.S. healthcare costs average about double the OECD average.

In an executive order that begins with a deranged preamble slandering Medicare for All proposals, Trump orders the Department of Health and Human Services to prepare the ground for ending Medicare rate-setting: