Putting the "Affordable" in the Affordable Care Act: A role for the IRS

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 After the boost to ACA marketplace subsidies enacted as part of the American Rescue Plan Act (ARPA), the largest remaining bar to affordable coverage for all but undocumented Americans (who are barred from any government help for coverage) may be the affordability threshold for employer-sponsored insurance. It's ridiculously high. The IRS can provide some relief now, without portentous rulemaking.

The ACA defines employer-sponsored insurance (ESI) as affordable if a plan providing Minimum Essential Coverage (MEC) as defined by the ACA costs less than 9.5% of income. That baseline is adjusted annually to account for inflation in premiums in excess of inflation in the consumer price index and currently stands at 9.83% of income.  MEC is equivalent to bronze-level coverage in the ACA marketplace, which typically means a single-person deductible in the $7,000 range. Those for whom an employer's offer of insurance is deemed affordable are ineligible for ACA marketplace subsidies (though not ineligible for Medicaid). KFF estimates that 3.5 million uninsured people are in this category.

Obamacare enrollment at vaccination sites, part 1

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                                             Getting jabbed? Get covered too!

11 million uninsured Americans are eligible for ACA marketplace subsidies, according to KFF estimates. With the premium subsidy increases enacted in the American Rescue Plan Act (ARPA) in March, coverage can credibly be called "affordable" for most of them.  Another 7.3 million uninsured people are eligible for Medicaid, per KFF.

Ignorance of these offerings is rife. Less than a third of the public knows the ACA is still law, again according to KFF. Enrollment outreach, sabotaged by the Trump administration, has always been a challenge (as has the difficulty of navigating the application for some but not all enrollees).

While considering incremental ways to improve the ACA in my last post, it dawned on me that enrollment outreach at vaccination sites, or via email and texts connected with vaccination, was a golden opportunity to reach the uninsured.  Like most lightbulb thoughts, this one was far from unique.  It's occurred to many professional enrollment assisters -- probably hundreds. Some have acted on the thought.

The ACA as it should have been and may yet be: beyond premium subsidy boosts

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The Wall Street Journal's Stephanie Armour succinctly captures where Democrats seem to be at on the healthcare reform front:

Many progressive Democrats and President Biden are facing the political reality that far-reaching healthcare overhauls aren’t likely to succeed in the short term, which means their hopes may rest instead on building on recent Affordable Care Act changes and reducing prescription drug costs.

That is, make the premium subsidy boosts in the American Rescue Plan Act (ARPA) permanent, and maybe maybe maybe pay for it by getting some tangible form of prescription drug cost control past Democratic moderates. 

Pretty plainly left behind is the centerpiece of candidate Biden's healthcare plan, which also happens to be the continually submerged Ur-template for Democratic healthcare reform:

One more note to subscribers: feedburner stopped

 Dear xpostfactoid subscribers: as I noted a couple of weeks ago, Google is discontinuing feedburner, the subscriber service that's delivered xpostfactoid this many a year, as of July.  I accordingly transferred subscriptions to follow.it, and as the new service seems to be functioning adequately, I just cut the cord with feedburner. If you've been annoyed by getting two emails for each post, apologies: that ends now.  And if you haven't subscribed via follow it, please do, via the box at right. Thanks for reading...

In New Jersey, silver plans are free or all but free up to 200% FPL

When New Jersey launched supplemental state premium subsidies along with the launch of its state-based ACA marketplace, GetCoveredNJ, in the fall of 2020, I was somewhat taken aback to note that the state subsidies were heavily weighted toward enrollees at higher incomes. 

The supplemental NJ subsidies ranged from $20/month at an income of 138% FPL ($17,609 for an individual) to $95/month, beginning at an income somewhere between 250% and 300% FPL (around $38,000 for 40 year-old individual, according to my price checks on GetCoveredNJ).

As I noted at the time,

The smaller subsidies at low incomes leave substantial premiums in place at incomes below 200% FPL for silver plans, which carry a strong CSR [Cost Sharing Reduction] benefit up to that income threshold.

For a 40 year-old with an income of $25,000 (just under 200% FPL), the lowest cost silver plan in most of the state will cost $86/month. The deductible is $800; the out-of-pocket maximum is $2,600. The lowest cost bronze plan is $17/month, with a deductible of $6,000 and an OOP max of $7,000. Last year, cheapest silver would have cost about $125/month. 

Well, the American Rescue Plan Act (ARPA), signed into law in March, with an extra boost from New Jersey, has solved that problem, at least through 2022 (and hopefully beyond, if Democrats make the new subsidy levels permanent as they intend).  New Jersey's income-weighted subsidies mesh quite well with the subsidy boosts provided by ARPA, which reduced premiums for a benchmark (second cheapest) silver plan with strong CSR to $0 at incomes up to 150% FPL and to 2% of income at 200% FPL.

The New Jersey supplemental subsidies all but wipe out premiums for a silver plan all the way to 200% FPL.  Here's what's available to a 40 year-old with an income of $25,500:

Emergency SEP enrollment, shrinking attrition boost ACA marketplace enrollment beyond yearly top lines

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In a report issued last September, Covered California, the golden state's ACA exchange, announced that effectuated enrollment in private health plans through the exchange had reached an all-time high of 1.53 million (1,527,730) as of June 2020.   That was in the midst of an emergency Special Enrollment Period (SEP), effectively a second open enrollment season, implemented by California in response to the Covid-19 pandemic.  (In normal years, SEPs are open only to individuals who can demonstrate a qualifying "life change," such as loss of job-based insurance.)

The emergency SEP ran from March 20 through August 31, 2020. According to the September report, SEP enrollment increased by more than 100% over the same period in 2019, to 289,460.  As the CoveredCA report stresses, that's in contrast to a mere 27% increase in SEP enrollment in the 38 states then using the federal exchange, HealthCare.gov, for which the Trump administration refused to open an emergency SEP.  In September, active membership enrolled through CoveredCA reached a new all-time high, 1,551,470.  

Driven largely by the boost in SEP enrollment, plan selections as of the end of OE 2021 in California finally surpassed their 2016 high point of 1,575,340, reaching 1,625,546. (The term "plan selections" acknowledges that not all those who "enroll" in plans during OE make a first payment and thus "effectuate" enrollment and become, in CoveredCA parlance, "active members").  

While plan selections as of the end of OE have always served as the headline number for ACA marketplace enrollment, they provide a somewhat misleading picture. Every year, an average of about 10% of those who "enroll" in plans during OE never pay their first premiums, and attrition continues throughout the year, as disenrollments exceed SEP enrollments -- at least through 2019, the last year for which monthly enrollment has been published.  But attrition has been shrinking beginning in 2018, perhaps because the silver loading that began that year sharply reduced net-of-subsidy premiums for many enrollees, including a substantial number who paid zero premium.  In 2016, national enrollment as of December was 28% below the end-of-OE total for plan selections. In 2019, December enrollment was just 20% below the end-of-OE tally.

One quarter of the U.S. population is on Medicaid

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Time for an estimate of Medicaid enrollment growth since the eve of the pandemic, February 2020.  Monthly enrollment growth may finally be slowing, though it probably will not stop until the pause in disenrollments mandated by the Family First Act (passed in March 2020) is ended. Then, watch out: many states will probably commence income/eligibility checks at short intervals with a vengeance. 

As noted my previous update, the cumulative growth rate recorded in my sample, which is based on available monthly reports issued by the states, generally exceeds CMS's official tally (which lags this tally by four months) by about half a percentage point (state reports differ from CMS's official count in numerous ways).  Based on that rule of thumb, I would venture that enrollment nationally is up 16% since February 2020 and now stands at about 82.6 million for all full-service Medicaid programs. That's exactly one quarter of the U.S population. Exclude the undocumented and also legally present noncitizens who are time-barred from Medicaid eligibility, and the percentage is higher still.
[Update, 8/16/21: This estimate was high. The final tally for February is 81.4 million; CMS's total reported increase from Feb. 2020 through March 2021 is 15.6%. So my 34-state estimate is now coming in nearly a full percentage point ahead of final CMS tallies. CMS's preliminary March total is 81.7 million; the final March total will probably come in a bit over 82 million.]

ARPA should reduce underinsurance in the ACA marketplace

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• While free bronze plans have been widely available to low income marketplace enrollees since 2018, the American Rescue Plan makes free or very low-cost silver plans with much lower out-of-pocket costs widely available.
  
  
• Bronze plan enrollment at low incomes spiked during Open Enrollment for 2021
  
  
• The American Rescue Plan may already be reversing the drift toward bronze at low incomes

The Urban Institute estimates that if the American Rescue Plan Act's increases to subsidies in the ACA marketplace are made permanent, enrollment will increase by 5.1 million, and the uninsured population will be reduced by 4.2 million. The enhanced subsidies are funded only through 2022 at present.

Urban foresees most of this enrollment increase -- about three quarters of it -- occurring at incomes over 200% of the Federal Poverty Level.  But ARPA should also reduce underinsurance, primarily at incomes below 200% FPL.

While ARPA does not reduce out-of-pocket costs at any metal level, it does make silver plans, which come with strong Cost Sharing Reduction (CSR) subsidies at incomes up to 200% FPL, much more affordable to low income enrollees. 

A note to subscribers

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How much will free benchmark silver plans boost ACA marketplace enrollment in nonexpansion states?

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An Urban Institute brief estimates that if the premium subsidy increases for the ACA marketplace enacted through 2022 in the American Rescue Plan are made permanent, marketplace enrollment will increase by 5.1 million, and the uninsured population will decrease by 4.2 million.

That's somewhat higher than the increase of 3 million that KFF's Cynthia Cox floated to me as a soft estimate. A lot depends on the effectiveness of outreach and possible future improvements to the enrollment process, Cox stressed. Both estimates are pretty modest, given the magnitude of the subsidy boost, outlined below. By KFF's estimate, about 10.6 million uninsured are eligible for subsidies under the new schedule.

Here I want to focus on the category* in which Urban foresees minimal change: enrollment at 100-138% FPL in states that have refused the ACA Medicaid expansion. In those states, eligibility for marketplace subsidies begins at 100% FPL, whereas in expansion states, adults** with incomes up to 138% FPL are eligible for Medicaid. Under ARPA, benchmark silver coverage is free at this income level, and in fact up to 150% FPL. And up to that threshold, Cost Sharing Reduction boosts the actuarial value of the free silver plan to 94%, well above the average for employer-sponsored coverage. According to CMS, the average deductible for silver plans at this income level is just $69 in HealthCare.gov states (e.g., all nonexpansion states). While even modest out-of-pocket costs appear to be a barrier at near-poor incomes -- Medicaid logs higher satisfaction ratings than high-CSR marketplace coverage in surveys -- this is a very valuable free benefit.

The Urban Institute analysis estimates that ARPA will reduce the uninsured population at incomes below 138% FPL by only 312,000. The authors do not provide an estimate of the subsidy-eligible population at 100-138% FPL -- but as I noted in early April, the Kaiser Family Foundation does provide such estimates for 12 nonexpansion states.*** In those 12 states together, 1.8 million people with incomes in the 100-138% FPL range were uninsured in 2019, according to KFF's estimate.  

UI effect? ACA marketplace enrollment soared at low incomes in nonexpansion states in 2021

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Back in March 2020,  you may have read here that the emergency supplemental unemployment insurance provided by the CARES Act -- $600 per week for up to 4 months -- would likely lift some uninsured people in states that had refused to expand Medicaid out of the so-called "coverage gap." That is, the extra UI income would raise some low income people over the income threshold for marketplace subsidy eligibility in nonexpansion states: 100% of the Federal Poverty Level (FPL).

Back in December, you may have read here that as of the end of Open Enrollment for 2021, marketplace enrollment was indeed up 10% over 2020 levels in nonexpansion states, but flat in expansion states.

This month, you may have read here that takeup of marketplace coverage at incomes just over the subsidy eligibility threshold in nonexpansion states -- 100-138% FPL -- has historically been weak -- under 50% in of these states states.

More detailed data about 2021 enrollment was released by CMS on April 21. I don't think it's an exaggeration to say that enrollment at the lowest subsidy-eligible income levels in nonexpansion states exploded this year. 

"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.