Sunday, May 27, 2018

Trump's CSR cutoff boosted ACA enrollment in the 300-400% FPL income bracket

This is to follow up, x-post, on a factoid I noted early this month: while enrollment in states was down 5% overall in 2018, and down 7.5% among those with incomes up to 200% of the Federal Poverty Level (FPL), it was up among wealthier subsidized enrollees. All of the absolute gain came in the 300-400% FPL range.

Enrollment at 200-400% FPL in States

200-250% FPL
250-300% FPL
300-400% FPL
Total 200-400% FPL

That's actually quite striking. In the prior post, I noted 
If enrollment in the 200-400% FPL range had been down 7.5% in 2018, as it was in the 100-200% FPL bracket, there would be 254,000 fewer enrollee in states than there are now. If the impact in the states that run their own marketplaces was proportionate, that suggests 342,000 fewer enrollees had the federal government continued to reimburse insurers for CSR.
Most of that gain attributable to silver loading occurred in the 300-400% FPL income bracket. If enrollment in this bracket were down 7.5%, there would be 140,000 fewer enrollees in states (and probably about 188,00 fewer nationwide).

The difference is almost certainly due to the silver loading of CSR costs (see note below), which created discounts in bronze and gold plans that chiefly benefit those with incomes above 200% FPL (below that level the free CSR benefit outweighs the gold/bronze discounts).  So let's look at metal level selection in the 300-400% FPL bracket in 2017 and 2018.

Note: CMS broke out gold selection in 2018 but not in 2017. So the 2017 "gold" line includes minimal enrollment in platinum and catastrophic plans, which together totaled 1.5 % of enrollment across all income levels.

Enrollment by metal level at 300-400% FPL in States

Total bronze
% bronze
Total silver
% silver
Total gold*
% gold

Gold totals for 2017 include platinum and catastrophic enrollment.

Enrollment totals at the metal levels are derived from whole-number percentages provided by CMS.

Bronze enrollment in this income bracket was up by about 150,000 in 2018, and gold was up by about 56,000.  Silver was down 125,000.

Takeup of subsidized marketplace plans has always been poor in the upper ranges of income eligibility. The bronze/gold discounts made available by Trump's cutoff of federal funding for CSR plainly improved takeup in the upper income range.

There is another factor in the enrollment spike at 300-400% FPL. A higher percentage of enrollees in this income bracket was probably subsidized in 2018 than in 2017. That's because of the huge spike in premiums in 2018. In previous years, younger enrollees in particular with incomes as low as 250% FPL did not qualify for subsidies, because unsubsidized premiums required of them an "affordable" share of income (almost 10% in the 300-400% bracket). 

This year, the impact of slipping just below the subsidy line was magnified by the bronze/gold discounts. An older buyer in particular who might have had just a $10/month subsidy for a benchmark silver plan might find a much more dramatic discount in bronze or gold.

Note on Effects of CSR funding cut-off 

When Trump cut off federal reimbursement of insurers for the Cost Sharing Reduction subsidies they're legally required to provide to lower income ACA marketplace enrollees who select silver plans (57% of marketplace enrollees in 2017), most states allowed or required insurers to concentrate the cost of CSR in premiums for silver plans only. States in which 70% of individual market enrollees live concentrated the cost of CSR in on-exchange silver plans only, allowing for cheaper silver plans to be sold off exchange.

Since ACA premium subsidies are keyed to the price of the benchmark (second cheapest) silver plan in each rating area, subsidies rose to cover inflated silver premiums, generating often dramatic discounts in non-silver plans, i.e. gold and bronze (platinum availability and purchase is negligible). In many states, steep increases in silver plan premiums resulted in zero-premium bronze plans becoming available to many buyers (or nominal $1-3/month premiums), and gold plans that were either cheaper than silver or close in price.

Cheap gold plans were a particular boon to enrollees with incomes between 200% and 400% of the Federal Poverty Level (FPL). These buyers are not eligible for strong CSR, which makes silver plans roughly equivalent to platinum plans for buyers up to the 200% FPL threshold. Normally,  enrollees in the 200-400% FPL range would pay between 6% and 10% of their income (percentage rising with income) for a benchmark silver plan with an actuarial value of 70%, i.e. with an average deductible of around $3600). With CSR priced into silver plans in 2018, gold plans  (80% AV, with an average deductible of around $1100) came 

Friday, May 25, 2018

Trump's CSR cutoff is still reverberating

There is a kind of settled wisdom by now about the effects of Trump's cutoff of federal reimbursement of insurers for the Cost Sharing Reduction (CSR) subsidies they are obligated to provide to qualifying low-income enrollees in the ACA marketplace.

The story line: 1)states and insurers reacted swiftly and rationally by "silver loading" (explained below); 2) confining silver loading (explained in note at bottom) to on-exchange plans holds the unsubsidized harmless from the pricing in of CSR; 3) virtually all states and insurers will arrive at this solution; so silver-loaded CSR is now baked in, benefiting subsidized enrollees and not harming the unsubsidized. 4) Only further administration sabotage -- banning silver loading -- can disrupt this new normal.

The story line is essentially on target. About two million subsidized enrollees took advantage of bronze/gold discounts in 2018. The availability of those discounts probably helped offset other shocks to the system -- a halved enrollment period, radical cuts in outreach and enrollment assistance; insurer uncertainty as Republicans came within a whisker of repealing the core programs of the ACA.  Going forward, CBO estimates that silver loading will boost enrollment by 2-3 million per year (though I'm pretty sure the boost was in the low-to-mid hundred thousands in 2018, when silver premiums rose almost twice as much as gold and bronze). Further, some 70% of enrollees were in states where silver loading was concentrated on-exchange.

But that's not the whole story. Trump's threat to cut off CSR payments loomed for nine months before he pulled the trigger and was a major component of the general uncertainty insurers faced while filing rate proposals or deciding whether to participate in the marketplace. The effects of that uncertainty on premiums is, I suspect, not entirely captured by the calculated priced-in cost of CSR.  And now, here cometh the Congressional Budget Office to remind us that sudden policy changes have lingering effects, and the CSR shakeout isn't fully shaken out.

Wednesday, May 23, 2018

In New Jersey, ACA reinsurance or....?

Here in Jersey, progressives are urging Governor Murphy to sign two bills designed to fend off Republican sabotage of the ACA. The first would establish a state individual mandate to replace the effectively repealed federal mandate. The second would seek federal funding for a reinsurance program for the individual market for health insurance, designed to reduce premiums by 10-20%.

If the two bills are enacted and the ensuing waiver application seeking federal funding for reinsurance is approved, the two measures should reduce premiums by 20-30%, compared to where they'd be if no action is taken. For more detail, see this writeup.

Governor Murphy is likely to sign the mandate bill, but there are indications that he may seek changes to the reinsurance bill. The problem is cost.

Rough projections are that revenue from the mandate would cover a third to half of the reinsurance program's costs, while the federal government picks up half or a bit more than half. The state could be on the hook for an additional $30-40 million per year. New Jersey is in dire financial shape;  Murphy has a lot of spending priorities, and a looming fight on his hand to raise new revenue.

State Senator Joseph Vitale is confident that if the program proves to need more funding by FY 2021, when the first bill to insurers comes due, a revenue source can be developed -- probably via an assessment on insurers. Murphy might seek to get that in writing, in the bill -- as it was in an early version.  He would do so by issuing a conditional veto, after which the legislature would have to vote on an amended bill by June 7.

I found myself mulling this evening: If the bid to stand up a reinsurance program fails, how else might the mandate revenue, projected at about $90-100 million per year, be deployed to boost healthcare access in the state? One answer might be simply to return the mandate revenue to those hurt most directly by rising premiums: enrollees in the individual market who don't qualify for federal subsidies (subsidized enrollees pay a fixed percentage of income for a benchmark plan and so are not directly affected by premium hikes). These are mostly people above the income eligibility threshold, 400% of the Federal Poverty Level (FPL). They also include people who are ineligible for subsidies because of an offer of insurance from an employer.

Monday, May 21, 2018

Four ways states can leverage ACA sabotage

Sabotage of the ACA by the Trump administration and the Republican Congress will partially reverse the ACA's coverage gains, causing hardship to millions. But it differs from Republicans' failed legislative repeal in a fundamental way: The ACA's funding streams and mechanisms remain in place.

Not only can states that retain the will to make the ACA work continue to tap federal funding -- if they're willing to be creative, they can tap revenue streams created and inflated by the sabotage. Each form of sabotage has created new opportunities. There are at least four ways that states can not only fight off sabotage, but leverage funding opportunities that sabotage has created.

Tuesday, May 15, 2018

In Health Affairs: If CMS ends silver loading

I've co-authored with David Anderson, Charles Gaba and Louise Norris a blog post in Health Affairs that surveys the fallout from Trump's cutoff of federal funding for Cost Sharing Reduction subsidies in 2018 and considers the likely effects if the Trump administration moves to block the current effective strategies that most states have employed for dealing with that cutoff.

That is, what happens if CMS administrator Seema Verma and/or HHS Secretary Alex Azar move to block states from allowing or instructing insurers in the individual market to price CSR into silver plans only, a strategy that has created discounts in gold and bronze plans?

Part one recounts the history of how states and insurers found their way to silver loading. Part two quantifies how many people likely benefited from discounted bronze and gold plans. Part three reviews the impact of the CSR cutoff on unsubsidized premiums. And Part four considers the likely effects on plan pricing and enrollment if HHS/CMS either forces individual market insurers to spread the cost of CSR evenly among all ACA-compliant plans or to spread it evenly among all plans sold on-exchange only.

Hope you'll take a look.

Sunday, May 13, 2018

A "modernist' C.S. Lewis?

Continuing vacation-week repostings of the nonpolitical...

(8/17/14) Lev Grossman, a fantasy writer whose works I have not yet been privileged to read, has a wonderful, wonderful, wonderful tribute to C. S. Lewis, who brought him into the worlds of reading and of fantasy. He focuses first on a passage that I used to xerox for students, also trying to capture its magic:
Even more than that, it’s the way he uses language—which is nothing like the way fantasists used language before him. There’s no sense of nostalgia. There’s no medieval floridness. There’s no fairy tale condescension to the child reader. It’s very straight, and very clean—there’s no Vaseline on the lens. You see everything clearly, not with sparkles or a flowery sense of wonderment, but with very specific physical details. Look at the attention to detail as you watch Lucy going through the wardrobe:
This must be a simply enormous wardrobe!" thought Lucy, going still further in and pushing the soft folds of the coats aside to make room for her. Then she noticed that there was something crunching under her feet. "I wonder is that more mothballs?" she thought, stooping down to feel it with her hand. But instead of feeling the hard, smooth wood of the floor of the wardrobe, she felt something soft and powdery and extremely cold. "This is very queer," she said, and went on a step or two further.

Friday, May 11, 2018

Melt like wax into God or be born into her womb?

Continuing vacation posting of old non-political bits...

Kierkegaard, Julian, Obama

(5/5/13) -- Who knows what governs how a moderately engaged undergraduate makes sense of abstruse philosophic texts? As a sophomore, my mind settled on a basic dichotomy: Hegel bad, Kierkegaard good. This was probably what you might call a gendered thought. Hegel's basic How-Things-Work was to my mind aggressive, imperialist, male: thesis absorbs antithesis in new synthesis. Man slays dragon, eats its heart, becomes (relative) superman. Kierkegaard, by contrast, kept apparently irreconcilable opposites in eternal balance, on an eternal toggle switch whereby they could be seen alternately as part of a unity and eternally distinct.

I can't tell you at this distance whether my abstract caricature is accurate, but it has stayed with me all my life, and I tend to class thinkers on one side or the other of this divide. In retrospect, I'm sure that I placed the subject of my dissertation, the medieval mystic Julian of Norwich (an achoress, i.e. a nun in self-imposed solitary confinement) on the Kierkeaardian side of the ledger, though I never zoomed up the centuries to probe the association. *

Julian had a brilliant trick of subordinating the harsh elements of Catholic dogma that she didn't like (the damned are damned forever) to those that she felt by force of direct revelation to be true (all will be well, and all will be well, and all manner of things will be well).  Her basic dynamic was that God-as-man maintains two "cheres," or points of view: the human, limited one, whereby we must see and condemn our own sin, and the "inward, more ghostly" and more strictly divine one, whereby no one does anything except by God's will, and God is delighted with all, and sin is merely an instrument of human self-education.