I wanted to look at the average purchased actuarial value on the Exchange in 2015. My expectation going into the data dive was that the average purchased value would be significantly below the target threshold. My thought was that all else being equal, a plan with a lower actuarial value will have both a lower absolute premium and a lower net of of subsidy premium. I thought that the marginal buyer on the Exchange is primarily price sensitive so that they would buy the lowest priced product within a metal band all else being equal.
I got surprised. This is not what I saw in the data for 2015.
Average Bronze was a smidgen above the target. Silver, Gold and Platinum were within one point of the target. I had expected to see average purchased AV with a one’s digit of eight not nine.
Chart 2 is the ever enrollment sums by trimmed actuarial value bins. As you can see Silver is the dominant story here.
Bronze, Gold and Platinum have similar profiles. Silver is a bit different. I think that this is the Cost Sharing Reduction (CSR) effect. CSR is added on top of the standard benefit design. An CSR qualified individual will see the same net benefit structure if they buy a 68% Silver or a 72% Silver, all else being equal. In this scenario, it makes the most sense for the individual to buy the least expensive Silver as they will still get a 73%, 87% or 94% actuarial value plan at the end.
The last thing that I found interesting is that insurers were offering lower AV value products on average than what was being bought. The spreads were not large although it was largest at Bronze and smallest at Platinum. I am not sure what this means but my expectations were wrong when I started this.
Data: Enrollment data was here. Actuarial Value data was from the Universal Rate Review Template PUF. Other data from 2015 QHP Landscape PUF.
Nicole
I love your posts, David, but boy howdy sometimes they make me feel like I’m a moron (because this is an important issue that I just don’t know much about) – what is your evaluation of this? Are you saying that people are doing a better job shopping for overall value than just looking for the least expensive plan in each band? That is, they’re being reasonably smart consumers when shopping for a plan?
David Anderson
@Nicole: I don’t know what to say about this data yet.
I had gotten into a good conversation on Twitter yesterday about plan level enrollment data and then I started to put things together. And as I put things together, my priors were getting shakier.
I don’t have a good story to tell myself much less anyone else about this data yet. I think it is interesting in the best sense of that word.
itstrue
It’ll be interesting to see how this plays out as the rules changes for 2018 take effect, with allowable AVs shifting from +/-2% to +2/-4%. If no one bites on the -4’s, that says something.
Nicole
@David Anderson: Thanks. Even as someone with no background in this, it is really interesting to watch a major social program come into existence and evolve. Social Security is very different from what it was at the start, although the overall objective has always been to reduce elderly poverty. It’s much better at it today than it was when it originated; I hope health care doesn’t get sabotaged and has a similar (though maybe a bit faster) journey.
hilts
OT
As journalism and democracy struggle, New America Foundation caves in to Google
h/t http://www.emptywheel.net/2017/08/30/as-journalism-and-democracy-struggles-new-america-caves-to-google
Sab
@hilts: I know your comment was OT to David’s important point, but still, WOW! So New America Foundation is now dreck. That is very unfortunate.
Another Scott
@hilts: I’m having trouble getting outraged about this.
Foundations that depend on benefactors for their funding are always – at least to some extent – at the mercy of those benefactors. It goes with the territory.
I don’t think that Lynn is being “squashed by Google” or however he’s spinning it.
That said, Yes, corporate consolidation is a problem. But there are many, many problems that need to be addressed….
My $0.02.
Cheers,
Scott.