I’ve been a major proponent of states Silver Loading CSR costs onto only their Silver plans so that premium tax credits would increase faster than the overall rate of claims cost increases. This makes the subsidized premium of Platinum, Gold and Bronze plans lower than they otherwise would have been.
There is a major concern though. People have to be able to figure out what they are looking at and make a good choice. I will define a “goood choice” as a non-dominated choice. A dominated choice is one where on all relevant metrics Plan A meets or beats Plan B. A dominates B. If there is a metric where B beats A even if A beats B on everything else, there is no dominated choice.
As a matter of policy, we should not want people to make dominated choices.
Andrew Sprung looks at the choices people made in Maryland where there is a significant Gold Gap in action. In 2017, 1.% of the people earning between 150% and 200% Federal Poverty Level (FPL) bought an 80% Actuarial Value (AV) Gold plan. These folks qualified for an 87% AV CSR Silver. In 2018, they still qualified for an 87% Actuarial value Silver but 9.8% of this population bought either a Gold plan.
2. Choices in 2018, when bronze plans were nearly free to everyone under 200% FPL and gold plans were either close in price to silver (for about 85% of enrollees) or slightly cheaper than silver (for about 15%) are also pretty on-point. The main problem, as noted in the prior post, is a dropoff in CSR takeup. Those under 200% FPL who bought gold chose “dominated” plans — that is, plans offering less AV per premium dollar than silver …. On the other hand, the extraordinarily high level of gold selection among those above 200% FPL reflects pure bounty for an under-subsidized cohort (excepting the subsidy-ineligible, for whom gold was merely less overpriced than silver). (my emphasis)
In Maryland, a subsidized eligible person who makes under 200% FPL is better off with a CSR Silver plan than a Gold plan if we assume the same network. Buying Gold for someone who is eligible for a 94% AV or an 87% AV Silver at a lower net premium is a mistake. Bronze may not be a mistake as the lower net premium (or $0 net premium) is a significant differentiation compared to Silver.
They have the ability to calculate the estimated net of subsidy premium and they can identify unique networks and unique benefit structures. State based exchanges have the ability to compare plans and identify dominated plans for each individual buyer. State based exchanges should be able to control the display of dominated plans at the individual buyer level. State based exchanges can either completely suppress the plans for a particular buyer or make the buyer click through one more screen to see all plans instead of the non-dominated plans.
States that want to improve the Exchange experience for their citizens have the tools to do so if they elect to do so.
Another Scott
Unless I’m reading things wrong (possible – it’s early in the morning), you and Sprung are defining “dominated” differently and it’s confusing.
You say: “I will define a “goood choice” as a non-dominated choice. A dominated choice is one where on all relevant metrics Plan A meets or beats Plan B. A dominates B. If there is a metric where B beats A even if A beats B on everything else, there is no dominated choice.
As a matter of policy, we should not want people to make dominated choices.”
Sprung says: “Those under 200% FPL who bought gold chose “dominated” plans — that is, plans offering less AV per premium dollar than silver …. ”
It seems to me, there are at least 2 things going on here in the “dominated choice” universe:
1) On policy grounds, we want companies competing against each other so there should never be a choice that is better than all others in every “relevant” metric. I agree with that. In that respect, I agree with you that there should be no “dominated choice”.
2) On a personal level, people should choose the best insurance they can get for the lowest possible price. (That’s also part of the competition in #1). But if there is an obviously better insurance policy for the lowest possible price, then of course we want people to take it and we should encourage them to take it even if it is the “dominated choice”. If Satan’s Insurance manages to give the buyer the best deal in 2018, then consumers should rush to it. That’s the only way Gabriel’s Insurance is going to feel pressure to improve their policy and cut their prices for 2019.
But #1 and #2 are kinda conflicting.
How does that fit with Sprung? If people are buying a more expensive Gold plan when they should buy Silver, then how is it the “dominated choice”?? If it dominates on every metric other than cost, then according to your definition it isn’t a “dominated choice”, is it? Purely based on your definition, how is it possible for an 80% AV plan to be “dominant” over an 87% AV plan?? Or does cost not count as a relevant metric?
What am I missing?
I agree that the groups running the exchanges should do better about pointing out these issues.
Thanks.
Cheers,
Scott.
raven
On Sunday, Piedmont Healthcare doctors and hospitals became out-of-network providers for Blue Cross and Blue Shield of Georgia members.
Round-the-clock negotiations failed to bring an agreement on a new contract between Blue Cross, the state’s largest health insurer, and the rapidly expanding Piedmont system.
David Anderson
@Another Scott: In Maryland, Gold does not beat Silver on premium. It comes damn close but not quite. For people earning over 200% FPL Gold is not dominated as it offers a better out of pocket for slightly more premium (a reasonable trade-off) but for people earning under 200% FPL, Gold offers worse OOP and higher premium.
wkwv
When my son was shopping the Maryland Exchange last fall he had no idea what the percentage of the poverty rate applied to him. The exchange website was clunky enough that he had to seek out a navigator to make sure that he was signed up. His income fluctuates every year but is in the $35,000 range. The previous year Kaiser Permanante told him his income was too high for subsidy and signed him up for an off exchange plan.
Does anybody know how to play this game? He just wants to be able to pay the doctor if he falls off a ladder at work (independent overhire labor, so no benefits and he pays all taxes) and he can’t afford more than 10% of his take-home pay. He bought a bronze plan and first bank of Mom will have to backstop him for a loan on his copay.
Tl/dr- It’s not clear what the applicable poverty rate is.
David Anderson
@wkwv: If he makes less than $48,000 he qualifies for a subsidy. He should have shopped on Exchange if he is making in the 30s even if he was paying the entire premium every month so that he could get the tax credit back next year when he filed his returns.
If he is reasonably healthy and can access the First Bank of Mom or has other reserves in case a tree limb falls on him and that is his biggest reasonable risk, then a Bronze plan makes sense. It prevents bankruptcy at the lowest premium.
wkwv
The only danger a tree limb that would fall on him is if his theater staged “The House at Pooh Corner”. He’s a theatrical lighting manager and hangs light ‘cans’ from the ceiling grid. Thank you Mr. Anderson for your reply, I’ll go back to lurking now.