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.