Andrew Sprung at Xpostfactoid notes that the recent CMS release of the Open Enrollment Public Use files shows a likely negative outcome — lots of low income buyers (people earning between 100% to 150% Federal Poverty Level — single individual ~$13,500 to ~$20,000) who are eligible to purchase potential zero premium silver plans with very low cost sharing ($300 to $500 deductible) bought low to no premium Bronze plans with very high cost sharing ($6,000 to $8,500 deductibles) plans instead.
At the lowest income level at which subsidies are normally available, where the benchmark silver plan is now free, silver plan selection in 2022 was lower than in any year except 2021. At the next income level (150-200% FPL), CSR takeup was higher in 2020 and every year prior (including 2014-16, not shown) than in 2022, notwithstanding that benchmark silver cost about $130/month at 200% FPL in 2020, compared to $43/month this year.
| Percentage of Healthcare.Gov Bronze Buyers | |||
| 100-150% FPL | 151-200% FPL | ||
| 2017 | 9.2% | 14.5% | |
| 2018 | 9.9% | 18.2% | |
| 2019 | 10.4% | 20.6% | |
| 2020 | 12.1% | 23.9% | |
| 2021 | 16.2% | 30.0% | |
| 2022 | 14.1% | 22.0% | |
We can’t say categorically that these individuals are making an inherently irrational decision. I can spin a story that the zero premium silver plan in a given county is offered by Insurer X. Insurer X offers an objectively hideous network and a really ugly bad experience to get a very low premium. People could legitimately prefer to pay more premium to buy Insurer Y with a big network and pleasant experience. A slight increase in premium or a significant increase in cost-sharing exposure could be well worth it especially if an individual thinks that they are likely to have less than $500 in medical expenses in a year independent of their choice of insurance plans.
If researchers had access to household level data from Healthcare.gov, we could look at each household’s choice set. We would then say that a household that bought Bronze X at zero premium when Silver X with a zero premium plan, then they made a completely irrational choice. When this occurs, there is an opportunity to move people out of this fundamentally irrational choice as I, along with Coleman Drake and Petra Rasmussen argued last year with “smart defaults” where people would be placed into objectively better plans from the same insurer on the same network.
We can’t say for sure that everyone earning between 100-150% FPL is making a dominated choice if they choose a Bronze plan instead of a Silver plan but I would not be shocked if a significant portion of this group made a dominated choice. And dominated choices are objectively inefficient and expensive choices that benefits only insurers and not consumers or patients.
Baud
Can’t you get that information without household-level data?
guachi
Anecdotally, I see this happen frequently. People don’t know about the cost sharing Silver so they pick the Bronze because it looks cheaper on the surface.
Butch
Well, we were able to move from Bronze to Silver this year because of the increased subsidy; honestly can’t say that the coverage is any better and may actually be worse. Deductible would still bankrupt us and Blue Cross has gotten skilled at working around all the supposed limits, such as out of pocket, in the ACA.
David Anderson
@Baud: Nope, we need to see what a given household chose. We can’t make super strong statements about preferences between and among insurers and networks. We need that granularity to think anything beyond “hmmm… this is weird and likely not good…” which is where I’m at.
Andrew
Hi David: Acknowledging that in some cases obtaining a better provider network would be worth choosing bronze over high-CSR silver (as I did in my posts on this), I’m pretty confident that the cases in which that makes sense are very rare. Even if the silver plan with desired network costs, say, $50/month while benchmark silver and bronze w/ said network are free, that’s $600 in premiums to get a likely $7000 improvement in OOP max, if nothing else. If you’re network-conscious enough to forgo free silver, you’ll probably need enough care to make the silver premium worth paying. There will always be exceptions (for gold too, as in Philly area in 2018), but I feel comfortable posting that the vast majority of the 600k under 150% FPL in bronze would be better off in silver.
David Anderson
@Andrew: I agree… the cases that we’re both mentioning are the “butttt….achually…..” edge cases that preclude a strict pronouncement of universal domination but the situation here is facial evidence that domination is likely to be quite common.
Laurie
A marketplace navigator that I know told me that she witnessed insurance brokers steer consumers to zero premium bronze plans instead of tiny premium silver plans with much better benefits. The consumer had to do nothing, and they would keep their plan and the broker would get their monthly fee. Had they enrolled in a silver plan with a small premium there was a chance the consumer might not pay the premium ending the plan and the broker’s monthly fee.