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You are here: Home / Anderson On Health Insurance / Minimizing Passive Dominated Plan Choice

Minimizing Passive Dominated Plan Choice

by David Anderson|  April 18, 20238:00 am| 10 Comments

This post is in: Anderson On Health Insurance

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The Notice for Benefit Payment and Parameters-2024 edition (NBPP-2024) is the Center for Medicare and Medicaid Services (CMS) annual ACA play book.  The final rule came out last night.  I want to highlight a single section:

NBPP 2024 Automatic Re-enrollment criteria change to minimize Bronze to CSR Silver dominated plan choice

What does this mean?

CMS will automatically default people who have low incomes (<250% FPL) and who bought Bronze plans into Silver plans with CSR benefits on the same network if the Silver plan has the same or lower premium. Functionally, this is mostly going to effect people earning under 200% FPL with a big benefit to folks earning under 150% FPL who are almost guaranteed to have at least one zero premium Silver plan with a $0 to $800 deductible available instead of a zero premium Bronze plan with a $8000 deductible.

CMS is working to get some people out of a dominated default option.

In 2021, I co-authored an analysis with Petra Rasmussen and Coleman Drake on the situation that many people likely are defaulted to dominated options. Dominated choices means that they pay more to get less.  That is just dumb!

 

JAMA Health Forums published our work where we CSR-Silver was the overwhelming replacement destination of dominated default placements:

Dominated default by metal level on Covered California and non-dominated superior option -- control for network and premium

We found that these mistakes are expensive:

5.8% of 748 087 California marketplace enrollees currently default to dominated health care plans with higher premiums and cost sharing; more than 98.0% of enrollees have low incomes. By comparison, an alternative smart default system would default many enrollees to more generous plans with approximately $100 lower monthly premiums and almost $2000 lower deductibles.

The CMS rule will only touch folks who are currently in Bronze plans and who are also eligible for CSR Silver plans.  Using our data, this is about 43% of all folks who are defaulted to a dominated plan. Gold to Silver CSR is the other big chunk (46%) with odd-ball situations accounting for the rest.

If we are to rely on consumer choice as a means of providing information and market discipline, then we need to make sure that the smarter choices are the easier choices.  CMS is making one little chunk of the market work a bit better while making consumers better off by reducing, sometimes dramatically, individual and household cost-sharing exposure.

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Reader Interactions

10Comments

  1. 1.

    narya

    April 18, 2023 at 8:50 am

    This sounds like a huge deal.

  2. 2.

    AM in NC

    April 18, 2023 at 8:54 am

    Glad to hear it.  Trying to gam out choices on the exchange for the first time this year was not easy, and my husband and I have advanced degrees and owned a business where we purchased insurance plans for our company.  Having 300 choices for breakfast cereal might be excessive but not harmful. Having 300 choices for health insurance is insane.

  3. 3.

    David Anderson

    April 18, 2023 at 9:13 am

    @narya: It is a useful deal.  A couple hundred thousand people will see substantially less cost-sharing — I don’t think it changes premiums as almost everyone involved will go from a zero premium Bronze to a zero premium CSR-94 Silver but the cost-sharing is substantial

    This went from “hmmm, guys there is a weird problem here” in January 2021 (I think there are a couple of Balloon Juice posts on that then) to a paper that we submitted in March 2021, published in August 2021 to policy in 2024 — that is fucking rapid diffusion and policy uptake.

  4. 4.

    Another Scott

    April 18, 2023 at 9:15 am

    @David Anderson: You’re doing great work, and it’s clear that your work matters.  You’re making a real difference in individual people’s lives and making the country better.

    Thank you.

    Cheers,
    Scott.

  5. 5.

    narya

    April 18, 2023 at 10:48 am

    @David Anderson: And, IMHO, the speed is definitely part of the big deal! It means that my tax dollars are going to an agency that is actually trying to make the health care exchange work better for consumers, despite insurance companies’ best efforts to make it work better for shareholders. I’m so glad you’re in a position now where you can contribute this way! I’m also glad you continue to contribute here; I always learn something.

  6. 6.

    Kathleen

    April 18, 2023 at 11:56 am

    Deleted. Wrong post!

  7. 7.

    StringOnAStick

    April 18, 2023 at 12:59 pm

    David, I hope you know just how valuable your work is and how many people you will never meet who have had their lives materially improved by your work!

  8. 8.

    David Anderson

    April 18, 2023 at 1:04 pm

    @narya: I think I need a longer response to your comment tomorrow —

    A lot of what I’m poking at right now is not intent based — or at least not conscious intent based work.  There are a lot of weird interacting rules (most set by Congress), assumptions about policy prioritization, strong assumptions about the value of choice and policy shocks.  Some insurers in these cases are likely being malicious assholes, most are likely responding to clear incentives that produce dumb outcomes.

  9. 9.

    Barker

    April 18, 2023 at 6:02 pm

    I wonder how many consumers will meet the criteria of having a same-network Silver plan at the same or lower premium than their Bronze plan.

    The only obviously eligible consumers I can think of are <150% FPL consumer currently on a Bronze plan where their corresponding same-network Silver plan is the lowest or 2nd-lowest price silver plan (therefore both plans are $0). Outside of this though, I would guess that most Bronze consumers would see the potential Silver crosswalk plan at a greater premium and therefore not be eligible.

    I would hope CMS is also considering some type of consumer outreach or notification that they are eligible for a CSR but not autorenewing into one.

  10. 10.

    David Anderson

    April 18, 2023 at 8:38 pm

    @Barker: Overwhelmingly you’re right.  The large majority of folks who will be automatically re-enrolled into CSR Silver will be under 150% FPL earners who bought a 2023 Bronze plan from an insurer that will have either the #1 or #2 Silver plans in 2024.  There will be a few folks over 150% who have a 2023 Bronze plan from the insurer that has the 2024 cheapest Silver — this will vary by county, age and family size as the silver spread between benchmark and cheapest silver varies as well.  Some areas it could be fairly high into the 170s or 180s FPL and other areas it might be 153% FPL where the switch no longer happens…. this is an interesting plausibly exogenous discontinuity.

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