Silver Switcharoo

I talked about this the other day, but re-reading my post, I don't think I emphasized it nearly enough:

It's also important to keep in mind that due to how the ACA's subsidy formula is structured (combined with Silver Loading and Silver Switching), a lower benchmark premium will actually result in higher net premiums for many subsidized enrollees (although it's still good news for those who are unsubsidized). Here's why:

  • Let's say the unsubsidized premiums for a given enrollee in 2019 is $400 for Bronze, $600 for the benchmark Silver and $700 for Gold.
  • Let's say that enrollee earns exactly $32K/year (256% FPL), meaning they only have to pay 8.54% of their income for the benchmark plan.
  • That means they qualify for ($7,200 - $2,733) = $4,467 in subsidies ($372/month).

This would leave them paying $228/month for the benchmark Silver...but they can apply that towards a Bronze plan if they wish so they'd only pay $28/month, or a Gold plan so they only pay $328/month.

Just a few minutes ago I noted that the state of Oregon is once again strongly considering taking a second crack at establishing their own, fully state-based ACA exchange after spending the past five years piggybacking on top of HealthCare.Gov.

Well, the Oregon State Public Interest Research Group just published an extensive report in which they urge the state to do just that...along with several other key changes which I also strongly agree with:

Steps like a mandate for Oregon residents to buy health insurance and relief for exchange customers who earn too much to receive tax credits under the Affordable Care Act could help reverse premium hikes that have shot up amid attempts by the Trump administration to roll back the law, OSPIRG, the Oregon State Public Interest Group, argued in a report released Wednesday.

Via Email from the Connect for Health Colorado exchange...

Customers Receiving Financial Help Through Connect for Health Colorado® Seeing a 14% Drop in Net Monthly Premium Cost

DENVER – Coloradans who get financial help buying health insurance through Connect for Health Colorado® are paying an average 14 percent less in “net premium” – what they pay after assistance – compared to the average net premium in 2018, according to data released today.

Three of every four current Connect for Health Colorado customers qualify for financial help to reduce the monthly cost of health insurance. The average net premium for those Coloradans is $117 per month, down from $136 per month last year.

“We are happy that we are able to make health insurance affordable for so many people,” said Kevin Patterson, Chief Executive Office of Connect for Health Colorado. “The number of our customers receiving help rose this year by seven percentage points, to 76 percent, an important increase. We know we have more work to do, and are committed to expanding our impact as we work with policy makers, our stakeholders and our customers throughout the state.

At long last, the final piece of the puzzle can be added: I just received the final 2019 Open Enrollment Period numbers from Vermont Health Connect.

Before looking at it, it's important to understand that Vermont has a unique way of reporting ACA-compliant healthcare policy enrollments.

For the first two years of Open Enrollment, the state didn't allow any off-exchange (or "direct") enrollments for the individual market (or the small business market, I believe). That means all indy market enrollments were done through the exchange. Due to technical problems (and possibly for other reasons as well), however, starting in 2016 they started allowing direct/off-exchange enrollment as well, as every other state does (the District of Columbia is the only other ACA exchange which has no off-exchange market). However, Vermont still requires the insurance carriers to report those off-exchange enrollees to them and they report them as well.

I wish every state reported their enrollment data this way; it would make it much easier for me to do my job, since as it stands the off-exchange market is a bit of a mystery in most states.

Last year there was much hand-wringing by myself and other healthcare wonks about whether or not the Trump Administration would attempt to kill off Silver Loading (and its even-wonkier cousin, Silver Switching). HHS Secretary Alex Azar and CMS Administrator Seema Verma kept sending out mixed and confusing signals about their intentions.

Eventually, Azar decided that while he doesn't like the practice, there wasn't enough time to change the rules before the 2019 Open Enrollment Period was set to begin, so he decided to take a pass for the time being.

Well, in yesterday's NBPP release, the HHS Dept. addressed the issue of CSR reimbursement funding directly...but they also made it clear that they're letting Silver Loading slide for another year:

Unfortunately, Vermont is one of the three states (along with Idaho and Maryland) which hasn't released any 2019 Open Enrollment data yet, so I don't have any numbers to report on that front. However, they did just post this "Open Letter" which I found interesting. The two things to keep in mind about Vermont are: 1) they include their own subsidies on top of ACA subsidies; and 2) they were among two states (North Dakota is the other one) which upgraded their premium pricing in 2019 from "no load" to full #SilverSwitcharoo status.

You can read about the wonky mechanics of this here, but the bottom line is that Vermont residents who qualify for subsidies have substantially better deals available this year, while unsubsidized enrollees have an important workaround to avoid being stung with extra CSR costs:

An Open Letter to Everyone Who Has Helped Vermonters Get into the Right Health Coverage

I've written a lot about how the clever Silver Loading and Silver Switcharoo pricing workarounds have managed to result in millions of people becoming eligible for dirt-cheap or even free Bronze ACA exchange healthcare policies, or bargain-priced Gold plans for millions more. Last year, in fact, the Kaiser Family Foundation determined that roughly 4.5 million uninsured Americans qualified for FREE Bronze plans nationally.

Well, they've done it again for 2019. The total number eligible for FREE Bronze plans has dropped a bit to 4.2 million, but that's still a TON of people:

It isn't often that I write about anything Oklahoma-related, and it's rarer still that I post good news out of the...um..."labor omnia vincit" state (that's their slogan, I looked it up...), so today's a rare day indeed.

A couple of weeks ago I noted that at least 9 more states will be jumping onboard the #SilverSwitcharoo train for 2019, bringing the total to 30:

Last year I wrote a LOT about Silver Loading and Silver Switching for 2018...basically, the way which ACA individual market enrollees can save hundreds or even thousands of dollars on their 2018 insurance policies by taking advantage--perfectly legally and ethically--of the unusual pricing of different metal level policies this year.

The short version is this: Due to the way the ACA's tax credit formula works, Donald Trump's attempt at sabotaging the ACA exchanges by cutting off Cost Sharing Reduction (CSR) reimbursement payments to insurance carriers actually (partly) backfired on him, resulting in an unusual situation in which several million subsidized enrollees ended up benefitting from the pricing fallout, while millions of unsubsidized enrollees ended up being hurt by it...but other unsubsidized enrollees ended up being able to avoid being hurt by switching to a special off-exchange Silver plan (thus, the "Silver Switch").

UPDATE 10/30/18: Thanks to some additional reviews/checking by Dave Anderson, Louise Norris, Andrew Sprung and myself, I've been able to update the spreadsheet further; the blog post has also been updated correspondingly.

Last year, while Congressional Republicans were doing everything possible to officially repeal the Affordable Care Act via legislative means, Donald Trump spent months repeatedly threatening to cause the ACA individual market exchanges to either "explode" or "implode" (depending on the day) by, among other things, cutting off Cost Sharing Reduction reimbursement payments to insurance carriers.

There were several stories over the past few days about a new, just-released report from the General Accounting Office (GAO) which examined how well/poorly the Trump Administration handled the 2018 Open Enrollment Period last year.

Many of the findings were things which I had been either predicting or documenting all year:

  • Enrollment through Healthcare.gov Was 5 Percent Lower in 2018 than 2017
  • Stakeholders Reported That Plan Affordability Likely Played a Major Role in Enrollment
  • HHS Reduced Consumer Outreach for 2018 and Used Problematic Data to Allocate Navigator Funding
  • HHS Did Not Set Numeric Enrollment Targets for 2018, and Instead Focused on Enhancing Certain Aspects of Consumers’ Experiences

We identified a list of factors that may have affected 2018 healthcare.gov enrollment based on a review of Department of Health and Human Services information, interviews with health policy experts, and review of recent publications by these experts related to 2018 exchange enrollment.

Factors related to the open enrollment period:

March 20, 2018:

Azar Says He Is Not Aware Of Discussions On Blocking ‘Silver-Loading’ in 2019

HHS Secretary Alex Azar said that he has not been involved in discussions about blocking ‘silver-loading’ plans in 2019 and is not aware of any agency discussions about ending the practice at the moment.

...In recent weeks, some stakeholders have speculated that the Trump administration could block silver-loading in 2019. Several pro-ACA experts say that even though the administration may have authority to stop silver-loading, it would be a self-destructive move, especially leading up to the November midterm elections.

CMS Administrator Seema Verma told reporters on Thursday (March 22) that she was “very concerned” about certain aspects of ‘silver loading’ plans, namely that it raises costs for unsubsidized consumers and the federal government. Verma did not commit to allowing or blocking the process for the 2019 plan year.

This year, thanks to their reinsurance program, ACA individual market premiums dropped by around 23.6% on average, from a whopping $1,040/month to "only" $795/month per enrollee.

HOWEVER, they would have dropped about 4.5 percentage points more if not for Trump cutting off Cost Sharing Reduction reimbursement payments, or roughly $560/year per enrollee. AK averaged around 16,000 effectuated ACA-compliant individual market enrollees per month in 2017, so that amounts to right around $8.9 million total. 6,930 enrollees qualify for CSR assistance this year, so that averages around $1,280 apiece in CSR help, which sounds about right to me.

Last fall I wrote a lot about how different states would be dealing with the tens of millions of dollars in losses they were facing after the Trump Administration decided to cut off Cost Sharing Reduction (CSR) reimbursement payments to them. As a quick reminder, there basically four (or five, depending on your POV) options available to each carrier and/or state insurance commissioner for dealign with CSR costs for 2018:

  • No Load: They could gamble that the CSR problem would be resolved and the payments would be made after all (i.e., they would price normally).
  • Broad Load: They could spread the CSR cost out evenly across all of their 2018 ACA policies, on exchange & off.
  • Silver Load: They could load the CSR costs onto all Silver plans only (both on & off exchange).
  • Silver Switcharoo: They could load CSR costs onto all on-exchange Silver plans only, while also creating "mirror" Silver plans off-exchange without any CSR load.
  • Mixed Load: Each insurance carrier could choose whichever of the other 4 strategies they wanted to and let the chips fall where they may. Not sure if this really counts as a "strategy", since it's more or less "all of the above".

For nearly a year, healthcare wonks like myself, David Anderson, Andrew Sprung and Louise Norris have been heavily getting the word out to promote not just the "Silver Loading" CSR-load workaround, but an even more clever variant which I've coined "the Silver Switcharoo" which takes the concept of Silver Loading and goes one step further.

It gets a bit complicated, but here's my explainer of how the Silver Switcharoo works for ACA individual market policies.

The bottom line is that in theory/on paper, just about everyone either comes out ahead or at least is no worse off if they use silver switching:

A couple of months ago, I sounded a (semi-muted) alarm about the future of Silver Loading and Silver Switching of Cost Sharing Reduction costs when CMS Administrator Seema Verma not only failed to state flat-out that she wouldn't attempt to stop these workarounds, but started giving indications that she was actively considering doing just that.

If this were to happen, then it would be devastating to millions of people while helping almost no one, as my colleagues Dave Anderson, Andrew Sprung, Louise Norris and I explained in Health Affairs a few weeks back.

Well, it appears that this particular bullet will be dodged for at least one year, anyway:

HHS won’t ban silver-loading this year, Azar admits after being pressed. No time to write broad-loading regs for 2019 plan year.

I had actually already written about Vermont doing this back in March, but seeing how it was one of only 2 states (+DC) which didn't allow Cost Sharing Reduction (CSR) costs to be loaded onto premiums at all this year, I figured I should mention it here as well. Once again:

  • 20 states went the full #SilverSwitcharoo route (the best option, since it maximizes tax credits for those eligible for them while minimizing the number of unsubsidized enrollees who get hit with the extra CSR load);
  • 16 states went with partial #SilverLoading (the second best option: Subsidized enrollees get bonus assistance, though not as much as in Switch states; more unsubsidized enrollees take the hit, but they aren't hit quite as hard);
  • 6 states went with "Broad Loading", the worst option because everyone gets hit with at least part of the CSR load except for subsidized Silver enrollees;
  • 6 states took a "Mixed" strategy...which is to say, no particular strategy whatsover. The state insurance dept. left it up to each carrier to decide how to handle the CSR issue, and ended up with a hodge podge of the other three
  • 3 states (well, 2 states + DC, anyway) didn't allow CSR costs to be loaded at all. Their carriers have to eat the loss, which makes little sense, but what're ya gonna do?

99% of what I write is posted either exclusively here at ACASignups.net or, at most, is cross-posted over at Daily Kos. Once in blue moon I've written a freelance piece for healthinsurance.org, and I even wrote one piece for Cracked.com last year. Today I'm proud to announce that an article which I co-wrote with three other healthcare wonks (David Anderson, Louise Norris and Andrew Sprung) has been published by HealthAffairs:

Implications Of CMS Mandating A Broad Load Of CSR Costs

In October 2017, the Trump administration eliminated federal funding to reimburse insurers for cost-sharing reduction (CSR) subsidies, which they are obligated to provide to qualifying enrollees in the Affordable Care Act (ACA) Marketplace. President Donald Trump had threatened to eliminate CSR funding throughout 2017, so insurers and insurance regulators in many states had anticipated the move by adding the cost of CSRs to premiums for 2018.

Louise Norris is an awesome source for all sorts of healthcare policy/insurance data, but she's especially on top of developments in her home state of Colorado, where she and her husband Jay run a small brokerage outlet.

Today Jay and Louise have a couple of interesting tidbits out of The Centennial State (yeah, I had to look up their nickname myself).

First, according to Jay (via the Connect for Health Colorado exchange itself), as of May 7, 2018, C4HCO had exactly 142,474 people enrolled in effectuated ACA exchange policies statewide. This is noteworthy mainly because 161,764 people selected Qualified Health Plan (QHP) policies during the 2018 Open Enrollment Period.

That's (sort of) an 88% retention rate through early May. I say "sort of" because this presumably includes some amount of churn (if 100 people drop coverage and 100 off-season enrollees sign up, that'd be a net change of zero). Even so, it's actually slightly better compared to prior years, when the national effectuation number had usually dropped to around 87% by the end of March.

Well, Keith Hall, Director of the Congressional Budget Office, just confirmed pretty much everything that we've been saying for a year or more now:

The Affordable Care Act (ACA), in section 1402, requires insurers who participate in the marketplaces established under that act to offer CSRs to eligible people who purchase silver plans through the marketplaces. CBO views that requirement as establishing an entitlement for thoseeligible.

To qualify for CSRs, people must purchase a plan through a marketplace and generally have income between 100 percent and 250 percent of the federal poverty guidelines (also known as the federal poverty level, or FPL). The size of the subsidy varies with income.

CSRs reduce deductibles and other out-of-pocket expenses like copayments. For example, in 2017, by CBOs estimates, the average deductible for a single policyholder (for medical and drug expenses combined) with a silver plan varied according to income in the followingway:

A few weeks ago I posted an entry title, "Will Trump's HHS Dept. do the stupidest thing possible? Reply Hazy; Try Again Later."

The "stupidest thing possible" being referred to was whether or not CMS Administrator Seema Verma is planning on putting the kibosh on Silver Loading and the Silver Switcharoo starting in 2019:

The head of the Centers for Medicare and Medicaid Services would not say Thursday if the Trump administration is considering setting limits on how insurers that sell Obamacare plans structure subsidies for their customers.

"I'm not going to comment on the agency's deliberations," CMS Administrator Seema Verma said when asked by the Washington Examiner about rumors that had circulated about the issue. When pressed about whether any conversations had occurred, Verma said, "I'm just going to leave it at that."

NOTE: I've modified the headline to clarify that it's CSR reimbursements which are dead, not the actual CSR subsidies. Those eligible for CSR assistance will still receive it from the insurance carriers..it's just that the carriers aren't/won't be reimbursed for doing so. In response, they've jacked up the premium rates on others to cover their losses.

And in the end...neither Alexander-Collins, Alexander-Murray, Collins-Nelson or any other "ACA stabilization bill" was included in the final version of the "must-pass" omnibus bill last night.

As I understand it, this means that unless a standalone bill of some sort passes, there will be no significant legislative changes to the ACA exchange/individual market status for the 2019 Open Enrollment Period at the federal level...and that's extremely unlikely to happen this year.

A few days ago I warned Congressional Democrats that while I agree that appropriating CSR reimbursement payments at this point would be a net negative move thanks to the clever Silver Load/Silver Switcharoo workaround developed last year, there's one possible cloud surrounding that silver lining, so to speak: What if the Trump Administration were to attempt to put the kibosh on Silver Loading altogether?

I don't know the legality of such a move, mind you, but It has been thrown around the rumor mill of late, so I figured I should remind them to keep that possibility in mind.

Well, today I received some reassurance...

Azar Says He Is Not Aware Of Discussions On Blocking ‘Silver-Loading’ in 2019

Note: This is more of a placeholder for the moment; it'll be updated as soon as the numbers are available.

At around 10:30am this morning, Covered California will be announcing their final, official 2018 ACA Open Enrollment Period numbers, along with other various demographic info.

Keep in mind that California is second only to Florida in terms of ACA exchange enrollees, with around 13% of the national total each year, so this is a big deal.

The most recent updates from the largest state-based exchange pegged their numbers at 1,542,000 QHP selections as of January 21st, including:

  • "more than" 1.2 million renewing enrollees, and
  • "more than" 342,000 new enrollees signing up.

Last year Covered CA's 1/31 total hit 1,556,676 (or just under 15,000 enrollees higher). In 2016 they had their all-time high of 1,575,340, so they'd have to have tacked on about 34,000 more over the final 10 days of Open Enrollment this year in order to beat their record.

Over at the Obamacare: What's Next? Facebook group, John Bruder raised an odd premium situation he ran across in Hawaii.

According to our CSR Load Load spreadsheet, Hawaii is supposed to be one of the 20-odd states using the full "Silver Switcharoo" strategy. It also has a single Rating Area, and only has two carriers (Kaiser and HMSA) participating in the individual market (on or off-exchange) anyway, making it a pretty easy state to run a full apples-to-apples year over year comparison.

Kaiser is offering a total of 11 plans on the ACA exchange (3 Bronze, 3 Silver, 3 Gold and 2 Platinum), while HMSA lists 10 (2 Bronze, 3 Silver, 3 Gold and 2 Platinum). I couldn't run a perfect comparison to 2017 since each carrier changed a couple of their offerings, but it's pretty darned close.

Until today, I operated under the assumption that my home state of Michigan was among the 18 states which took the "Silver Load" approach to dealing with the Cost Sharing Reduction (CSR) cut-off by the Trump administration. Reviewing the SERFF rate filings of the various carriers participating in the individual market, it looked like most of them were loading the CSR cost onto both on and off-exchange Silver plans. I didn't check every single carrier, but that seemed to be the trend, so I filed the state under "Silver Load".

HOWEVER, earlier today, commenter "Cayo" chimed in to say:

I'm signing up for a plan off the exchange with Priority Health in Michigan. ON-Exchange, the plan is $365 a month, but off exchange (directly from their website), the price is $300 per month. I don't qualify for a subsidy, but it's still cheaper than my 2017 plan with BCBSM. That was the Multi-State Plan in Region 7 with Dental and Vision.

No one has been promoting the Silver Switcharoo option (in states which allow it) louder or more emphatically than I have for the past few weeks.

To summarize (again), this is where someone whose household income is too high for them to qualify for ACA tax credits (400% of the Federal Poverty Line) chooses an ACA-compliant off-exchange Silver plan instead, which is either identical or nearly identical to the same on-exchange policy in every way except that the additional CSR load hasn't been tacked onto it.

Here's a perfect example found by Louise Norris...ironically, this is via Priority Health here in Michigan, which (until today) I thought was a "Silver Load" state, not "Silver Switcharoo". I'll have to do some more research to be sure, but it sounds like at least one MI carrier (Priority) is going full Switch:

 

I've written a lot in recent weeks about the real world impact that Trump cutting off CSR reimbursement payments will have on 2018 premiums in various states depending on how they choose to load the additional cost. As I've noted repeatedly, there are basically four strategies they can take: They can assume the payments will continue; they can spread the load across all ACA-compliant policies; they can load all of the cost onto Silver plans only; or they can load all of the cost onto on-exchange Silver plans only, while also creating (if one doesn't exist) a special off-exchange-only Silver plan as a backstop for unsubsidized Silver enrollees (aka the "Silver Switcharoo").

As of this writing, most states have gone with the third or fourth of these options, but a handful are still pursuing the first or second.

A healthcare wonk-blogger colleague, Andrew Sprung of Xpostfactoid, described the four CSR loading strategies as The Four Sons from the Passover Seder:

A week or so ago, David Anderson, Louise Norris, Andrew Sprung and I co-wrote an article explaining how different states were planning on handling 2018 individual market pricing given the massive uncertainty surrounding ongoing Cost Sharing Reduction (CSR) reimbursement payments.

Our timing couldn't have been more fortuitous: Less than 48 hours after we posted the piece, Donald Trump announced that, sure enough, he's finally following through on his threat to pull the plug on CSR payments, effective immediately.

Covered California (CA's ACA exchange) just issued the following press release:

Covered California Keeps Premiums Stable by Adding Cost-Sharing Reduction Surcharge Only to Silver Plans to Limit Consumer Impact

  • In the absence of a federal commitment to continue funding cost-sharing reduction (CSR) reimbursements through the upcoming year, Covered California health insurance companies will add a surcharge to Silver-tier products in 2018.
  • However, because the surcharge will only be applied to Silver-tier plans, nearly four out of five consumers will see their premiums stay the same or decrease, since the amount of financial help they receive will also rise. Those who do not get financial help will not have to pay a surcharge.
  • Financial help means that in 2018, nearly 60 percent of subsidy-eligible enrollees will have access to Silver coverage for less than $100 per month — the same as it was in 2017 — and 74 percent can purchase Bronze coverage for less than $10 per month.
  • California and individual markets across the nation still need a clear commitment that the federal government will continue to make CSR payments to promote lower premiums, save taxpayer money and ensure health insurance companies participate.

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