More Obamacare Enrollees Getting Higher-Value Health Plans

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By Sara Hansard

Many enrollees in Obamacare-compliant health plans in 2018 will pay lower out-of-pocket costs because they are shifting to higher-value plans, early indicators show.

Early enrollment data on Affordable Care Act-compliant plans show an increase in the share of people signing up for higher-value gold-tier plans for 2018, according to online health insurance brokerage firm eHealth.com. Ironically, the gold plans are a better deal than lower-value silver plans in many cases due to President Donald Trump’s Oct. 12 decision to end payments to insurers to cover subsidies they are required to provide for low-income people.

But an unprecedented mix of events in the individual market may have longer-term effects on its stability. Signups for ACA-compliant plans by people who make too much money to receive premium tax credit subsidies under the ACA are expected to fall about 22 percent in 2018 for the second year in a row due to 22 percent annual rate hikes, Oliver Wyman actuary Kurt Giesa told Bloomberg Law.

‘A Tale of Two Cities’

“You have a tale of two cities out there,” Andrew Ratner, chief marketing officer of the Maryland Health Benefit Exchange, told Bloomberg Law. “People inside the subsidy window are pleased. People outside the subsidy window, where there are bigger rate increases, are not pleased. Something has to be done to stabilize that. That’s not a good long-term situation.”

Through Nov. 21 Maryland’s state-based marketplace enrolled about 130,000 people for 2018, Ratner said. The share of people who signed up for gold-tier plans, which cover an average of 80 percent of medical claims, has almost doubled from 5 percent in 2017, he said. Silver-tier plans covering 70 percent of claims have dropped from 72 percent in 2017 to 70 percent for 2018, he said.

Eighty-three percent of the approximately 12.2 million people who enrolled in the ACA’s individual marketplaces in 2017 received premium tax credit subsidies, which are based on the second-lowest-cost silver plan, and silver plans have been the most popular type chosen by ACA enrollees since the exchanges opened in 2014. Households with incomes between 100 percent and 400 percent of the federal poverty level—$24,600 to $98,400 for a family of four in 2017—qualify for subsidies.

Buying Plans `for the Cost of a Movie Ticket’

In Maryland’s rural counties, where CareFirst BlueCross BlueShield is often the only choice, many people who qualify for subsidies are able to buy silver-tier plans “for the cost of a movie ticket,” Ratner said.

Due to different actions by states to deal with the loss of the cost-sharing payments to insurers, “States are going to look really different this year,” Jessica Altman, acting commissioner of the Pennsylvania Insurance Department, told Bloomberg Law.

Pennsylvania uses the federal HealthCare.gov exchange, but the Democratic-led state has been active in working to get people enrolled, Altman said. In addition to higher numbers of enrollees so far during this open enrollment period, “We’re seeing a lot of folks enrolling for the first time,” she said. “That’s encouraging as well.”

Insurers Added Costs to Silver Plans

Most exchange insurers increased prices for the 2018 silver tier plans to cover the cost of the discontinued cost-sharing payments. That increases subsidy payments, which can be used to buy plans on any of the four actuarial value tiers in the exchanges. In many areas, gold tier plans will cost about the same as silver tier plans, and most counties will have free exchange plans for low-income enrollees.

As a result, Oliver Wyman’s Giesa expects to see an expansion in the number of subsidy-eligible people in 2018. But for people who don’t receive subsidies, “We’ll see fewer of them signing up for health insurance,” he said.

Change in Enrollment in Individual Market

The ACA’s requirements that insurers cover everyone regardless of medical status without charging more “comes at a real cost,” Giesa said. “Nobody’s helping the nonsubsidy eligible pay that cost. They’re picking it up themselves. And it’s a significant cost.”

Lower Enrollment Seen

While the nearly 2.3 million health plans selected for 2018 in the 39 states using HealthCare.gov from Nov. 1-18 exceed the number of plans selected at the same time a year earlier, the shorter open enrollment period for 2018 could well result in lower enrollment, Caroline Pearson, senior vice president of health policy consulting firm Avalere Health, told Bloomberg Law. “The pace of signups continues to look slow relative to prior years,” she said.

Open enrollment for 2018 is from Nov. 1 through Dec. 15, about half the length of open enrollment for 2017.

“There are multiple unique things going on with 2018 open enrollment,” Greg Fann, a consulting actuary with Axene Health Partners LLC in Murrieta, Calif., told Bloomberg Law. Fann is a fellow with the Society of Actuaries, which credentials actuaries.

Reduced Enrollment in Unsubsidized Market

“I would expect a reduction in enrollment in the unsubsidized market,” Fann said. As ACA rates go up, fewer people without subsidies will enroll, he said.

But the increase in subsidies due to the loss of cost-sharing reduction payments to insurers may be a one-time event if Congress restores the payments. In that case, “I would expect subsidized enrollment to decrease” in future years, Fann said.

Gold Plan Selections Up

Individuals selecting gold plans during that period have jumped from 10 percent to 13 percent, eHealth reports. The share of enrollment in silver plans as well as bronze plans, which cover an average of 60 percent of claims, has dropped, eHealth found. On average eHealth has enrolled more than 100,000 people in ACA-compliant plans annually.

“Very often it’s a family [with adults] in the 40-55 age range, where we’re seeing the biggest move towards gold,” Nate Purpura, vice president of market for individual and family products for eHealth, told Bloomberg Law. In addition, the number of young adults, between the ages of 18 and 34, moving into bronze plans has almost doubled, he said. “If they’re seeing they can get a really large subsidy to pay the premium, that may be why they’re buying bronze plans,” he said.

That could have a positive long-term effect on the reducing premiums in the exchanges if enrollees are healthier on average, Purpura said. Only about 20 percent of exchange enrollees have been young adults, well below the 40 percent level that the federal government had hoped to attract initially, he said.

Impact Not Clear

It isn’t yet clear what will happen when the dust settles after the 2018 open enrollment period ends, Kris Haltmeyer, vice president for policy with the Blue Cross Blue Shield Association (BCBSA), told Bloomberg Law. Blue Cross Blue Shield companies serve a majority of exchanges and are the most available type of plan offered in them, often in areas with limited participation.

“It could be consumers have gotten the message they need to sign up earlier,” Haltmeyer said.

An uptick in sales of gold plans could be because prices for gold plans are closer to silver plans than they have been in the past, Haltmeyer said. “But it could also reflect risk differences,” with sicker people choosing better-value gold plans, he said.

BCBSA has called for permanent federal funding to cover people with high medical costs, such as through a permanent reinsurance program. A move by congressional Republicans to repeal the ACA’s individual mandate requirement that everyone buy health insurance or pay a penalty further increases the need for permanent federal funding for sicker people, Haltmeyer said.

Claims in the individual market are about 17 percent higher than in the employer market, Haltmeyer said. With the ACA’s elimination of discrimination based on pre-existing conditions, which BCBSA supports, “you are seeing a higher-risk population buy in this market,” he said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bloomberglaw.com

For More Information

eHealth's “Half-time Report” on the 2018 Open Enrollment Period is at http://src.bna.com/uuB.

Oliver Wyman's report, Rising Premiums Hinder ACA Enrollment, is at http://health.oliverwyman.com/transform-care/2017/10/rising_premiums_hind.html.

The Centers for Medicare & Medicaid Services's Health Insurance Marketplaces 2017 Open Enrollment Period Final Enrollment Report is at http://src.bna.com/uv2.

Avalere Health's report, Most Counties Will Have Free 2018 Exchange Plans for Low-Income Enrollees, is at http://src.bna.com/uwp.

The CMS's Weekly Enrollment Snapshot: Week Three is at http://src.bna.com/uwm.

Avalere Health's report, 2018 Exchange Enrollment Tracking Behind Prior Years, is at http://src.bna.com/uwA.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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