Health wonks like to say that the ACA is not a single program but fifty one programs. It works well in some states (California) and poorly in others (Arizona) and muddles through in most. This is a good insight but it is an incomplete insight. The ACA as experienced has some state level components such as the decision to expand Medicaid or not and risk pool/risk adjustment interactions but the Exchanges are experienced best at the zip code and county level. Carriers can be in a state but only sell in a select number of counties. Some zip codes can span multiple counties. This matters.
Tennessee is an extreme example of the differing local experiences of the ACA that depends on the county a person resides in. The map below is a county level map of the 2017 differences between the least expensive Silver plan and the benchmark Silver plan for a single 40 year old non-tobacco user. A big gap means the cheapest Silver plan for a subsidized individual is a better deal after the subsidy. Green is a big gap, red is a small gap.
Perry County is one of a cluster of counties in Central Tennessee that has the biggest spread in the country. It is an extreme Silver gap at $97.62. There is a single carrier, Blue Cross and Blue Shield of Tennessee that offers two Silver plans. Roane County is the other extreme. A single carrier is also in the market, Humana. However Humana is offering only a single Silver plan which means the spread between the benchmark and the cheapest plan is zero. There is no chance of a good deal for a Silver below benchmark.
What does this mean?
— Richard Mayhew (@bjdickmayhew) November 3, 2016
— Richard Mayhew (@bjdickmayhew) November 4, 2016
This is an extreme example. In Perry county, a 40 year old earning $25,000 a year, which is slightly more than 200% Federal Poverty Level (FPL), saves $100 a month or roughly 5% of their income because of the Silver Gap compared to the same individual in Roane County. Going to a broader scenario, a married pair of 40 year olds plus a ten year old kid can earn up to $38,600 (~190% FPL) before they have to pay a dollar for Silver plan with Cost Sharing Assistance. In Roane County, that same family is paying $182 per month or 5.6% of their monthly income for their Silver plan.
If that family of three is a pair of 50 years olds and a 10 year old, the Perry County family can earn up to $45,000 a year before they have to pay a dollar for their Silver plan. Bronze plans are zero dollar premiums for this family when they earn just north of $75,000.
The same family in Roane County pays 7.2% of their monthly income for a Silver plan if they earn $45,000 a year. Their zero dollar Bronze plan ends once they earn more than $43,500.
From a risk pool perspective, Perry County should be extremely healthy. The subsidies are rich enough that almost everyone can afford a plan even if it is a minimal Bronze plan. Roane County will see good uptake among people who earn under 150% FPL and decent uptake to 200% FPL. Above those income levels, there will be significant adverse selection as the deals just aren’t too good for healthy people, so the population will be fairly sick and expensive.
More importantly, people in Perry County who are getting subsidized will see the ACA working really well. They have good, cheap health insurance. However their cousins across the state are getting a raw deal compared to the great deal that they get in Perry County. This is especially true as we move up the income scale which means moving up the likely voter scale and influence scale.