Insurers have signed their final rate contracts for 2018 participation on the Exchanges. Most insurers are assuming that Cost Sharing Reduction (CSR) subsidies may not be paid in 2018. State regulators in most states are allowing insurers to either price CSR into their baseline premiums or they approved two sets of rates, one with CSR and one without and are allowing insurers to reprice mid-year if CSR is pulled in 2018. Insurers are getting ready for a market that they know is not stable and is prone to monkeywrenching. Most of that prep work means raising premiums.
It also produces weird effects. States that tell their insurers to first assume that CSR will not be paid and then to load the entire cost of providing the CSR benefit onto Silver plans will see strange pricing. Silver plans are nominally 70% actuarial value. In typical times, they are more expensive than Bronze, less expensive than Gold and much less expensive then Platinum plans. That is not the case in the No CSR, Silver Load scenario.
The chart below uses data from a single insurer in a region where they are the sole carrier. They received rate approval to assume that CSR would not be paid and to load the incremental CSR costs only onto the Silver plans. We can see that Silver is now more expensive than Gold and Bronze and just slightly less expensive than Platinum.
This is the Gold Gap strategy for 2018. This is what happens when the benchmark has been effectively moved and attached to approximately 90% actuarial value instead of 70% actuarial value. 80% AV plans become comparatively much cheaper for subsidized buyers and Platinum plans are no longer far out of reach for most subsidized buyers.
Bronze plans are now much cheaper than Silver plans. Bronze plans in 2017 for this carrier were priced as if they were about 10 actuarial value points less comprehensive benchmark. In 2018, Bronze plans are priced as if they are 30 actuarial values points less comprehensive than the benchmark plan. A pair of 40 year olds earning $32,000 now could buy a Gold plan for $1 month. Bronze plans will be extremely inexpensive up to the edge of the subsidy income range. Lower net of subsidy costs will bring in more people.
The downside of the Gold Gap is that is it only an on-Exchange mechanism that will improve enrollment. Off-Exchange, non-subsidized buyers will be facing higher costs. Bronze, Gold and Platinum buyers will be facing price increases that are a function of medical trend and the one time hit of the re-institution of the health insurance premium tax. Silver buyers will most likely need to change metal tiers as they will be seeing massive premium increases.