North Carolina, Medicaid Expansion, Premiums and Silver Gapping

North Carolina Republicans have introduced a Medicaid Expansion bill. It is not a non-waiver expansion. Instead, it wants work requirements, wellness requirements and premium payments of 2% of income for beneficiaries who earn between 50% and 138% Federal Poverty Level. We know that general wellness programs do nothing but add administratively complexity when applied to the employer sponsored universe. We know that work requirements are paperwork requirements that increase compliance costs and reduce enrollment without actually advancing the core purpose of Medicaid.

I want to focus on premiums. Here is the language from the bill:

SECTION 4. Participant contributions. – NC Health Care for Working Families
39 program participants shall pay an annual premium, billed monthly, that is set at two percent (2%) of the participant’s household income. Participant contributions shall be utilized to fund the program as required by Section 7 of this act. Failure of a program participant to make a premium contribution within 90 days of its due date shall result in the suspension of the program participant from the program unless that program participant shows that he or she is exempt from the premium requirements prior to the expiration of that 90-day period. An individual who was suspended from the program for nonpayment of the monthly premium may reactivate coverage if that individual meets the eligibility requirements and pays the total amount in previously unpaid premiums owed by the individual.

Collecting these premiums are expensive. 2% of 50% FPL is $10-11 per month. The administrative cost of mailing bills, processing checks and sending reminder notices and chasing back premiums will eat up a significant amount of administrative expenses. Arkansas tried a complex monthly individual collection process and they ended up spending twenty times as much money as they collected. Here is evidence from 2017:

Collecting small dollar premiums that are unlikely to be universally tied to a credit card or an automated electronic withdrawal is expensive. Chasing people down for these payments is expensive. Retroactively repaying claims is expensive. This is an administrative nightmare.

It is also likely to make many people objectively worse off due to Silver gapping on the Exchange.

A single individual earning $16750 (approximately 138% FPL) is expected to pay $48 per month for the benchmark Silver plan. This is approximately 3.4% of income. This buys a CSR-94 plan with a $200-$500 deductible. However, as we all know, people can take their ACA subsidy and buy a less expensive plan. They save every incremental dollar.

Monthly premiums for healthy people who are not network sensitive and only price sensitive are cheaper if there is at least a $20 gap between the benchmark and the least expensive silver plan. Below is a Tableau of the Silver Gap for a single 40 year old in 2019. Every county except Wake County has at least a $20 Silver Gap. Even in Wake County, married couples and adults with children earning 138% FPL will likely qualify for less expensive ACA plans as premiums increase faster than income for a given FPL level when more people are added to a family unit so therefore the subsidy amount increases faster than income. Almost all counties have zero premium Silver plans for 40 year old individuals earning just over 100% FPL.

Collecting and tracking premiums will be an administrative nightmare.

Collecting premiums will make many people who are currently on Exchange in a CSR-Silver plan worse off.

Collecting premiums will deter long term enrollment of the reasonably healthy.

But I’m at a point where a sub-optimal Medicaid expansion with known and significant problems is better than no expansion.

22 replies
  1. 1
    burnspbesq says:

    I don’t think it’s wrong to assume, until proof to the contrary emerges, that a Republican-sponsored Medicaid expansion is intended to (a) fail, (b) fail expensively, and (c) lead to a backlash against the very idea of Medicaid.

  2. 2

    @burnspbesq: Explain Arizona, Arkansas, Ohio etc.

    I think the more accurate statement is “expensive, complex and more limited than it needs to be but significantly better than not expanding”

  3. 3
    Another Scott says:

    Alright, who broke the blog.

    I only get a dark grey window in most of my poking around here. I was only able to get this far via a Private Browsing window on Chrome. I can’t get into lower threads.

    Someone kick the hamsters….

    [ That was fast! Thanks! ;-) ]


  4. 4
    sharl says:


    Folks, it looks like the Balloon Juice site is down.@Johngcole @bettycrackerfl @TomLevenson @DougJBalloon— Cheryl Rofer (@CherylRofer) April 23, 2019

    (DougJ & JGC already responded to Cheryl’s tweet)

    ETA: hmm, my comment went through…dunno what’s going on with other folks.

    ETA2 – saw Alain’s comment (#5) just now. Carry on…

  5. 5
    Alain says:

    @Another Scott: I’m tweaking some ad code and since this version of the site is not on the test server, I’m working with the live site. Sorry for the hiccup. PHP is unforgiving.

  6. 6
    Alain says:

    FYI if you see part of the site and not the whole thing, then the site isn’t down, it’s having issues. BIG difference!

  7. 7
    Amir Khalid says:

    Is that why some photos have not been loading for me?

  8. 8
    Alain says:

    @Amir Khalid: Shouldn’t affect that, but this whole CDN/cache thing is a bit spooky. I only added in new code for ads and on some browsers, the change wasn’t reflected and on others, it was immediately. So strange. I need to get this one more ad setup and then I can step away. This is not how I wanted to spend the morning! Once I’m done, I’ll reset the caches and the site will be a bit slow until they’re rebuilt and propagated out across the CDN (content delivery network).

  9. 9
    Anonymous At Work says:

    @David Anderson: What about the assumption that the “expansion” (and I think the air quotes are justified) is about preempting a ballot initiative that would offer a pure expansion? With Nebraska, Idaho, and Utah all likely to proceed to court to argue over “text of the initiative” vs. “what the legislature passed at gunpoint, ” a smart GOP legislature would offer the most unworkable system possible to (re-)enforce that Obamacare doesn’t work while heading off attempts to make it work.

  10. 10

    @Anonymous At Work: Not in North Carolina — I can see your suspician elsewhere

  11. 11
    Hoodie says:

    About what you would expect from those guys. The unnecessary administrative expense is probably a feature, not a bug, likely they’ve set up some cronies to benefit from that. The NC GOP goes beyond your typical bible thumpers and racists, they’re also corrupt as hell. What really has happened here is that the old corruption gene transferred to them from the predecessor good ol’ boy NC Dem party transferred to the modern NC GOP but, unlike the NC Dems, the NC GOP is not constrained by any party ethos to “help the little guy.”

  12. 12
    rikyrah says:

    Did North Carolina have Medicaid expansion from voter referendum, or is this their way to try and get around it, and still not do it?

  13. 13
    Mike E says:

    @burnspbesq: Ya, insiders here expect this to get lost on its way between legis chambers…the governor is good so far with his messaging on the expansion, and he will use the TEA-GOP’s intransigence for full effect here

  14. 14
    JustRuss says:

    Thanks for the analysis. What a cluster.

  15. 15
    Brachiator says:

    Instead, it wants work requirements, wellness requirements and premium payments of 2% of income for beneficiaries who earn between 50% and 138% Federal Poverty Level.

    Jesus Fuck! Again with the goddam work requirements. I still don’t understand Republicans’ obsession with this.

    Agree that wellness requirements are usually pointless.

    Are these Republican proposals endorsed by insurance industry conservative lobbyists? Some of this seems stupid even by standards of cynicism and greed.

    The premium payments. Is this like re-introducing the individual mandate of the ACA?

  16. 16

    I don’t know that Republican attempts to expand Medicaid are intended to fail, but they are certainly aimed more at making political points than they are at helping the most people for the lowest price. Sometimes the point is to make it clear that Those People aren’t getting a free ride. Sometimes the point is to head off a more workable solution. Sometimes the point is to send money to their cronies. A related point is that the longer it has taken a state to expand under Republican control, the less likely the Republicans in that state are to expand with no strings.

  17. 17
    Villago Delenda Est says:

    The goal is to deny health care coverage to the poor.

    Mission accomplished with this plan.

  18. 18
    Just Chuck says:

    I haven’t read a lot of these posts, so I’m a little behind on the technical terms. Could someone ELI5 what the heck “silver-gapping” is?

  19. 19

    @Just Chuck: Silver Gapping is an ACA premium strategy that takes advantage of the fact that the benchmark premium is the 2nd cheapest Silver price and the buyer of a lower cost plan pockets the entire difference. A smart/aggressive insurer Silver Gaps by maximizing the premium spread between the benchmark premium and the cheapest Silver plan.

  20. 20

    @Just Chuck:

    Could someone ELI5 what the heck “silver-gapping” is?

    Silver gapping is taking advantage of the way subsidies are structured in Obamacare exchanges. Essentially, the subsidies are built around the second cheapest silver plan on the market. What that means is that in places where there are few insurers and/or there’s active collusion between the insurance companies (possibly coordinated by the state government) it’s possible to arrange for very cheap insurance for heavily subsidized people by ensuring there’s a big gap in price between the cheapest and second cheapest silver plan. If the gap is big enough, people who get the full subsidy can get a free or negative cost silver plan by going with the cheapest instead of second cheapest plan on the market.

  21. 21
    TenguPhule says:


    Jesus Fuck! Again with the goddam work requirements. I still don’t understand Republicans’ obsession with this.

    Its designed to get sick people off of coverage in order to kill them through lack of medical care.

    Everything makes perfect sense once you accept they’re fucking evil.

  22. 22


    Jesus Fuck! Again with the goddam work requirements. I still don’t understand Republicans’ obsession with this.

    It makes perfect sense if you start from the assumption that people on Medicaid are healthy enough to work but are refusing to because they’re a bunch of shiftless layabouts who love living on the government’s dime. This is easy enough to believe if you’re a moronic bigot, so it plays very well with the Republican base.

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