Yesterday, CMS released the 2020 ACA public use files. I’ve done my regular analysis of the “Silver Gap” between the benchmark Silver plan and the least expensive plan in each metal band for a single, subsidized forty year old non-smoker
- More competition has decreased the number of counties where a Gold plan is less expensive than the benchmark
- 2017: 5 counties on Healthcare.gov
- 2018: 594 counties on Healthcare.gov
- 2019: 1136 counties on Healthcare.gov
- 2020: 937 counties on Healthcare.gov
- Low to no cost Bronze plans are quite common
- Iowa got smart
- 12 counties in Oklahoma still have zero premium Gold plans
This analysis is only relevant for individuals who make between 100% to 400% Federal Poverty Level (FPL) as this is the group that receives Advanced Premium Tax Credits (APTC). Everyone else pays full price. Subsidized individuals are sensitive to premium spreads while non-subsidized individuals are sensitive to premium levels.
I am curious if people will be hyper rational buyers by incorporating expected MLR rebates into their premium and purchase decisions.
We can strongly suspect that the 2020 MLR period which includes plan years 2018, 2019, and 2020 will have above average MLR rebates. 2018 was tremendously overpriced. 2019 was slightly overpriced. We can assume that insurers believe that 2020 will be priced appropriately. MLR rebates for plans that are purchased next month won’t be paid out until September 2021 so there would be some significant discounting plus uncertainty in the estimate but I think hyper rational buyers with too much time on their hands could make good guesses as to which insurers are likely to pay out 2021 rebates. And from there people could purchase plans with higher net of subsidy premiums than other alternatives with the expectation that MLR rebates would eventually make them better off.
I suspect several people on my Twitter feed will do that. But that is not a statistically, economically or actuarially meaningful number. It is a question that I will want to poke at next spring.
germy
error message in your link
guachi
How did Iowa get such dirt cheap Bronze Plans? A few states have counties with cheap Bronze Plans (looking at you, Oklahoma) but every Iowa county has cheap plans.
lahke
Did you mean “increase” in your first bullet? The number of plans is going up over time?
Butch Fries
@guachi: I was asking the same thing. Spouse’s bronze plan is $936 a month because we are just over the limit and the plan is garbage. We send the premium check every month but don’t receive anything that deserves to be called insurance in return. (Blue Cross actually dreamed up a way to deny coverage for preventive and wellness services and also invented a second tier of deductibles that could leave us on the hook for $21,000 before insurance actually kicks in.) We are unfortunately in a rural area where there is no competition.
daveNYC
Hyper rational about MLR rebate? Heck, I’d like to see numbers on how many people are even aware they exist.
Quaker in a Basement
@lahke: Yeah. What lahke said.
ProfDamatu
There’s yet another piece to this puzzle – MLR rebate eligibility depending on the previous year’s enrollment, despite MLR rebate calculations being on a 3 year rolling average. Rebates each year go to the people who were covered by an insurer in the previous year (so, the rebates paid out this year by, say, Anthem (based on the MLR average for plan years 2016, 2017, and 2018), go to folks who had Anthem plans in 2018). If you want to capture the higher MLR rebates caused by the 2018 shenanigans, you have to stick with the insurers that engaged in them, regardless of what you might predict about which insurers are likely to overprice for 2020. Whoever does, it’s unlikely to be as massively as was the case in 2018 (well, I would hope not; ideally insurers would learn from their mistakes).
There’s a great example of this in Virginia, where Optima took advantage of their monopoly in a lot of the state in 2018 to massively overprice their plans (apparently they simply did not give a shit about the people above 400% FPL). This year, MLR rebate checks went out to everyone Optima screwed over in 2018…but that won’t be the case next year, when MLR rebates could be even higher (the 3 year rolling average will no longer include 2016, a year in which Optima actually lost money on individual plans, MLR over 100%). Optima went from something like 53,000 indy market subscribers in 2018 to like 15,000 for this year…so it’s those 15k who stuck with them who’ll be getting the rebates next year.
ProfDamatu
@Butch Fries: This sort of thing is why I decided to stay with Optima, despite the fact that Anthem came in to my local market with lower premiums this year; fortunately, I’m a subsidized buyer, so I didn’t personally suffer from Optima’s overpricing last year. I’d just heard too many horror stories about the difficulties in getting the Anthem/HealthKeepers/BCBS behemoth to pay for anything. I mean, I still have a ridiculous deductible and OOP max, but at least there aren’t any games with second tier deductibles or dodging of payment for preventive care. In fact, I’ve never had a claim denied, other than exact duplicates submitted in error.
Butch
@ProfDamatu: I’m in the Upper Peninsula (Michigan, the part between Wisconsin and Lake Superior) and all the insurers except for Blue Cross left this area several years ago, so I don’t have an alternative except an underwritten plan, which I’m exploring now.