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.