Silverloading is the practice that many states and ACA insurers adopted after the direct federal reimbursement to insurers for the provision of Cost-Sharing Reduction (CSR) benefits was stopped in October 2017. Silverloading moved the cost of providing better benefits in the form of lower deductibles, co-pays and coinsurance from a behind the scenes payment directly into silver plan premiums. This had the effect of making silver plans much more expensive relative to non-silver plans. This made bronze and gold plans comparatively cheaper to silver. This is important because the subsidy level is determined by the gross premium of the second cheapest silver plan. Lots of low income households had always seen a zero premium bronze plan with a $7,000 deductible instead of a $10 silver plan with CSR benefits and a $300 deductible. With silverloading, way more people saw gold plans with $2500 deductibles being cheaper than some silver plans with $4000 or more deductibles.
However, silverloading is not the only response states and insurers could use to address the cost of providing CSR benefits. In 2018, five states required insurers to “broadload” CSR costs. Broadloading meant that a flat percentage surcharge was added to all plans. Relative prices between silver and not-silver plans did not change. There were no significant discounts for not-silver plans. Colorado and Delaware switched to silverloading in 2019. Mississippi, Indiana and West Virginia mandated silverloading to the current plan year. West Virginia has both high gross premiums and low enrollment:
Here’s a summary of the number of people who have signed up for private individual market coverage through the West Virginia exchange each year, during open enrollment:
- 2014: 19,856 people enrolled
- 2015: 33,421 people enrolled
- 2016: 37,284 people enrolled
- 2017: 34,045 people enrolled
- 2018: 27,409 people enrolled
- 2019: 22,599 people enrolled
- 2020: 20,066 people enrolled
- 2021: 19,381 people enrolled
This will change. West Virginia’s insurance regulators are allowing their insurers to silverload for 2022.
And West Virginia takes steps to increase the ACA state marketplace premium tax subsidy!
West Virginia will be joining most other states in a practice that health policy wonks call “silver loading.” It is an approach to pricing health insurance plans on the ACA state marketplace that both insurers and consumers support. Basically, a person’s premium tax credit protects that person from spending more than a certain percentage of their family income on the premium for a “benchmark” health insurance plan. That is how the premium tax credit dollar amount is calculated. Once that dollar amount is set, then a person can use those dollars toward the cost of the premiums of any plan offered on the ACA state marketplace.
So if the benchmark plan’s premiums go up, so does the dollar amount of the premium tax credit. Insurance companies offer many different plans on the marketplace. To adjust premiums for medical inflation and other factors, an insurance company can raise prices across the board for all their products on the marketplace, or just raise the price on the benchmark plan. Either way the insurance company covers their increase in costs from medical inflation, etc. The Office of the Insurance Commissioner has just decided that it is ok for an insurance company to load their premium increases more heavily onto just the benchmark plan – which is the second lowest silver plan offered. Thus the term “silver loading.”
Every new shopper on the ACA across the country will be experiencing a positive price shock this November when they start looking for ACA health insurance because the American Rescue Plan significantly lowered net of subsidy premiums for everyone while also expanding subsidy eligibility significantly. However, West Virginia residents will be seeing a huge positive price shock as almost everything will be notably less expensive in November 2021 compared to November 2020 when the last open enrollment started.
This change was the result of long term public advocacy with people and organizations that dug deep into the rules and pulled in nerds (including me) to explain the oddities of the ACA. In November, plenty of people in West Virginia will see great improvements in the value of health insurance that they can purchase on Healthcare.gov.