The ACA makes insurance more affordable for people through a cost-sharing reduction (CSR) benefit. CSRs are available to consumers with incomes between 138% and 250% of the Federal Poverty Line ($27,311 to $49,475, for a family of three) who purchase Silver level plans. CSRs are sliding scale discounts on cost sharing, including deductibles, co-pays, and co-insurance. New analysis from Washington D.C.-based Avalere Health of nationwide Marketplace enrollment for 2015 shows that only 73% of enrollees eligible for cost-sharing reductions chose Silver level plans. Thus 2.2 million consumers forfeited this benefit.
According to Avalere’s analysis, “consumers may not be aware that CSRs are available and the benefits they offer. ‘Additional consumer education and more sophisticated decision support tools are likely needed to ensure that all patients are accessing the benefits available under the Affordable Care Act,’ said Elizabeth Carpenter, vice president at Avalere. ‘Specifically, consumers need tools that highlight the tradeoff between monthly premiums and out-of-pocket costs and demonstrate the benefits of cost-sharing reductions.’”
In New York, however, 78% of eligible enrollees chose plans that came with CSRs – 5% better than the national average. New York also saw a steep curve between the three CSR tiers: 97% of those eligible for the highest level of CSR subsidy – 94% actuarial value – enrolled in Silver plans; but only 62% of people eligible for the lowest level of CSR subsidy – 73% actuarial value – enrolled in Silver plans (see graph below). This suggests that New York consumers are making strategic enrollment decisions. New York’s 11,000 assistors, who disproportionately serve consumers with lower incomes, are likely a part of our success story.
New York’s data also suggest that consumers eligible for the lowest level CSRs (CSR-III) – with a $1200 deductible – may still face affordability problems. These consumers may be choosing Bronze level plans to save money on premiums, or they may forgo CSRs altogether and “buy up” to Gold level plans.
Come 2016, consumers in the CSR-I and CSR-II bands will qualify for the Essential Plan (EP), which will have very low cost or no cost premiums and minimal cost sharing. This may underscore the affordability issues facing consumers eligible for the CSR-III subsidies, earning between $39,581 and $49,475, for a family of three.
In its second Open Enrollment report, the New York State of Health Marketplace (NYSOH) identified trends in plan selection. One stand-out trend is the high uptake of out-of-network products in the areas in which they are offered.
An “out-of-network” product provides insurance coverage for services delivered by providers that do not belong to the carrier’s network. During the 2015 Open Enrollment period, carriers offered Qualified Health Plans (QHPs) through NYSOH with out-of-network coverage in 11 counties of the state: Albany, Allegany, Cattaraugus, Chautauqua, Erie, Genesee, Niagara, Orleans, Rensselaer, Saratoga, and Wyoming counties.
In these 11 counties, a whopping 21 percent of QHP enrollees selected plans with an out-of-network benefit. QHPs with an out-of-network benefit are more expensive than plans that only cover in-network providers – costing 7% to 40% more in monthly premiums – but a significant share of consumers clearly value this option when it is offered.
HCFANY will continue to advocate that carriers should offer out-of-network options in all counties. New York is one of only three states where out-of-network coverage is not widely available in the individual market. As insurers have moved to narrower networks and more limited networks, it has been especially hard for people with serious illnesses and disabilities who are receiving care from many providers to find a network that includes all of their providers. Even with improved network adequacy and external review appeal processes, many consumers would prefer to purchase a more expensive plan with out-of-network coverage than a cheaper plan that requires them to say in-network. People paying for vital treatments with trusted providers – HIV and cancer specialists, for example – should retain the right to see these providers without having to pay out-of-network rates and cover the cost entirely out-of-pocket.
Eleven New York counties (shown in green) offer out-of-network plans in the Marketplace
This is the fifth in a series of blog posts about the NYSOH 2015 Open Enrollment Report.
The New York State Department of Financial Services (DFS) released its final decisions on the rate review process (Don’t remember what that is? Check out our blog post about it here). The 17 carriers on the individual insurance exchange were approved for a weighted average premium increase of 7.1%, which is 3.3% lower than requested by the plans. These figures mask considerable variation among plans; Health Republic, Empire HMO, Emblem HIP, and MVP Health Plan were all approved for double digit rate increases, while United and Oxford OHP had their requests cut by 20.4% and 17.6%, respectively. New York’s individual market has more choices than most other states, so it behooves consumers to shop around to get the best deal for themselves and their families in this upcoming open enrollment period, beginning November 1, 2015.
While the New York State Health Plan Association condemned DFS’s approved rates as too low, their customers can’t help but compare their 7.1% increase to the much lower 4% rate increase California allowed for 2016. As HCFANY described in its rate comments, New York’s proposed and now adopted rate increases exceed the national rate of medical cost inflation predicted by independent analyses; considerably exceed growth in wages, according to the most recent Employment Cost Index released by the Bureau of Labor Statistics; and they are significantly higher than the average rate increase of 5.7% approved by DFS last year.
We recognize that some plans had seriously underpriced premiums in the past and are facing financial difficulties. DFS has a challenging balancing act to perform. DFS correctly notes that its rate reductions will still keep premiums 50% lower than they were before the launch of the New York State of Health marketplace. All told, the prior approval process will save New York consumers $430 million in premiums for 2016. Unfortunately, the price hikes will still hurt.
“Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them,” summarized Chief Justice John Roberts at the end of his landmark June 25th opinion in King v. Burwell. The decision upholds the right of people in states with federally-facilitated exchanges to get “premium tax credits”, the subsidies provided under the 2010 Affordable Care Act to help low and moderate income people afford health coverage.
Narrowly at issue in the case was a clause saying that subsidies are available in exchanges “established by the State”, leading to a legal challenge arguing that people in the 34 states that use healthcare.gov, the federally-facilitated marketplace, should not receive the subsidies. Chief Justice Roberts’s opinion, speaking for a 6-3 majority (Justices Scalia, Alito and Thomas dissented) makes clear that this language was a drafting error and totally contrary to the intent of Congress. Recent media interviews of those involved with drafting the law also support the decision.
In the 1990s, Chief Justice Roberts explained, New York and other states banned insurers from denying coverage or charging higher premiums to anyone due to their bad health. In response, many bought health coverage only when they got sick, forcing health insurers to increase premiums to account for an ever sicker risk pool, causing even more healthy people to drop their insurance (known as the “death spiral”). The ACA addressed this problem by adding two reforms necessary to make the system work: (1) a requirement that all Americans (with limited exceptions) maintain health coverage; and (2) the premium tax credits. In light of this history, Chief Justice Roberts said in his opinion, Congress could not have meant for residents of the 34 states not to get federal subsidies.
As a result of the decision, six million Americans will not be threatened with losing their coverage and health insurance markets are not facing chaos. But it’s also critically important that the ACA has turned a corner. The major legal challenges are over. A majority of Americans now support the law. As ACA supporters, we now have a new opportunity to increase our focus on making the law work rather than refighting the battles of 2009 and 2010.