Silver loading and exchange: unintended consequences of pulling levers of health policies


PITTSBURGH, June 20, 2019 – A White House movement in 2017 – criticized by many health policy analysts as an attempt to reduce the Affordable Care Act (ACA) – had unintended consequences that have improved the affordability of health insurance for enrolled in the Marketplace, an analysis of the Graduate School of Public Health at the University of Pittsburgh confirms.

The results, reported today in the journal Health Services Research, show that cutting the Trump administration of ACA's shared cost reduction payments to health insurers has made insurers compensate by shifting premium distribution in order to increase federal government subsidies to those enrolled in the Marketplace. And, surprisingly, the geographic markets in which a single insurer holds the monopoly have resulted in the best price for low-income subscribers.

"The narrative about the monopoly markets has been largely problematic and melancholic," said Coleman Drake, Ph.D., an assistant professor in the Department of Health Policy and Management at Pitt Public Health. "But in fact, in terms of accessibility, monopoly insurance markets are resulting in very low or no-cost premiums for users enrolled in the Marketplace. On the other hand, this is a really inefficient way of spending federal tax money to create affordable health insurance. "

The federal government provides tax credits for people with income equal to or less than 400% of the federal poverty level who purchase health insurance through or similar state-based markets. The amount of credit or tax allowance varies depending on the market, or region, where the person is buying health insurance because different insurers offer different plans with different premiums.

Each health insurer that participates in the market offers health insurance plans that correspond to a "metal level" – bronze, silver, gold and platinum – with the brass costing the least and offering the smallest generosity of benefits. The subsidy is determined based on the premium spread of each market, defined as the difference between the second lowest cost silver plan – the benchmark – and the lowest cost plan offered in the market.

For example, a single enrollee in 2018 whose income is 180 percent of the federal poverty line is expected to pay $ 100 a month for health insurance. If the reference plan premium in your region was $ 200 per month and the lowest cost plan was $ 140, the premium spread would be $ 60. This would pay $ 40 for the premium plan which is equal to the person's expected monthly contribution of US $ 100 less the $ 60 allowance for the premium spread.

When it was enacted for the first time, ACA also provided additional assistance to those enrolled in the Marketplace with incomes at or below 250% of the federal poverty level, enabling them to pursue policies with lower co-payments and deductibles, also known as reduction subsidies of cost sharing. In turn, the government compensated insurers for the additional costs associated with offering these more generous benefits to very low-income subscribers. These subsidy payments for shared cost reductions to insurers are what the Trump Administration cut off in October 2017.

In response, state insurance commissioners in 42 states instructed insurers to "charge silver," which means increasing the premium for silver reference plans to cover these additional costs, thereby increasing the spread of premiums and creating larger premium subsidies . Silver loading works best in markets with only one insurer because the monopoly insurer sets the premium for both the silver reference plane and the lowest cost one.

The average monthly spread of the premium before the cut of cost-sharing reduction was about $ 60. After the cut, the average spread of the monthly premium jumped to $ 133.52 in 2018 and $ 147.94 in 2019 .

But this approach did not benefit individuals who bought their insurance out of the Marketplace or who did not qualify for premium tax credits. As a result, commissioners are increasingly encouraging the "silver exchange" that insurers can sell off-the-market plans that are very similar, but not identical, to market-based benefits plans, but only to plans in the market. are loaded with silver. This allowed plans outside the Marketplace to hold the lowest premiums and be allowed in 24 states in 2018 and 29 in 2019.

States that allowed silver loading and the silver exchange had a 121% jump in premium spreads, compared to a 71% jump in states that allowed only silver loading, indicating that insurers were wary about the loss of customers out of the market with the increase in premiums in the states. allowed silver charging but no silver switching.

Silver charging and silver switching coupling thus maximizes the premium accessibility of market participants.

"States that are taking this second step and allowing the exchange of silver and silver are trying to ensure that insurers continue to operate in the individual market and that middle- and high-income consumers can afford health insurance," said co-author Jean Marie Abraham, Ph.D., Wegmiller Professor of Health Administration at the Division of Health Policy and Management, School of Public Health, University of Minnesota. "Of course an important trade-off is that such policy responses eventually lead to higher federal government spending than would have occurred under the original policy."


This research was funded by the Robert Wood Johnson Foundation.

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About the Graduate School of Public Health, University of Pittsburgh

The University of Pittsburgh Graduate School of Public Health, founded in 1948 and today one of the best public health schools in the United States, conducts research on public health and medical care that improves the lives of millions of people around the world. . Pitt Public Health is a leader in creating new methods to prevent and treat cardiovascular disease, HIV / AIDS, cancer and other important public health problems. For more information on Pitt's Public Health, visit the school's Web site at http: // www.public

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