Low-income Enrollees Research Articles

The impact of terminating cost-sharing reductions payments on health insurance plan choices.

The Trump administration terminated cost-sharing reductions (CSRs) payments to health insurers in 2017, while still required insurers to provide CSRs to eligible enrollees in the Marketplace. Marketplace administration data reveals that, in response to this termination, insurers raised premiums to compensate for their loss. Consequently, premium increases led to more advanced premium tax credits for enrollees in the Marketplace. To investigate the impact of CSRs payment termination on low-income consumer insurance plan choices, I leverage variations in state price regulations and employed a difference-in-differences design. In a robustness analysis, I utilized differences in county income distributions to examine the effects of the termination on insurance choices. The results indicate that after the termination, more low-income enrollees opted for cheaper bronze plans, and fewer chose silver plans. These results suggest that alterations in subsidy channels may inadvertently encourage low-income individuals to purchase less expensive health insurance plans, highlighting an unintended consequence of the termination of cost-sharing subsidies.

How do low-income enrollees in the Affordable Care Act marketplaces respond to cost-sharing?

The Affordable Care Act requires insurers to offer cost sharing reductions (CSRs) to low-income consumers on the Marketplaces. We link 2013-2015 All-Payer Claims Data to 2004-2013 administrative hospital discharge data from Utah and exploit policy-driven differences in the actuarial value of CSR plans that are solely determined by income. This allows us to examine the effect of cost sharing on medical spending among low-income individuals. We find that enrollees facing lower levels of cost sharing have higher levels of health care spending, controlling for past health care use. We estimate demand elasticities of total health care spending among this low-income population of approximately -0.12, suggesting that demand-side price mechanisms in health insurance design work similarly for low-income and higher-income individuals. We also find that cost sharing subsidies substantially lower out-of-pocket medical care spending, showing that the CSR program is a key mechanism for making health care affordable to low-income individuals.

Income-related disparities in Medicare advantage behavioral health care quality.

To inform efforts to improve equity in the quality of behavioral health care by examining income-related differences in performance on HEDIS behavioral health measures in Medicare Advantage (MA) plans. Reporting Year 2019 MA HEDIS data were obtained and analyzed. Logistic regression models were used to estimate differences in performance related to enrollee income, adjusting for sex, age, and race-and-ethnicity. Low-income enrollees were identified by Dual Eligibility for Medicare and Medicaid or receipt of the Low-Income Subsidy (DE/LIS). Models without and with random effects for plans were used to estimate overall and within-plan differences in measure performance. Heterogeneity by race-and-ethnicity in the associations of low-income with behavioral health quality were examined using models with interaction terms. Data were included for all MA contracts in the 50 states and the District of Columbia that collect HEDIS data. For six of the eight measures, enrollees with DE/LIS coverage were more likely to have behavioral health conditions that qualify for HEDIS measures than higher income enrollees. In mixed-effects logistic regression models, DE/LIS coverage was associated with statistically significantly worse overall performance on five measures, with four large (>5 percentage point) differences (-7.5 to -11.1 percentage points) related to follow-up after hospitalization and avoidance of drug-disease interactions. Where the differences were large, they were primarily within-plan rather than between-plan. Interactions between DE/LIS and race-and-ethnicity were statistically significant (p< 0.05) for all measures; income-based quality gaps were larger for White enrollees than for Black or Hispanic enrollees. Low income is associated with lower performance on behavioral health HEDIS measures in MA, but these associations differ across racial-and-ethnic groups. Improving care integration and addressing barriers to care for low-income enrollees may improve equity across income levels in behavioral health care.

How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost Sharing?

How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost Sharing?

Turnover in Zero-Premium Status Among Health Insurance Marketplace Plans Available to Low-Income Enrollees

Recent subsidy enhancements in Affordable Care Act (ACA) Marketplaces made many low-income enrolles (below 150% of the federal poverty level [FPL]) eligible for 2 free silver-tier plans. eligible for 2 free silver-tier plans. However, an unintended consequence of this structure is that the identity of which silver plans are free will often "turn over" between years, requiring that enrollees actively initiate premium payment (or lose coverage). The prevalence of this free-plan turnover is not known. To measure the prevalence of free-plan turnover in ACA Marketplaces and to estimate how many enrollees below 150% of FPL are likely to be affected. This observational cross-sectional study used data on plan offerings and premiums in 33 state ACA Marketplaces using HealthCare.gov in 2021 and 2022, along with estimates of county-level enrollee characteristics and plan selection patterns. The enrollment-weighted share of county markets affected by free-plan turnover was quantified, along with the association of turnover with enrollee and market characteristics. Estimates of the number of affected low-income enrollees were calculated using the data plus statistics reported in past research. Data were analyzed from November 21, 2021, to February 28, 2022. This study found that turnover of zero-premium plans was quite common, with 93% of HealthCare.gov counties (weighted by enrollment) experiencing at least 1 zero-premium plan in 2021 turning over to nonfree in 2022; 84% of counties experienced turnover of all $0 silver plans from 2021 to 2022. This turnover affected an estimated 1.36 million people with incomes below 150% of FPL. Turnover was more common in counties with a higher share of non-White enrollees, in Medicaid nonexpansion states, in counties with more carriers, and in counties with changes in the number of offered plans. The findings of this cross-sectional study suggest that owing to the prevalence of zero-premium plan turnover, many low-income ACA enrollees faced elevated risk of disenrollment at the start of 2022. Outreach to affected enrollees and other actions to encourage coverage retention and midyear reenrollment could help mitigate coverage losses.

Good for your fiscal health? The effect of the affordable care act on healthcare borrowing costs

We study the effect of the US Affordable Care Act (ACA) on healthcare borrowing costs. The ACA provides insurance subsidies to low-income enrollees. States could accept funding to expand Medicaid, although many declined, citing the cost burden. The ACA significantly reduced healthcare yields after a favorable 2012 Supreme Court ruling. Furthermore, hospital investment spending increased, and investment-cash flow sensitivities decreased. The yield effect was double in Medicaid expansion states, and insignificant in rural areas of non-expansion states. Our results highlight how the municipal market can be used to evaluate the heterogeneous effects of public policy and guide a targeted policy approach.

Estimated Plan Enrollment Outcomes After Changes to US Health Insurance Marketplace Automatic Renewal Rules

The American Rescue Plan increases premium subsidies for health insurance marketplace enrollees, potentially leading to situations in which enrollees could switch to other health care plans with lower premiums and less cost sharing (ie, deductibles and copayments). Current policy defaults enrollees to their current health care plan if they automatically renew their coverage, which may cause them to stay in health care plans that, because of the American Rescue Plan, are now dominated in that they have higher premiums and cost sharing than other options. To estimate the extent to which a smart default policy could reduce US health insurance marketplace enrollees' cost sharing and premiums. Using 2018 individual enrollment data and 2021 premium data from California's marketplace and the American Rescue Plan premium tax credit subsidy schedule, this economic analysis estimated the characteristics of enrollees' default health care plans if they defaulted into 2021 health care plans under current and smart default policies. The analysis was conducted from March 20 to April 8, 2021. Characteristics of enrollees' default health care plans under current and smart default policies, including net premiums, plan levels, and cost sharing. The analytic sample consisted of 748 087 Covered California enrollees from 2018 (mean [SD] age, 44.80 [13.72] years; 408 410 [54.6%] women). Under current policy with the enhanced subsidies implemented under the American Rescue Plan, 5.8% of sample enrollees would default into dominated health plans. Of these enrollees, 98.0% would have incomes below 250% of the federal poverty level. A smart default policy would lead to a mean $102.47 decrease in monthly premiums (95% CI, $103.84-$101.10), a mean $1960 reduction in individual annual medical deductibles (95% CI, $1991-$1928), and a $49.56 reduction in specialty prescription copays (95% CI, $49.77-$49.34). The findings of this economic analysis suggest that a smart default policy could avoid defaulting lower-income marketplace enrollees to objectively inferior health care insurance plans and may lead to large reductions in lower-income enrollees' deductibles, copayments, and maximum out-of-pocket amounts. Implementation of a smart default policy could enable marketplace administrators to reduce the prevalence of underinsurance among lower-income marketplace enrollees.

Can Automatic Retention Improve Health Insurance Market Outcomes?

There is growing interest in market design using default rules and other “choice architecture” principles to steer consumers toward desirable outcomes. Using data from Massachusetts's health insurance exchange, we study an “automatic retention” policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14 percent of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes.

Using Email And Letters To Reduce Choice Errors Among ACA Marketplace Enrollees.

During the 2019 open enrollment period in California's Affordable Care Act (ACA) Marketplace, we used a randomized intervention to examine the effects of email and postal messages on choice errors, where low-income households enroll in gold or platinum plans although they are eligible for cost-sharing reduction (CSR) silver plans with lower premiums and higher actuarial values. Relative to the control group, assignment to the email-only treatment increased plan switching to CSR silver plans by 2percentage points (an 11percent increase), and assignment to the mail-plus-email treatment increased plan switching to CSR silver plans by 3.9percentage points (a 22percent increase). The mail-plus-email treatment significantly increased plan switching across all subpopulations in which choice errors were made. Consumers who switched out of a plan chosen in error saved an average of $84 per month in premiums and $56 per month in reduced out-of-pocket expenses. Our results indicate that low-cost nudges can help low-income enrollees obtain more generous coverage at a lower price and that the combination of email and postal messages is more effective at increasing plan switching than email alone to rectify choice errors.

Can Automatic Retention Improve Health Insurance Market Outcomes?

There is growing interest in market design using default rules and other choice architecture principles to steer consumers toward desirable outcomes. Using data from Massachusetts’ health insurance exchange, we study an policy intended to prevent coverage interruptions among low-income enrollees. Rather than disenroll people who lapse in paying premiums, the policy automatically switches them to an available free plan until they actively cancel or lose eligibility. We find that automatic retention has a sizable impact, switching 14% of consumers annually and differentially retaining healthy, low-cost individuals. The results illustrate the power of defaults to shape insurance coverage outcomes. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

A Comparison of Health Risk and Costs Across Private Insurance Markets.

The Patient Protection and Affordable Care Act (PPACA) established new parameters for the individual and small group health insurance markets starting in 2014. We study these 2 reformed markets by comparing health risk and costs to the more mature large employer market. For 2017, claims data for all enrollees in PPACA-compliant individual and small group market plans as well as claims data from a sample of large employer market enrollees. Risk scores and total (unadjusted and risk-adjusted) per-member-per-month (PMPM) allowed charges. Differences across markets in enrollment duration, age, and geographic distribution are addressed. The analysis is descriptive. Compared with large employer market enrollees, health risk was 3% lower among PPACA small group market enrollees and 20% higher among PPACA individual market enrollees. After adjusting for differences in health risk, enrollees in the PPACA individual market had 27% lower PMPM allowed charges than enrollees in the large employer market and enrollees in the PPACA small group market had 12% lower PMPM allowed charges than enrollees in the large employer market. On average, the PPACA individual market enrolls sicker individuals than the 2 group markets. But this does not translate to higher health costs; in fact, enrollees in the PPACA individual market accumulate lower allowed charges than enrollees in the large employer market. Lower-income enrollees particularly accumulate lower allowed charges. Narrower networks and increased enrollee cost-sharing among individual market plans, though they may reduce the value of coverage, likely significantly reduce allowed charges.

Good for your Fiscal Health? The Effect of the Affordable Care Act on Healthcare Borrowing Costs

We study the effect of the US Affordable Care Act (ACA) on healthcare borrowing costs. The ACA provides insurance subsidies to low-income enrollees. States could accept funding to expand Medicaid, although many declined, citing the cost burden. The ACA significantly reduced healthcare yields after a favorable 2012 Supreme Court ruling. Furthermore, hospital investment spending increased, and investment-cash flow sensitivities decreased. The yield effect was double in Medicaid expansion states, and insignificant in rural areas of non-expansion states. Our results highlight how the municipal market can be used to evaluate the heterogeneous effects of public policy and guide a targeted policy approach.

How Do Low-Income Enrollees in the Affordable Care Act Marketplaces Respond to Cost-Sharing?

The ACA requires insurers to provide cost-sharing reductions (CSRs) to low-income consumers on the marketplaces. We link 2013-2015 All-Payer Claims Data to 2004-2013 administrative hospital discharge data from Utah and exploit policy-driven differences in the value of CSRs that are solely determined by income. We find that enrollees with lower cost sharing have higher levels of health care spending, controlling for past health care use. We estimate the demand elasticity of total health care spending to be -0.10, but find larger elasticities for emergency room care, lifestyle drugs, and low-value care. We also find positive cross-price elasticities between outpatient and inpatient care.

Changes in Quality of Life Among Enrollees in Hennepin Health: A Medicaid Expansion ACO.

Despite limited program evaluations of Medicaid accountable care organizations (ACOs), no studies have examined if cost-saving goals negatively affect quality of life and health care experiences of low-income enrollees. The Hennepin Health ACO uses an integrated care model to address the physical, behavioral, and social needs of Medicaid expansion enrollees. As part of a larger evaluation, we conducted semistructured interviews with 35 primary care using Hennepin Health members enrolled for 2 or more years. Using fuzzy set qualitative comparative analysis, we assessed enrollee complexity and use of the care model and improvements in quality of life. We found improved quality of life was consistently associated with strong bonds to primary care, consistent mental health care, and support from extended care team members. Comprehensive, integrated care models within ACOs may improve quality of life for low-income Medicaid enrollees through coordinated primary and mental health care.

Cost-Sharing Reductions, Technocrat Tinkering, and Market-Based Health Policy

The Trump Administration has exposed both the durability and vulnerability of the Patient Protection and Affordable Care Act's insurance reforms. One of the Administration's first strikes at “Obamacare” was to discontinue federal government payment of cost-sharing reductions, which insurers pay to low-income enrollees on the exchanges to reduce their out-of-pocket share of medical spending. The states struck back with a clever solution that could hold insurers and enrollees harmless. This article examines this strategy and why, while impressive, it reaffirms larger problems with the ACA's market-based approach to health reform and the need for new pathways forward.

Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?

This paper shows how in Medicare Part D insurers' gaming of the subsidy paid to low-income enrollees distorts premiums and raises the program cost. Using plan-level data from the first five years of the program, I find multiple instances of pricing strategy distortions for the largest insurers. Instrumental variable estimates indicate that the changes in a concentration index measuring the manipulability of the subsidy can explain a large share of the premium growth observed between 2006 and 2011. Removing this distortion could reduce the cost of the program without worsening consumer welfare.

The unintended effects of the Medicare Part D low income subsidy

ObjectivesMedicare Part D is the voluntary program that provides insurance for prescription drugs to 37 million US elderly. This form of public insurance is delivered exclusively through a choice-based private insurance market, where Medicare pays various types of subsidies. The objective of this paper is to analyze how the subsidy paid to low income enrollees induces insurers to distort their plan premiums. MethodsCombining both an analysis of the incentives created by the different regulations and empirical evidence obtained from plan level data for the years between 2006 and 2013, the paper evaluates the presence of premium distortions associated with insurers response to the low income subsidy. ResultsThe findings indicate that insurers cluster premiums at the value that maximizes the rents they earn on enrollees receiving the low income subsidies. Moreover, insurers use the possibility of offering multiple insurance plans to manipulate the amount of the subsidy and increase further their rents. ConclusionsThis study indicates the need to reform the subsidy system in Medicare Part D and offers guidance on the essential elements of the low income subsidy reform.

The Unintended Effects of the Medicare Part D Low Income Subsidy

Objectives: Medicare Part D is the voluntary program that provides insurance for prescription drugs to 37 million US elderly. This form of public insurance is delivered exclusively through a choice-based private insurance market, where Medicare pays various types of subsidies. The objective of this paper is to analyze how the subsidy paid to low income enrollees induces insurers to distort their plan premiums. Methods: Combining both an analysis of the incentives created by the different regulations and empirical evidence obtained from plan level data for the years between 2006 and 2013, the paper evaluates the presence of premium distortions associated with insurers response to the low income subsidy. Results: The findings indicate that insurers cluster premiums at the value that maximizes the rents they earn on enrollees receiving the low income subsidies. Moreover, insurers use the possibility of offering multiple insurance plans to manipulate the amount of the subsidy and increase further their rents. Conclusions: This study indicates the need to reform the subsidy system in Medicare Part D and offers guidance on the essential elements of the low income subsidy reform.

The impact of patient cost-sharing on low-income populations: Evidence from Massachusetts

Greater patient cost-sharing could help reduce the fiscal pressures associated with insurance expansion by reducing the scope for moral hazard. But it is possible that low-income recipients are unable to cut back on utilization wisely and that, as a result, higher cost-sharing will lead to worse health and higher downstream costs through increased use of inpatient and outpatient care. We use exogenous variation in the copayments faced by low-income enrollees in the Massachusetts Commonwealth Care program to study these effects. We estimate separate price elasticities of demand by type of service. Overall, we find price elasticities of about −0.16 for this low-income population — similar to elasticities calculated for higher-income populations in other settings. These elasticities are somewhat smaller for the chronically sick, especially for those with asthma, diabetes, and high cholesterol. These lower elasticities are attributable to lower responsiveness to prices across all categories of service, and to some statistically insignificant increases in inpatient care.

Medicare Part D Prescription Drug Program: Benefits, Unintended Consequences and Impact on Health Disparities

Medicare Part D Prescription Drug Program: Benefits, Unintended Consequences and Impact on Health Disparities