Was Silver Loading Really the Silver Bullet? The Effects of CSR Non-Payment on Consumer Plan Selection in the ACA Individual Marketplaces

Abstract

In October 2017, only weeks before the 2018 health insurance open enrollment period began, the Trump administration abruptly eliminated crucial reimbursements to insurers. This decision, derided by many as an attempt to undermine the functioning of the Affordable Care Act (ACA), threatened the stability of the individual marketplaces by incentivizing insurers to withdraw their marketplace plans. In response, state insurance regulators devised a workaround strategy called “silver loading.” Silver loading caused premiums to change in a way that would allow insurers to recover their losses and also protect subsidized consumers from increased costs.

On the whole, silver loading was largely successful and has been touted by health policy experts and researchers alike as an excellent example of the resilience of the ACA in the face of disruptive policy changes. However, while silver loading was essential to combatting CSR non-payment, this thesis will look beyond the successes of silver loading to illuminate an unintended consequence of the changed premium landscape.

Specifically, this thesis hypothesizes that the premium changes that occurred as a result of silver loading caused low-income consumers to preferentially select plans with less generous out-of-pocket cost coverage. This thesis employs a mixed-methods approach to evaluate this shift in consumer plan selection behavior. First, a linear regression model is used to determine if a relationship exists between silver loading and consumer movement into higher cost-sharing plans. Next, a qualitative review of interviews with enrollment assisters and health policy experts provides an on-the-ground perspective of the observed shift in consumer plan selection.

The results of the quantitative analysis show that consumers between 150% and 250% of the Federal Poverty Line responded to silver loading by selecting plans with less generous out-of-pocket cost coverage. The qualitative review concludes that there are several reasons behind this movement into higher cost-sharing plans, including low health insurance literacy, the perceived unaffordability of more generous plans, and the lack of value placed on insurance as a protection against unexpected medical costs.

Low-income consumers enrolled in high cost-sharing plans are at a far greater risk of incurring catastrophic medical costs and are more likely to forgo necessary health services. As a result, this thesis concludes that more effective and targeted enrollment assistance, specifically at the state and local levels, is necessary to support consumers in making fully informed choices about their health coverage, especially in an increasingly volatile and confusing health insurance marketplace.