Late in the day on January 21, 2016, as the city of Washington prepared to shut down for a massive snowstorm, the Centers for Medicare and Medicaid Services (CMS) released the Final 2017 Actuarial Value Calculator and Methodology and the Department of Health and Human Services Office of Assistant Secretary for Planning and Evaluation (ASPE) released another report on 2016 HealthCare.gov enrollment.
The 2017 Actuarial Value Calculator Methodology (released together with the calculator itself) describes how insurers offering non-grandfathered health plans in the individual and small group market are to calculate the actuarial value (AV) of those plans during 2017 for determining the plans' metal level. The AV calculator arrives at an empirical estimate of the AV of a particular plan as a percentage of the average spending of a standard population for the essential health benefits.
Although CMS considered a number of potential changes to the 2016 AV calculator, and is considering further changes for 2018, the final 2017 AV calculator is essentially unchanged from 2016. The calculator implements a couple of technical changes and a couple of technical corrections, but the only significant change is that it updates the maximum out-of-pocket limit to $7,200, the estimated 2017 MOOP limit.
Among changes that CMS considered but is not implementing were reallocating costs among benefit categories to recognize rising drug costs, combining mental health/substance abuse disorder outpatient services with primary care and specialist office visits for some purposes to recognize mental health parity requirements, and changing the way coinsurance is handled for plans with separate medical and drug deductibles. The 2017 AV calculator uses the same rate for calculating medical trend as the 2016 AV calculator — 6.5 percent.
The AV calculator methodology starts with utilization and cost sharing data representing a standard population, which are derived from claims data from the Health Intelligence Company (HIC) database for calendar year 2010 trended forward. Spending and claims information has been derived from the database for 14 medical and four drug service categories. These data are adjusted in several ways to better approximate the current individual and small group population and then used to develop four sets of "continuance tables" that describe the distribution of claim spending for the standard population for the four metal levels.
Although the population in the current individual and small group market is assumed to be similar to that in the standard population database, the 2017 AV calculator will continue to adjust to account for the higher spending of the approximately 320,000 individuals who have moved from state and federal high-risk pools into the individual market. It will also adjust for the additional cost of pediatric oral and vision care and habilitative services, which were not generally covered in the individual and small group market prior to 2014.
Using the calculator, insurers proceed to calculate the AV for a plan by entering the metal level they are planning to achieve, the average cost over all enrollees in a plan, any expenses covered by employer contributions to health savings accounts (HSAs) or health reimbursement arrangements (HRAs) (which are considered plan expenditures), and (following detailed rules) plan-covered spending below the deductible, spending levels for MOOP, plan-covered spending between the deductible and MOOP, plan-covered expenditures beyond MOOP, and the effects of tiered-networks. At several steps, the methodology distinguishes between calculations that are used for plans that have separate medical and drug deductibles and calculations used for plans with combined deductibles.
The calculator only considers in-network expenditures. The methodology states that this is consistent with federal rules, and that in fact little utilization occurs out of network. CMS states that AVs calculated including and excluding out-of-network expenditures varied less than 1 percent. Query, however, whether with the rise of very narrow networks, an increasing amount of cost-sharing might take place out of network, and whether a very narrow network silver plan might not impose much higher cost sharing than a broad network silver plan.
Plan Selections After Application Of APTC
The ASPE Research Brief discusses plan selections and average premiums after the application of advance premium tax credits (APTC) in the 38 states using the HealthCare.gov eligibility and enrollment platform for the period November 1 to December 26, 2015.
Of the 3.64 million 2015 enrollees who actively reenrolled in coverage for 2016, 2.18 million (60 percent) switched plans, while 1.45 million (40 percent) remained with the plan they were enrolled in for 2015 or a crosswalk of that plan. The average monthly premium for those who switched plans was $137 but would have been $179 had they stayed with their plan. They thus saved $43 per month by switching. The average premium of those who stayed with their 2015 plan was $145, which might explain in part why they did not switch — they were already getting a pretty good deal.
More than eight in 10 (83 percent) of the 8.52 million 2016 HealthCare.gov consumers qualified for APTC, with an average amount of $294 per person per month. The APTC covered, on average, 72 percent of the gross premium, leaving an average net premium of $113 to be paid by the enrollee. Sixty-six percent of enrollees could have chosen a plan with a net monthly premium of $75 or less and 59 percent a plan with a net monthly premium of $50 or less. This presumably includes, however, bronze as well as silver plans, which would not have been eligible for cost-sharing reductions.
The report includes state level data for the 38 states covered by the report for a number of variables. The percent of all individuals with 2016 plan selections who received APTC varies from 64 percent in New Hampshire to 89 percent in Florida and Wyoming. The average monthly premium before APTC varies from $276 in Utah to $871 in Alaska. The average monthly APTC varies from $738 in Alaska to $189 in Utah.
from Health Affairs Blog http://ift.tt/1S9xnfh
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