Poster #103 - Silver Premium Alignment Increases ACA Premium Affordability and Enrollment in Texas for Some Subsidized Enrollees

• In Event: Saturday Poster Luncheon

Abstract

Research Objective: Texas was the first state to implement a “premium alignment” policy in its Health Insurance Marketplace in 2023; Michigan and Illinois will do so in 2026, and other states may follow suit. This policy requires insurers set Marketplace premiums in alignment with their actuarial value. Historically, Marketplace insurers have underpriced silver plans relative to their actuarial value. This behavior reduced premium subsidies available to enrollees because subsidy levels are determined by silver premiums. Premium alignment should therefore increase subsidies, reducing the post-subsidy premiums of lower generosity bronze and higher generosity gold plans that are otherwise unaffected by premium alignment. We validate these effects and examine downstream enrollment effects.

Study Design: Our primary data sources are the CMS’ Qualified Health Plan Landscape File and Open Enrollment Period Public Use Files. These data sources list all health plans offered and income group enrollment counts in states that use the HealthCare.gov platform. Our sample includes 1,840 counties in 25 states that used HealthCare.gov continuously from 2018 to 2024.

We use a differences-in-differences approach with entropy weighting to estimate the impact of premium alignment. Counties treated with premium alignment are those in Texas beginning in 2023. We use entropy weights to weight comparison counties outside of Texas so that they closely resemble Texas counties in 2022 based on common sociodemographic characteristics. After weighting, the main contributors to our comparison group are Arizona (18.2%), Florida (19.0%), and Kansas (27.1%). We then estimate premiums and log enrollment using entropy weighted least squares as a function of premium alignment, Medicaid expansion and reinsurance, and county and year fixed effects. We cluster standard errors at the state level.

Population Studied: Healthcare.gov enrollees from 2018 to 2024.

Principal Findings: Premium alignment reduced the lowest bronze plan’s pre-subsidy premium by $9.4 (SE = $2.8) and the lowest bronze plan’s post-subsidy premium for enrollees with incomes between 300-400% of the Federal Poverty Level by $14.2 (SE = 2.6). Enrollment among this relatively higher income group, in turn, increased by 18.5% (SE = 2.6%). Premium alignment raised silver pre-subsidy premiums without affecting post-subsidy silver premiums; decreases in gold pre- and post-subsidy premiums were similar to bronze plans. We also find roughly 18% enrollment increases among enrollees with incomes between 200-250% FPL and 250-300% FPL, which may be driven by the improved affordability of higher generosity gold coverage. Pre-trends tests are null. Enrollment below 200% was unaffected, likely because they already had generous zero-dollar coverage available prior to premium alignment.

Conclusions: Premium alignment appears to be a powerful tool to increase the affordability of Marketplace coverage for enrollees with incomes above 200% FPL that do not already have access to generous zero-dollar coverage.

Implications for Policy or Practice: Premium alignment may be a viable, bipartisan tool to mitigate Marketplace enrollment losses should enhanced Inflation Reduction Act subsidies expire after 2025.

Author

• David M Anderson, University of South Carolina
  Presenting Author