CHIR’s summer reading list includes the latest health policy literature. In July, we read about the disparities in medical debt burdens, policy interventions to reduce choice errors in the Affordable Care Act (ACA) Marketplace, and the affordability of Marketplace health insurance under subsidy expansion.

Michael Karpman, Fredric Blavin, Dulce Gonzalez, Jennifer Andrea, and Breno Braga, Medical Debt in New York State and Its Unequal Burden across Communities, Urban Institute. Using demographic information, the authors estimated the share of consumers with medical debt and examined the distribution of medical debt on marginalized groups.

What it Finds

• The share of New Yorkers with medical debt varies greatly across geographic regions
  • Statewide medical debt is 6 percent.
  • The communities with the highest rates of medical debt were in Central New York (14 percent), Mohawk Valley (11 percent), North Country (11 percent), and Southern Tier regions (10 percent).
  • The regions with the lowest medical debt were Long Island (3%) and New York City (4 percent).
• Among communities (defined based on zip code), the share of consumers with medical debt ranged from less than 3.2 percent to 37.6 percent.
• Across New York, the burden of medical debt fell greater on communities of color and lower-income households and communities. However, medical debt is not limited to low-income households—in communities in the highest quartile of median household income reported 3 percent of consumers had medical debt, but in some regions this proportion rose to 7 percent.
• Though the prevalence of medical debt was higher in communities where more residents were uninsured, the impact of medical debt extends beyond uninsured populations. In “high-debt” communities, those where the percentage of consumers with medical debt is in the highest quartile of the medical debt distribution, only 6 percent of the population is uninsured, while 15 percent of the population has medical debt. This illustrates that insurance coverage can still leave consumers vulnerable to medical debt.
• Almost half (48 percent) of New York residents with medical debt owed $500 or more, and 30 percent owed $1,000 or more. Median medical debt was highest in the communities with the lowest incomes.
  • Authors found racial/ethnic disparities in medical debt amounts. For example in one region, the median debt amount in communities of color was roughly double the amount in predominantly White communities.
  • Geographic variation in medical debt amounts suggests that in regions where residents have more medical debt, they are also more likely to have higher amounts of medical debt.

Why it Matters

Medical debt poses a significant financial burden on consumers. This study shows how medical debt disproportionately impacts the uninsured, low-income individuals, and people of color, while also highlighting that problems of medical debt exist even in communities with a higher insured rate and higher incomes. Authors highlight policies that could mitigate the prevalence and impact of medical debt, including expanding health insurance and reducing consumer cost sharing, instituting consumer protections to prevent aggressive debt collection practices, more robust requirements for hospitals to provide financial assistance to patients, and changes in credit reporting. As policymakers consider options to reduce medical debt, this research provides an evidence-based approach to preventing and alleviating debt burdens and narrow existing disparities.

Emory Wolf, Andrew Feher, Katie Ravel, and Isaac Menashe, Comparing the Effects of Nudges and Automatic Plan Switching On Choice Errors Among Low-Income Marketplace Enrollees, Health Affairs. Many low-income households with Marketplace coverage are enrolled in bronze plans, despite being eligible for zero-premium silver plans with cost-sharing reduction subsidies (“CSR silver plans”). Researchers from California’s ACA Marketplace—Covered California—analyzed two interventions administered during the 2022 open enrollment period to reduce this choice error among Marketplace enrollees eligible for CSR silver plans: crosswalking consumers into $0 premium CSR silver plans and sending a letter or email “nudge” encouraging these enrollees to switch to a $0 premium CSR silver plan. The authors assess their respective impacts in preventing low-income Marketplace enrollees from enrolling in zero-premium bronze plans when they are eligible for zero-premium silver plans with cost-sharing subsidies.

What it Finds

• The nudge intervention resulted in a 26 percent increase in take-up of CSR silver plans.
  • The nudge intervention led to more substantial increases among older consumers, those for whom English is their preferred written language, and those identifying as Latino or an unknown race.
  • After the nudge intervention, 90 percent of households stuck to bronze plans instead of enrolling in a CSR silver plan.
• The crosswalk intervention resulted in an 83-percentage-point (822 percent) increase in take-up of CSR silver plans.
  • The crosswalk intervention was especially effective among households that identified as Black, Latino, or White, as well as those with a younger head of household.
  • After the crosswalk intervention, less than 10 percent of households were still enrolled in bronze plans, and over 90 percent of households enrolled in CSR silver plans.

Why it Matters

Given the impact of increased cost sharing on health care utilization, cost-sharing assistance can significantly improve access to care. Covered California’s experiment illustrates the potential of automatic re-enrollment and crosswalking in promoting take-up of CSR silver plans among eligible enrollees, and the more modest but still significant impact of low-cost outreach interventions. HHS proposed a similar crosswalking intervention in their proposed 2023 Notice of Benefits & Payment Parameters (NBPP), but ultimately did not implement it. Given the recurring interest in minimizing cost-sharing and reducing choice error, other states can learn from and build on California’s efforts to reduce plan choice errors among Marketplace enrollees.

Vicki Fung, Mary Price, Emory Wolf, Joseph P. Newhouse, and John Hsu, The Affordability of Individual-Market Health Insurance in California Under the American Rescue Plan Act, 2021, Health Affairs. The American Rescue Plan Act (ARPA) significantly expanded Marketplace premium subsidies, including a policy that gave unemployment insurance recipients access to the most generous CSR silver plans for no or very low premiums. Authors surveyed enrollees on California’s individual market (both on- and off-Marketplace) in 2021 to assess the affordability of individual health insurance under subsidy expansion.

What it Finds

• Among survey respondents, 28 percent of respondents reported difficulty paying their premiums.
  • Among individuals with incomes up to 250 percent of the federal poverty level (FPL)—the income cut-off for CSR eligibility—off-Marketplace enrollees were significantly more likely than Marketplace silver plan enrollees to report difficulty paying premiums (41 percent compared to 25 percent, respectively).
• Twenty-four percent of respondents reported delaying care or not filling prescriptions because of the cost of care.
  • Among respondents receiving unemployment compensation, bronze plan enrollees were significantly more likely to report delaying care due to cost than to silver plan enrollees (41 percent versus 23 percent, respectively). Respondents with incomes up to 250 percent FPL exhibited similar disparities in care access.

Why it Matters

Expanded subsidies have substantially improved access to affordable, comprehensive health insurance through the ACA’s Marketplace. Under a previous policy in place during this survey, individuals receiving unemployment compensation had access to free or nearly-free CSR silver plans, and under an existing policy, CSR silver plans are available to individuals with incomes up to 250 percent FPL. Even with these policies in place, many individuals eligible for both premium and cost-sharing subsidies are not enrolled in CSR silver plans, and this study shows how that choice error can lead to reduced health care access. Further, individuals eligible for premium subsidies continue to enroll off-Marketplace. Given the perceptions of affordability among individuals eligible for generous premium subsidies, this study demonstrates the need for additional education, outreach, and enrollment assistance to help consumers enroll in the best coverage for their health and financial needs.