The CHIR team donned our raincoats as April showered us with new health policy research. For our monthly research roundup, we reviewed studies on a public option proposal for California, how personalized outreach can increase enrollment in affordable Marketplace plans, and recent trends in Marketplace premiums and insurer participation.

Richard M. Scheffler and Stephen M. Shortell, A Proposed Public Option Plan to Increase Competition and Lower Health Insurance Premiums in California, Commonwealth Fund, April 21, 2023. Researchers explored state approaches to implementing a public option—a government-administered health plan offered as an alternative to traditional private coverage—by proposing such a plan for California (“Golden Choice”) and evaluating the practicality and potential impact of the plan on health insurance premiums and care access. Based on total cost of care data for commercial HMO enrollees in California’s Integrated Healthcare Association database, researchers estimated Golden Choice premiums for a 36-year-old enrollee, comparing this estimate to the corresponding premiums for gold and silver plans offered on California’s ACA Marketplace, Covered California, in 2019. Researchers also interviewed health plans and providers to better assess the feasibility of their proposal.

What it Finds

• Leveraging California’s delegated risk model, in which providers receive risk-adjusted payments from insurers to improve care delivery, Golden Choice could offer a lower premium than health plans currently operating in 14 of Covered California’s 19 markets.
• An estimated 175,000 Californians would switch from their current health plan to Golden Choice, with lower premiums generating $1,389 in annual savings per enrollee (a total savings of $243 million).
• Golden Choice would increase competition in California’s commercial market, further reducing premiums; total premium costs would have been $288 million lower if at least five insurers participated in each Covered California’s markets between 2016–2020.
• Golden Choice networks would be sufficient based on network adequacy standards, with 6.5 primary care providers per 10,000 enrollees in most of the state, but residents of some rural counties would have less provider access.
• Health plans and providers affirmed the Golden Choice model’s feasibility, reporting that they could provide high-quality care in conjunction with 5–10 percent lower premiums than currently available Marketplace plans.
• An existing government-run plan offered through Covered California—L.A. Care—offers low premiums that in turn led to a 4.8 percent reduction in annual premium growth for all other plans in the Los Angeles market between 2019–2022 (corresponding to $345 million in savings).

Why it Matters

The public option has emerged as a potential lever to drive down costs amidst the U.S. health care system’s affordability crisis. Although a majority of voters support the public option, the policy has not gained traction at the federal level—instead, a handful of states have taken the lead on implementing public-option style plans. California could benefit from a public option because, like elsewhere in the country, workers’ wages are not keeping pace with raising premiums; medical debt is increasing, particularly among Hispanic and Black communities; and despite decent insurer participation in some parts of the state, California’s private insurance markets are fairly concentrated, with two insurers accounting for half of enrollment. This California study can help policymakers consider the benefits and drawbacks of the public option as a solution to ongoing affordability issues.

Andrew Feher, Isaac Menashe, Jennifer Miller, and Emory Wolf, Personalized Letters and Emails Increased Marketplace Enrollment Among Households Eligible for Zero-Premium Plans, Health Affairs, April 2023. Researchers conducted two randomized controlled trials among 38,745 low-income households in California that applied and were found eligible for, but did not enroll in, either a $0 or $1 premium Marketplace plan with cost-sharing reductions (CSR), including CSR plans covering an average of 94 percent of health care costs for consumers (“maximum CSR” plans). Households in the treatment group received both a personalized letter and two email reminders (for those with email addresses) in either English or Spanish, informing them of their eligibility for free or nearly free coverage and providing information about the enrollment process. Researchers evaluated whether the personalized outreach increased enrollment in maximum CSR plans with a $1 premium (available in 2021) or $0 premium (available in 2022, thanks to a new state subsidy that covers nominal premium costs).

What it Finds

• In the 2021 experiment, personalized outreach led to a 1.1 percentage point increase in enrollment; coverage take-up among those who received the outreach was 52 percent higher than in the control group (only 2.2 percent of whom enrolled in coverage).
  • In the control group, 85.8 percent of households who enrolled in coverage selected a CSR plan, while 54.6 percent selected a $1 premium maximum CSR plan. Outreach increased take-up of these plan choices with cost savings by 0.8 and 5.5 percentage points, respectively.
• Enrollment rates varied by demographics and other characteristics:
  • Email was an effective outreach method, increasing enrollment for households reachable via email (an increase of 1.4 percentage points, compared to 0.7 percentage points for households without an email address available).
  • People who had not visited the emergency department or been hospitalized in 2020 were 1.4 percentage points more likely to enroll.
  • In addition, personalized outreach led to larger enrollment increases among individuals who identified as Black (2.2 percentage points) or Asian (1.9 percentage points), as well as those who paid the state’s individual mandate penalty in 2020 (3.1 percentage points).
• A slightly larger proportion of the control group—5 percent—enrolled in coverage in 2022, and personalized outreach further boosted enrollment rates by 1.4 percentage points (a 28 percent increase relative to the control group).
  • Among control group households enrolling in Marketplace plans, 68.4 percent selected a CSR plan, and 35.8 percent selected a $0 premium maximum CSR plan. Households that received outreach were again more likely to select a CSR plan (a 1.2 percentage point increase) and significantly more likely to select a $0 premium maximum CSR plan (a 5.2 percentage points increase).
  • Similar to the 2021 experiment, applicants without adverse health events in 2020 and those identifying as Asian were responsive to personalized outreach.

Why it Matters

Although a record number of Americans have been eligible for free or low-cost Marketplace coverage since the passage of the American Rescue Plan Act (ARPA) in 2021, many remain uninsured. These experiments demonstrate that personalized outreach is effective at increasing Marketplace enrollment and helping low-income consumers, including those in underserved communities, select the most affordable plan options available to them. However, coverage take-up rates among the uninsured population remained low overall, even as California’s Marketplace has employed several strategies to make it easier for consumers to enroll in coverage. As people begin to lose Medicaid during the “unwinding,” outreach to inform consumers of other affordable health insurance options will help mitigate widespread coverage loss.

John Holahan, Erik Wengle, and Claire O’Brien, Changes in Marketplace Premiums and Insurer Participation, 2022-2023, Urban Institute, April 2023. Researchers used data from over 503 rating regions in 33 states to calculate average benchmark premiums and premium growth rates from 2022–2023. Amidst increased insurer participation, authors also evaluated the relationship between insurer participation and premiums by examining changes in Marketplace insurer participation in 43 rating regions across 28 different states.

What it Finds

• Marketplace benchmark premiums have increased nationally by an average of 3.4 percent, rising from $438 in 2022 to $453 to 2023 for a 40-year-old nonsmoker. Economic pressures, including inflation and rising health care costs, likely account for this increase.
• Several major commercial carriers offered plans in substantially more markets in 2023 compared to 2020.
  • UnitedHealthcare increased its participation from 3 to 25 markets studied over the three-year period; Aetna increased from 0 to 12 markets; Cigna increased from 6 to 12 markets; and Oscar increased from 16 to 20 markets. There was a similar trend in provider-sponsored plans, with participation jumping from 10 to 25 markets during the same time period.
  • Although Blue Cross Blue Shield did not enter any additional markets during the study period, the carrier was active in 37 out of the 43 markets studied.
  • The prevalence of health maintenance organizations (HMOs) with closed networks has grown; almost all benchmark premiums are associated with HMO plans.
• States with higher benchmark premiums tended to have fewer insurers participating in their Marketplace than states with lower benchmark premiums; average premiums in markets with only one insurer were $128 higher than in markets with five or more insurers.
• Lower benchmark premiums were also associated with the presence of (1) a Medicaid insurer offering Marketplace products, (2) Kaiser Permanente, or (3) a provider-sponsored insurer; authors posited that these insurers’ generally narrower networks and lower provider reimbursement rates may exert downward pressure on premiums.
• Benchmark premiums were generally lower in states that operate an SBM as well as states that have implemented reinsurance programs.
• Medicaid insurers—Centene, CareSource, and Molina—almost always had the lowest premiums their respective markets. Nonetheless, many commercial carriers who previously left the Marketplace are now reentering with more competitive premiums.

Why it Matters

Increased entry of carriers into the Marketplace has boosted competition and reduced premiums. As the authors point out, low premiums are often accompanied by narrower provider networks—sometimes resulting in a trade-off between affordability and adequate care access for plan enrollees. Monitoring trends in Marketplace premium growth and insurer participation will help policymakers weigh these often competing interests, hopefully enabling them to craft reforms that improve both affordability and access for consumers.