Brief How Do People Make Choices among Marketplace Plans?
John Holahan, Erik Wengle, Claire O'Brien
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This brief examines enrollee plan choice in the Affordable Care Act Marketplaces in several ways. We first examine enrollment by metal tier overall and by income. We then examine the change in choice of plan across metal tiers between 2016 and 2023, as individuals adjusted to the new pricing following silver loading. Finally, we use data from California and New York to examine enrollment in more detail by metal tier, as both make more detailed enrollment data available than other states.

WHY IT MATTERS

Examining consumer choices in the Marketplaces gives greater insight into how the Marketplaces are functioning and if consumers are choosing based on factors other than price. Other factors can play a role in consumer choice of Marketplace plans, including plan option complexity, health insurance literacy, risk preferences, switching costs, and consumer inattention or passive decision-making. Knowing how consumers choose plans nationally and across insurers informs policymakers on how competition in federal- and state-based Marketplaces is working to help improve consumer plan selection processes.

KEY TAKEAWAYS

Overall, 26.3 percent of individuals chose bronze plans, 57.9 percent chose silver, and 15.8 percent chose gold. However, the choice of bronze, silver, and gold varied considerably by income. For the lowest income population, those between 100 percent of the federal poverty level (FPL) and 150 percent of FPL, over 4.9 million Americans (81.4 percent) chose silver plans. Most in the 150 to 250 percent income range, 61.3 percent, chose silver plans. The percentage choosing silver plans drops to 21.4 percent among those with incomes between 250 and 400 percent of FPL.

From 2018 to 2023, enrollment in silver plans fell to 56.0 percent. There continues to be an increase in bronze plans (to 33.4 percent) as individuals take their premium tax credits and purchase low-cost bronze-tier products. In 2023, 10.6 percent of Healthcare.gov enrollees chose gold plans, up from 6.5 percent in 2018.

We also found that the California data show enrollees largely chose lower-cost plans, but a surprisingly large number paid more for more expensive plans, perhaps for more generous benefits or a preferred insurer. New York provides evidence of large numbers of individuals choosing the lowest-cost options, but at the same time, a smaller but considerable share of the population choosing more expensive options either because of insurer reputation or breadth of networks.

This brief provides evidence that large numbers of Marketplace enrollees choose plans based on price. Most people, especially low-income people, chose silver plans to take advantage of low premiums, after-tax credits, and cost-sharing reduction subsidies. However, even higher-income people are choosing bronze plans in large numbers because of low premiums despite the higher deductibles. Nonetheless, there is plenty of evidence that some consumers are willing to pay more for plans that are more costly.

Research Areas Health and health care
Tags Affordable Care Act Federal health care reform Health insurance
Policy Centers Health Policy Center
Research Methods Data analysis