How Messaging Steers ACA Enrollees to Enhanced Silver Plans

Email and postal mail communications can help guide low-income Affordable Care Act enrollees to less expensive, enhanced silver plans, a recent study published in Health Affairs discovered.

Sometimes low-income enrollees will select a higher-cost Affordable Care Act marketplace health plan, such as a gold or platinum health plan, even though they qualify for a cost-sharing reduction silver plan that would be more affordable.

“Our results indicate that low-cost nudges can help low-income enrollees obtain more generous coverage at a lower price and that the combination of email and postal messages is more effective at increasing plan switching than email alone to rectify choice errors,” the researchers found.

When low-income enrollees end up in the wrong health plan, the financial results can be damaging. In 2019, low-income enrollees in a health plan on California’s Affordable Care marketplace—called Covered California— saved on average $95 per month in premiums if they were in an enhanced silver plan compared to a platinum plan.

“Given that CSR plans provide more affordable health insurance premiums, lower cost-sharing, and better risk protection, it is a puzzle why consumers would instead choose gold or platinum plans,” the researchers explained. “Previous research points to a lack of awareness, plan complexity, and choice overload as possible explanations.”

The researchers conducted a randomized intervention in the Covered California marketplace, which is the largest state-based insurance marketplace in the nation. They sent an email, postal mail, or both to households in the relevant populations in order to see which nudges were most effective at directing enrollees to the lowest cost option.

The researchers sent email and postal mail communications to enrollees who were eligible for a silver-87 plan—a silver plan with an actuarial value of 87 percent—but were enrolled in gold plans, silver-94 plan enrollees in gold plans, or silver-94 enrollees in platinum plans.

“Messages described the average premium and out-of-pocket savings consumers could reap if they kept the same issuers and plan networks but switched to the enhanced silver tier,” the study explained.

“This allowed us to test whether such messages increased plan switching and whether the mode through which the messages were delivered differentially affected plan switching.”

In the control group, 17.7 percent of enrollees who were more expensive plans switched to enhanced silver plans.

Compared to a control group, the researchers found that sending emails increased enrollees’ likelihood that low-income enrollees would switch to a silver cost-sharing reduction plan by two percentage points—an eleven percent increase.

Using mail and email together increased the likelihood of switching to a silver cost-sharing reduction plan by 3.9 percentage points, a 22 percent improvement.

All categories saw significant changes except the email-only pushes for silver-94 eligible enrollees in gold plans and the silver-94 eligible enrollees in platinum plans.

The researchers also discovered that the email and mail pushes might have more impact based on age. Enrollees that were older than the mean age of 42.5 years responded more to the mail and email strategy than those who were younger than the mean age.

Another significant difference arose between individuals who had auto-renewed their erroneously chosen health plan the previous year versus those who had actively selected the higher-cost health plan the previous year.

Participants who had actively chosen their more expensive 2018 health plan were more responsive to both the email-only and the postal mail communications. For this population, the email-only strategy produced a 2.3 percentage point increase in enhanced silver plan enrollment and a 4.4 percentage point increase in response to the mail and email strategy.

In comparison, the number of those who had auto-renewed their expensive 2018 health plan and who switched to an enhanced silver plan increased by only 0.3 percentage points in response to the email-only strategy. The population of autorenewers that switched to an enhanced silver plan rose by 1.5 percentage points after the combined email-mail approach.

Payers have historically supported auto-renewal of Affordable Care Act marketplace and Medicaid enrollment as a step toward achieving universal coverage. However, this study may point to an area in which auto-renewal could have negative implications and would require a unique approach.

The strategy of sending both mail and emails produced a significant shift in the populations with high amounts of choice error. As a result, enrollees who chose to switch to a silver cost-sharing reduction plan saved on average $84 per month in premiums and $56 per month on out-of-pocket healthcare spending.

“Given that gold enrollment increased not just in California but nationwide after the termination of CSR subsidies, other states are likely grappling with how to guide low-income consumers to the best available plan for which they are eligible,” the researchers concluded.

“Our intervention points to a low-cost approach for states that could yield reductions in choice errors.”

This is timely information as eligibility for silver plans with no premiums becomes more widely accessible through the American Rescue Plan Act and the special enrollment period.