'Silver loading' on ACA exchanges paid off for some rural enrollees, study finds

“Silver loading” by health insurers paid off for people in subsidized Affordable Care Act (ACA) coverage, particularly in rural areas, according to a new study. 

Research published this week in Health Affairs examines how insurers’ reaction to the Trump administration’s 2017 decision to suspend cost-sharing reduction (CSR) payments impacted the affordability of plans on the ACA’s exchanges. 

They found that between 2017 and 2019, the average minimum net monthly premiums for subsidized enrollees in rural areas declined from $288 to $162. They decreased from $275 to $180 in urban areas. 

When CSRs ended in 2017, health insurers and states responded in a number of ways, notably “silver loading,” or tacking most of the premium increases tied to the CSR payments on silver plans, which the administration uses to calculate subsidies. This drove up the subsidies. 

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In states where plans responded through silver loading or silver switching, rural subsidized enrollees saw the largest declines in their premiums, the study found. As many rural markets are monopolized by one insurer, members in these regions felt the benefits more strongly. 

“Majority rural [areas] were much more likely than majority-urban ones to be served by monopolist insurers, which could fully leverage silver loading or switching to increase revenue from premium tax credits and reduce minimum net premiums,” the researchers wrote. 

However, people in rural areas who do not qualify for subsidies fared the worst on cost, according to the study, due to limited competition between insurers to manage costs.  

Unsubsidized enrollees in urban markets fared better—costs didn’t decrease dramatically, but greater competition between payers more effectively controlled premium hikes, according to the study. 

“There are no policies that can offer all populations—rural and urban, healthy and unhealthy, subsidized and unsubsidized—high quality insurance for low premiums,” the researchers said.