Premium alignment refers to the pricing of health plans on their benefit levels and not on their respective enrollees’ risk characteristics. The Affordable Care Act’s four categories of health plans (bronze, silver, gold, platinum) share the same Essential Health Benefits and were intended to differentiate their premiums largely by each category’s actuarial value. However, the silver-loading performed in the wake of CSR defunding has created a misalignment between the benefit levels and premiums in the Affordable Care Act market.
Although silver loading significantly increased silver plan premiums to offset the expense of cost-sharing reductions, their premiums generally remained below gold plan levels even though average actuarial values for silver plans generally exceeded the gold plan’s actuarial value of 80 percent.
Several states have directed their local insurers to base premiums on the plan actuarial values, which increases silver plan premiums and decreases gold plan premiums in many circumstances. As a result, premium alignment further increases PTCs and leads to a situation where many gold plans can be purchased without any consumer premium payment due to gold plan premiums being at or below the value of the Premium Tax Subsidy derived from the increased premium of the benchmark silver plan.
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