The solution
In October 2017 the Trump administration stopped funding the Affordable Care Act's cost-sharing reduction subsidies — the federal money that lowered copayments and deductibles for low-income enrollees. Insurers facing the loss raised premiums in response, but in many states, often at local regulators' behest, they raised them only on mid-level silver plans.
That choice was the whole trick: federal premium subsidies are calculated from the cost of silver plans, so when silver prices jumped, subsidies jumped too. Enrollees could spend the bigger subsidy on the pricier silver plan and pay about the same as before — or put it toward a gold plan with far lower deductibles that had stayed flat, in many markets making the more generous plan cheaper than the skimpier one.
The arithmetic showed quickly: the cheapest gold plan beat the cheapest silver plan in about a sixth of counties using Healthcare.gov — much of New Mexico, Wyoming, Kansas and parts of Wisconsin, Pennsylvania and Georgia — and came within $25 a month in many more. 'For many Obamacare enrollees, 2018 will be the cheapest year ever,' observed Bloomberg's Hannah Recht. The play appears to have originated in California's marketplace and spread to dozens of states.
Why it worked
The subsidy formula reads only the silver benchmark, so silver was the lever that converted a cut into bigger credits.
Keeping gold and bronze prices flat let subsidized enrollees upgrade instead of losing coverage value.
It partly neutralised the administration's move: the pain landed mostly on buyers who receive no subsidy.
What can be applied
When a formula pays against a benchmark, the benchmark is the whole game. Regulators who see that can route a cut into the payer's own pocket.
Aftermath
Open enrollment opened the next day with a new urgency to shop around: the windfall existed only for enrollees who switched, since silver-loading raised list prices for anyone buying without a subsidy.
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