Thursday, October 01, 2015

So, ACA marketplace, how're you doin so far? [Updated 10/14]

[Update, 10/14/15: This week Kaiser estimated that about 7.1 million uninsured people are currently eligible for private plan subsidies in the ACA marketplace. As of June, the marketplace had 8.3 million active subsidized enrollees. Thus the marketplace has reached about 54% capacity among the subsidized, if Kaiser's estimate of the uninsured population is on point. The Kaiser estimate, like a recent HHS estimate of the 2016 target market, indicates that CBO's projections of what will constitute full marketplace capacity may be too high. ]
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A dispiriting backdrop for those assessing the progress of the ACA private plan marketplace is the Kaiser Family Foundation's estimate that state marketplaces have enrolled just 35%  of the "potential marketplace population." 28 million are eligible; 9.9 million have enrolled.

That stat is easy to misinterpret, though, in that the "potential eligible population" encompasses those who earn too much to qualify for subsidies -- including those who buy plans off-exchange. Taking off-exchange buyers into account*, probably about 17 million of Kaiser's 28 million "potential" enrollees are currently insured in the individual market.

Subtracting about 2.5 million who are in "grandfathered" or "grandmothered" pre-ACA plans, perhaps 14.5 million are in the unified risk pools that insurers who participate in the state marketplaces must establish for all their customers in each state who are enrolled in ACA-compliant plans.

Spotlight on the subsidy-eligible

What about the percentage of potentially subsidizable marketplace customers reached thus far? They're the real target market of the marketplaces. If you earn too much to qualify for ACA subsidies, there's little reason** to buy your plan via an exchange.

On that front the marketplaces have done better. In 2013, Kaiser estimated the number of subsidy-eligible potential enrollees at 17.2 million.  As of June 30, 2015, after a season of attrition and enforcement following the end of open season in mid-February, the marketplace reported 8.3 million subsidized enrollees, or 48% of the target market identified by Kaiser in 2013 (which has shrunk slightly since then).

Kaiser's potential marketplace total is not a forecast, since no one expected, the entire existing individual market to migrate to the exchanges. For that we have CBO, which in 2013 forecast an average monthly marketplace enrollment for this year of 13 million, 11 million of them subsidized. Subsidized enrollment is thus about 25% below CBO's 2013 projection. Viewed another way, CBO views full capacity for subsidized buyers, projected for 2018-2021, at 20 million. Average monthly enrollment this year will be a bit more than 40% of that; CBO anticipated the marketplace to have reached 55% of full capacity by this point.

Medicaid enrollment exceeds projections

The increase in Medicaid and CHIP enrollment since since ACA launch as of July, in contrast, is about 1.2 million higher than the 12 million*** forecast by CBO in 2013.  Is there a relationship between exceeding expectations on that front and falling short of them in the private plan marketplace? Perhaps. And perhaps the variance in the allocation between Medicaid and the marketplace is concentrated among younger adults.

In the runup to the marketplace launch in fall 2013, much was made of HHS's stated goal of enrolling 2.7 million young adults (ages 18-34), a bit shy of 40% of their overall target of 7 million enrollments.  In what I believe was her first post for The Incidental Economist, then-graduate student Adrianna McIntyre crunched census data to assess how feasible the target seemed.

Adrianna calculated that of 25 million adults aged 18-35 who were either uninsured or insured through the individual market, about 14 million were either Medicaid-eligible or in the "Medicaid gap" -- ineligible for premium subsidies because their incomes were below 100% FPL, but denied Medicaid because their home states refused the expansion. That left 11 million potentially eligible for marketplace coverage -- and, I would add, just 8 million under 300% FPL, the point at which subsidies for younger buyers often phase out. While McIntyre thought HHS might hit its target, she also mused, "the fact that young adults disproportionately benefit from the Medicaid expansion and extended dependent coverage could put stress on the marketplaces." 

That post came to mind when I read this from the Commonwealth Fund's recent analysis of current enrollment and the still-uninsured:
Despite concerns that young adults might not sign up for the law’s coverage options, 19-to-34-year-olds comprise more than one-third (38%) of the current combined enrollment in marketplace and Medicaid plans among working-age adults (Exhibit 3). Young adults represent 31 percent of adult enrollees in the marketplaces, proportionate to their share of the adult population. Medicaid has been a critical source of new insurance coverage in this age group: 46 percent of new adult Medicaid enrollees are ages 19 to 34.
Now, those percentages are not hard enrollment numbers -- they're based on self-reported status in Commonwealth's spring 2015 survey of about 4800 adults (458 of them with marketplace coverage, and 344 in Medicaid for less than two years).  And Sara Collins points out to me that in the runup to the ACA launch, healthcare scholars, including at HHS, had reams of Census data on income and insurance status to crunch in coming up with their enrollment targets. Commonwealth analyses from 2009 and 2010, for example, noted that more than half of uninsured young adults had incomes under 133% FPL (though some of them would be eligible for marketplace subsidies in nonexpansion states). When creating its targets, HHS  doubtless took full account of income data for uninsured 19-34 year-olds, as for other cohorts. 

Nonetheless, the Medicaid expansion has exceeded 2013 expectations, while marketplace enrollment has fallen short of them. There are a lot of potential reasons for that: the terrible tech problems of fall 2013, the lack of outreach from state officials and agencies in red states, the skimpy subsidies available to those at the upper end of eligibility. But a larger-than-recognized skew toward incomes below 138% FPL may also be a factor.

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*  According to Kaiser's spring survey of plan buyers in the individual market, as of mid-February, 40% of plan holders in the individual market had bought their plans off-exchange. That would come to about 7.8 million at that point. Since then, marketplace enrollment has declined by about 15%; we don't know whether there was similar attrition off-exchange. I would guess not, as those who signed on to pay full freight are probably likelier to know what they can afford. Perhaps 7 million remain enrolled off-exchange. Other estimates of the off-exchange market are higher than Kaiser's.

** Some unsubsidized buyers use the marketplace to hedge against the possibility that their income will sink enough within the year to put them in subsidy range.

*** The CBO forecast is for average monthly enrollment throughout the yer; the July snapshot may not reflect that precisely.


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