Thursday, October 15, 2015

The shrinking subsidizable ACA private plan buyer pool

This week the Kaiser Family Foundation estimated that among 32.3 million non-elderly uninsured U.S. adults, 22%, or 7.1 million, should be eligible for subsidized private plans in the ACA marketplace. HHS estimates a total of 10.5 million uninsured who are eligible for marketplace coverage, almost 80% of whom are subsidy-eligible.*

There were 8.3 million subsidized marketplace enrollees as of June, suggesting a total pool of about 15-16 million who lack access to employer-sponsored or other insurance and are eligible for subsidies. The Congressional Budge Office's most recent forecast is that by 2017, 18 million people will be buying subsidized plans in the marketplace.  Allowing for a bit of population growth, why the apparent overshoot?

The answer may lie in expectations about employer response to the ACA. CBO's 2015 projection estimates that employer-sponsored insurance will be down 6 million from the pre-ACA baseline in 2016 (and down 1 million this year).

HHS just released what looks like a very conservative estimate for 2016 marketplace enrollment (11.0--14.1 million enrolled by the end of Open Season, reduced by attrition to 9.4--11.4 million by year's end). To account for the difference with CBO projections (21 million average monthly enrollment in 2016), HHS did spotlight the ESI projection -- along with difficulty reaching the still-uninsured):
We adjusted the CBO projections according to lessons learned over the past two years about enrollment through the Marketplaces and the most recent information available about trends in ESI coverage and in the individual market outside the Marketplaces. Specifically, we adjust CBO estimates downward based on employer surveys from Mercer and other industry sources, which suggest that shifts from ESI coverage and the off-Marketplace individual market into coverage through the Marketplaces will be smaller than CBO expected and that the remaining uninsured may be harder to reach than in previous years.
Another area in which HHS projections lag CBO's is in movement of those who buy plans off-exchange into the marketplace. CBO expects the off-exchange nongroup market to shrink by 4 million this year.  HHS anticipates that 0.9--1.5 million nongroup customers will switch to the marketplace.  There's really no reason for subsidy-ineligible customers to buy their insurance on the exchange, unless they anticipate the possibility that their income may drop, rendering them subsidy-eligible.

Perhaps the real story is that HHS anticipates that between 2.8 and 3.9 million "eligible uninsured" will select plans by the end of open season. That's a pretty small segment of the remaining uninsured target market of 10.5 million -- including perhaps 8 million subsidy-eligible prospective customers. HHS also expects 10--25% of 2015 enrollees to drop coverage.

Update, 10/16: One thing ACA watchers need to get used to is the natural and necessary reverse-forward movement in yearly marketplace enrollment figures. Following the enrollment totals announced at the end of open season, there are four down-shifts. First, 10-plus percent never pay their premiums. Next, the feds cut off or reduce subsidies for those whose reported income doesn't match their tax data (that was particularly draconian this year; hopefully in future years HHS will improve communication and enrollees and assistors will learn the ropes better). Then there's gradual attrition through the year: disenrollment modestly outstrips enrollment of those granted Special Enrollment Periods prompted by life/status changes such as job loss or moving. Finally, there are those who decline to renew in the year following.

The upshot: while 11.7 million people had "selected plans" by mid-February 2015 and 9.9 million were actively enrolled by June 30, HHS forecasts that somewhere between 7.3 million and 8.8 million (that's a wide range! will re-enroll for 2016. That's not a problem, or a surprise. Way back in November 2013, healthcare scholars Rick Curtis and John Graves projected that only 42% of those who would be eligible for subsidized marketplace coverage at the end of 2014 would have been eligible in open season at the end of 2013 (that sounds a bit backwards, I know). Employment status, income, family size and other factors are volatile in the relatively small segment of the population that will have use for the marketplace.

* HHS includes among those who "may qualify" for subsidies everyone with income up to 400% FPL. For a fair number of prospective marketplace customers, subsidies fade out at levels below 400 %FPL -- for young people, often around 300% FPL.

Related: HHS: Not done with apple picking now

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