Wednesday, September 03, 2014

No, Virginia, ACA administrators do not need to "retain" the prior 8 million signups in 2015

Tis the season for preview articles spotlighting the challenges of signing up more uninsured and retaining the newly insured in Year 2 of the Affordable Care Act. The New York Times' Reed Abelson, in an otherwise excellent overview, repeats a common fallacy:
the Obama administration is expected to try to persuade about five million more people to sign up while also trying to ensure that eight million people who now have coverage renew for another year.
No one can or will try to ensure eight million renewals, because a very large proportion of 2014's enrollees -- perhaps half or more -- will not need to renew their coverage. They will be covered by new employers, or new spouses, or newly employed old spouses, or they will lose income and become eligible for Medicaid, or they will go on disability, or die, or, or, or...

For the nth time I'm moved to cite Rick Curtis and John Graves, who highlighted the volatility of the non-group insurance market back in November 2013:
Our analysis also indicates that 12 percent of non-elderly adults will be eligible for subsidized exchange coverage by the end of 2014, having had full-year incomes in the tax-credit range and lacking employer coverage at year end. But less than half of this total (42 percent) were in the eligible group a year prior...
... a study by Mathematica Policy Research found that 7.7 percent of non-elderly persons were uninsured for the entire year, while on average 15.9 percent were uninsured in a given month, and 27 percent were ever uninsured at some point during the year.  And most people enrolling in non-group coverage have only done so for a limited period of time:  During an average month, 5.3 percent of the non-elderly population had non-group coverage, but only 2.1 percent held non-group coverage for the entire year, and 9.7 percent had non-group coverage at some point during the year.  Finally, while employer-sponsored insurance (ESI) is substantially more prevalent and stable, 56.4 percent held ESI for the entire year, and 76.1 percent held ESI at some point during the year.
Caveat: if it's roughly true that only 42% of next year's signups for private subsidized plans will have been eligible in this year's open enrollment, that does not mean that less than half of current signups will still be enrolled next year. Enrollment in private exchange plans is projected to increase from 8 million to 13 million, so even if there were no attrition at all, 38% of 2015 signups would be new customers -- and many if not most of them may have been eligible in the prior signup period.

So Curtis and Graves' estimates only give us an idea of the normal volatility in the nongroup market -- they are not a forecast of the attrition rate.  But Charles Gaba, who has been meticulously tracking ACA signups from publicly available data since last fall, estimates about 3% attrition in private plan signups every month, offset in part by about 9,000 new signups per day via "special enrollment periods" -- eligibility outside of open enrollment triggered by life-changing events such as job loss, marriage, divorce and childbirth.

The volatility of Americans' insurance status flows manly from the volatility of employment. Every month in the U.S., about four million people lose their jobs (or their seasonal jobs simply end), and about as many find new employment.  Those of us tracking the ACA's progress need to keep that volatility in mind.

One more footnote from Abelson's story. It seems to me that this initiative from California spells trouble:
In California, the state exchange is trying to get a step ahead by allowing people to begin renewing their plans Oct. 1. But anyone who wants to switch plans will still have to wait until Nov. 15, and many individuals may well want to shop around. In the Sacramento area, for example, someone who selected an H.M.O. plan from Anthem for 2014 faces a possible increase of nearly 17 percent, compared with a 2 percent increase for an H.M.O. plan from Kaiser Permanente in the same area.
That policy exacerbates the problem potentially caused by HHS's intent to encourage auto-renewal for those currently enrolled in private plans via The problem arises for enrollees in a plan that loses benchmark status -- that is, its status as the second cheapest silver plan (or the cheapest silver, to which the same subsidy advantage accrues).  Premium subsidies, calculated to leave the customer paying a fixed percentage of her income, are calculated against the benchmark; customers are responsible for the whole difference between the benchmark plan's premium and the premium of a more expensive plan. As of October 1, I should think (checking...), Californians who bought a benchmark plan for 2014 won't know whether that plan will maintain its benchmark status.  Yes, the subsidized marketplace is something of a tangled web.

UPDATE: The LA Times' Chad Terhune has details about California's struggles with renewal. On the one hand, there's this good news:
Consumers can check their health plan options and proposed rates for 2015 at Covered California's online calculator. Regulators are expected to finalize these rates by Sept. 30.
It's not clear, though, that those who look to renew on Oct. 1 or later will be able to easily determine whether their current plan is first- or second-cheapest silver -- or rather, just how much their premiums will go up, subsidy included, even if  their income hasn't changed (many probably know nothing about benchmarks or how their subsidy works).  Further, it looks like there's scope for more confusion in insurers' renewal notices:
Insurers are slated to send renewal notices from mid-October to Nov. 1. Those mailings should show the person's 2014 premium, his or her current federal subsidy and next year's rate for the same plan.

But it won't include the person's 2015 subsidy, and that may lead some consumers to mistakenly think that they're facing a huge rate hike because the full premium will be shown on the form.
Terhune further reports, "Covered California said it would send updated subsidy information sometime between Oct. 10 and Dec. 15." So why, one may ask would it kick off renewals on Oct. 1? Why not wait until all needed information is available in easily digestible form?

UPDATE 2: Charles Gaba, expanding on this post, points out that there's nothing magical about the 13 million figure -- it's a CBO estimate, not a target. Also, one more factor in turnover: about 200,000 of this year's signups will age out into Medicare.

UPDATE 3: Larry Levitt notes by email that once rates are finalized, a benchmark should be identifiable...which leaves open the question of just how clearly the benchmark will be flagged for existing customers, or whether the subsidized 2015 premium for their current plan will be at all clear when renewal is invited.

UPDATE 4, 9/6: Washington State is out with detailed data on off-season ACA enrollment and attrition. Charles Gaba analyzes and comes up with a 1.6% monthly net attrition rate, well below his overall estimate for the country as a whole. Washington broke out never-paids, voluntary disenrollments, and those who lost qualification to remain enrolled, as well as those who enrolled via special enrollment periods.

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