Friday, June 22, 2018

Steep enrollment drops in New Jersey's individual market

ACA marketplace enrollment was down 7% in New Jersey as of the end of open enrollment, according to CMS. That's a somewhat steeper drop than the 4% national average and the 5% average among states using HealthCare.gov, but in range.

This week the state Department of Banking and Insurance (DOBI) released first-quarter enrollment results for the entire individual market, off-exchange as well as on-. It shows more severe drops on both fronts -- particularly off-exchange:

NJ Total Covered Lives Comparison, individual market 2017-2018
New Jersey suffered an average weighted premium increase of 22% in 2018, with steeper increases for market hegemon Horizon Blue Cross. As I noted recently, unsubsidized enrollees didn't get any benefit from silver loading, as there were no discounted silver plans available off-exchange. Unsubsidized enrollees basically had four choices: eat huge premium increases, downshift to bronze, switch to narrow network AmeriHealth, or drop out.

It appears that a significant number of unsubsidized enrollees made that last choice. Off-exchange enrollment was down not only compared to the first quarter of 2017, but compared to the last quarter, when enrollment is at low ebb (overall enrollment is up 6% since Q4 2017, but down 11% since Q1).

Off-exchange enrollment stats are hard to come by, but steep enrollment drops are to be expected.  Matt Fiedler of the Brookings Institute estimated last fall that premium hikes averaging 20.5% nationally in 2017 were likely to reduce overall unsubsidized enrollment by 12.3%. New Jersey's numbers would seem in line with that estimate.

A few notes and question marks regarding both off- and on-exchange enrollment:

1. Could rising employment partly account for the off-exchange drop?  Apparently not: counter to the national trend, New Jersey's unemployment rate spiked a bit in late 2017.

2. It's possible that some off-exchange enrollment migrated to on-exchange, on two fronts:
  • First, as I noted in the prior post, while subsidized enrollment in NJ was down 9% as of Jan. 31, unsubsidized on-exchange enrollment was down only 2%. Perhaps some people who had previously enrolled off-exchange, stung by rate increase letters from their insurers, used HealthCare.gov to comparison shop, and enrolled online.
  • Second -- and more definitely -- as premiums spiked, more people with incomes in the 300-400% FPL range became subsidy-eligible. This is a nationwide phenomenon. While subsidy eligibility goes to 400% FPL, people with income below that level are not subsidized if the pre-subsidy premium of the benchmark silver plan cost less than 9.56% of their income in 2018. Accordingly while enrollment dropped in every other income category, enrollment in the 300-400% bracket actually rose slightly in NJ (and nationally) in 2018, to 37,991 from 37,236 in 2017. So some people who enrolled off-exchange in 2017 may have come aboard and picked up a subsidy in 2018.
3. While CMS showed a 7% on-exchange drop in New Jersey from the end of open enrollment 2017 to the end of open enrollment 2018, DOBI's first quarter report shows a 10% year-over-year drop as of the end of the first quarter, March 31. Does that mean attrition was worse in Q1 2018 than in 2017? Maybe, but a couple of caveats are in order. First, the state may simply have somewhat different enrollment figures than does CMS - that's not uncommon among states. Second, as Charles Gaba pointed out to me, open enrollment ended much earlier for 2018 (Dec. 15) than for 2017 (Jan. 31). So there's been more time for attrition to grind on. That difference could level out by the end of Q2, or at least by the end of the year.

4. Many states in which enrollment dropped less than in New Jersey (or not at all) benefited from silver loading -- that is, responding to Trump's cutoff of federal funding for Cost Sharing Reduction subsidies by allowing or instructing insurers to concentrate the cost of CSR in silver plans only, and in some cases in on-exchange silver plans only. The rationale: CSR is available only with silver plans. The effect: subsidies, which are income-based and keyed to a silver plan benchmark, rise with silver premiums, providing subsidized buyers with discounts in gold and bronze plans. While Jersey did silver-load, however, its marketplace did not feature any significant gold plan discounts, and bronze plan discounts were less extreme than in many states. That may explain why New Jersey's on-exchange enrollment decline was steeper than average. 

5. New Jersey's individual market should be comparatively well situated in 2019, as the state a) has enacted an individual mandate effective next year, b) is pursuing federal funding for a reinsurance program designed to reduce premiums by 10-20%, c) bans short-term plans and tightly regulates association health plans (with a provision in the individual mandate bill that safeguards that oversight), and d) has a new governor who is promising to vigorously support and promote enrollment across all state agencies. To climb once more on my personal hobbyhorse: off-exchange discounted silver plans would help too.

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