Monday, July 02, 2018

Off-exchange ACA enrollment dropped 20% in 2017. Why did unsubsidized on-exchange stay stable?

In October 2017, Matt Fiedler of the Brookings Institute estimated that premium hikes averaging 20.5% nationally in the ACA-compliant individual market in 2017 were likely to reduce unsubsidized enrollment by 12.3%.

Today, CMS is out with a report claiming that unsubsidized enrollment dropped 20% nationally in 2017. Average monthly enrollment among the unsubsidized was down 1.3 million. Subsidized enrollment was down just 3%, despite Republican repeal threats and a late cutoff of advertising (along with active denigration of the offerings) by the Trump administration. The subsidized were insulated from the premium hikes; the unsubsidized of course were not.

One peculiarity: all of the drop in unsubsidized enrollment was apparently off-exchange. In fact, unsubsidized enrollment on HealthCare.gov and the state exchanges rose slightly in 2017, from 2.1 million to 2.2 million (though the "unknown" subsidy status of 83,516 enrollees all but closes the gap).

I don't know how to explain that. But in 2018 as well, a fresh round of sabotage-induced premium hikes north of 20% did not ding on-exchange unsubsidized enrollment nearly as much as it likely did off-exchange. On-exchange unsubsidized enrollment dropped from 2,115,195 to 1,988,071, or 6%, compared to a 3% drop among the subsidized. I presume that once again the carnage was worse in the off-exchange market.

Some of those who left the off-exchange market likely ended up on-exchange. That includes the newly subsidy-eligible. On HealthCare.gov, enrollment among those with incomes in the 300-400% FPL bracket increased sharply in both years, from 710,866 in 2016* to 786,678 in 2017 and 867,198 in 2018 --an 18% increase in two years. That's doubtless because, as I noted recently:
At 300-400% FPL, steep premium hikes rendered many people who were previously ineligible for subsidies subsidy-eligible.  At 300-400% FPL, subsidies become available if the benchmark silver plan premium exceeds 9.56% of the buyer's income.
It's also possible that some of those who remained unsubsidized moved from off-exchange to on-. It may be that some people who had previously enrolled off-exchange, stung by rate increase letters from their insurers, used HealthCare.gov or state-based exchanges to comparison shop, and enrolled online. As CMS boasted in another report issued today, enrollment on HealthCare.gov is a lot easier than it used to be. The same is probably true for the SBEs.

A migration of unsubsidized buyers from off- to on-exchange wouldn't affect the overall count of unsubsidized enrollees. But it might help explain the wide difference in attrition between off- and on-exchange unsubsidized enrollment.

Of course, a national average weighted increase (above 20% in both years) explains a lot, but local stories vary enormously -- and state average weighted increases don't explain everything either. Those averages can hide large differences among insurers, or between metal levels, or between rating areas, or in the availability of enrollment assistance (more a factor for 2018, as the Trump administration radically cut outreach spending for that year. Employment markets also factor in.

What's certain, as Louise Norris pointed out today, is that individual market insurance is becoming unaffordable for a growing segment of those who lack access to other insurance.  And one simple form of relief would be a cap on premiums as a percentage of income at all income levels. That would cost less than Trump administration has squandered by driving up premiums (and so subsidies) by various acts of sabotage, chiefly the cutoff of federal CSR funding.

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* The total for 2016 is reported as a rounded percentage (8%) of total enrollment among those for reported income. 2017 and 2018 totals are whole-number counts, as reported for each income bracket in the public use files. 

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