Monday, March 11, 2019

New enrollment drops in ACA marketplace have decelerated since 2017

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In my last post, I noted that new enrollment in HealthCare.gov states in 2019 was barely half the 2016 total.  Here I want to spotlight an important point that I noticed late and had to add via update: The sharpest drop in new enrollment was in 2017. Reduced new enrollment, though still quite steep, is a decelerating trend. Conversely, improved retention after first payments are due has accelerated since 2016, though we don't yet have numbers for 2019.

Here's how new enrollment and first-quarter retention have played out since 2016, the year of peak enrollment so far:

New enrollment, HealthCare.gov states, 2016-2019
As of the end of Open Enrollment

2016*
2017
2018
2019
Change, 2016-17
Change, 2017-18
Change, 2018-19
Change, 2016-19
4,044,370
3,013,107
2,460,431
2,072,115
-25.5%
-18.4%
-15.8%
-48.8%

Kentucky retired its SBE and joined HealthCare.gov in 2017. Kentucky new enrollment for 2016 (18,733) is added to the 2016 total above.


New enrollment, all states, 2016-2018
As of the end of Open Enrollment

2016
2017
2018
Change,
2016-17
Change,
2017-18
Change, 2016-18
4,887,026
3,822,114
3,223,034
-21.8%
-15.7%
34.1%


First Quarter attrition, all states, 2016-18


2016
2017
2018
End of OE
12,681,874
12,216,003
11,750,175
After 1st payment
11,081,330
10,808,086
10,643,786
Attrition
12.6%
11.5%
9.5%

* 477,327 added to CMS total, which omitted those whose first payments were due after Q1 effectuated enrollment snapshot was published. See here for details.

Enrollment renewals in HealthCare.gov states are up 13.2% since 2016, per the chart from Covered California at bottom.

At first glance, the steeper new enrollment drop in 2017 would seem to discredit assertions that the drop in new enrollment and the 10% drop in overall enrollment since 2016 are mainly the result of various forms of marketplace sabotage in 2018-19-- e.g., gutting advertising and enrollment assistance in healthcare.gov states; coming within a vote of ACA repeal, which helped drive premium increases and created confusion in open enrollment for 2018; cutting off direct CSR reimbursement of insurers; promoting a parallel medically underwritten market for so-called short term plans; and zeroing out the individual mandate penalty. And it's probably true that had Hillary Clinton become president, and no significant changes to the ACA marketplace were enacted, new enrollment would have dropped  -- certainly it would have in 2017, when the market underwent a sharp correction as initial underpricing became manifest.  But the drop would almost certainly have been smaller.

Thoughts on various crosscurrents:

1. As noted in the last post, as soon as Trump took office his administration cut off advertising for the marketplace, crimping the surge that had always to that point occurred at the end of open enrollment. The cutoff probably reduced enrollment by about 400,000 in 2017; prior to the cutoff, it was within a percentage point of the 2016 pace. How much might the late falloff have affected new enrollments? In 2017, new enrollment was 31% of the total, but new enrollment surges at the end of OE. If 200,000 potential new enrollees were discouraged, the counterfactual would peg the new enrollment drop in 2017 at about 20% rather than 25%. [Update: Joshua Peck, head of marketing for HeathCare.gov in the Obama administration, tells me that in years prior to 2017, new enrollment did hit 50% of total enrollment in "the last couple of days" of open enrollment.]

2. The 12 states (including D.C.) that run their own marketplaces have their own dedicated funds for advertising and outreach. In those states, net enrollment is up 3.1%  flat since 2016, while in HealthCare.gov states it's down 13.5% 12.7%*. I don't have new enrollment figures for the SBEs collectively over that period, though we do have numbers for California, which accounts for half of SBE enrollments. And...

3. California, which actively manages its marketplace and has maintained its advertising and outreach budget, managed to keep new enrollment flat in 2017 and 2018 but suffered a 23.7% new enrollment drop this year, while overall enrollment remained flat (re-enrollment rose 7.5%). In a recent report, the state exchange attributed this year's new enrollment drop to repeal of the individual mandate penalty, while also acknowledging the effect of premium increases (themselves partly attributable to various forms of administration sabotage). A Jan. 31 CoveredCA press release touches on both factors:
  • Covered California’s drop in new enrollment is higher than the average 15.8 percent drop of the 39 states served by the federally facilitated marketplace this year. The difference is likely explained by the fact that the FFM states have already experienced sharp decreases in new enrollment in each of the past four years, putting their decrease on top of an already diminished pool of healthy consumers opting out of coverage. California has maintained strong new enrollment in each of the prior four years, leaving it more susceptible to drops in new enrollment due to the loss of the penalty and other factors.
  • In addition to the impact of the penalty on Covered California’s new enrollment, early analysis also indicates that affordability remains a key obstacle for many, especially those who do not receive subsidies.
4. The Covered California report cites a drop in bronze plan selections among new enrollees as evidence that the mandate repeal affected new enrollment, noting survey data indicating that bronze plan enrollees are more likely to have been motivated to enroll by the mandate. I would add that in Los Angeles at least, which accounts for more than a third of state enrollment and is split between two rating areas, bronze plan discounts were bigger in one rating area in 2019 than in 2018 and smaller in the other, by roughly the same amounts -- i.e., basically a wash.* Price spreads between cheapest bronze and cheapest gold in select CA rating areas can be viewed here; in 3 of the 5 regions sampled, a bronze plan is available for $1/month for a 40 year-old with an income of $25k. One more spot check: that's also true in Orange County, the state's largest rating area after the two in LA.

5. The Covered California report includes the following chart contrasting state marketplace performance with that of the HealthCare.gov states. In both markets, the contrast between new enrollment and re-enrollment is stark.  And while enrollment in California is down 3.9% since 2016, recall that it's up slightly in the 12 SBEs combined.


--
Data sources not linked to above: CMS Public Use Files, 2016, 2017, 2018; CMS Effectuated Enrollment Snapshots, March 2016, 2017, 2018,  and Final Weekly Enrollment Snapshots for 2018 and 2019.  Note correction for 2017.

* Re the strike-through: Kentucky switched from SBE to HealthCare.gov in 2017. In the chart linked to above, from Charles Gaba, the 2016 totals include Kentucky -- which is accurate but skews the performance comparison. The corrected numbers impute Kentucky's 2016 enrollment to the SBE group for comparison purposes.

Related: The shrinking but retentive ACA marketplace



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