Friday, March 08, 2019

The shrinking but retentive ACA marketplace

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n.b. the next post constitutes an update.

One feature of the ACA marketplace under Trump administration: as new enrollment contracts, retention has improved. With enrollment down 10% overall since 2016, the market has apparently contracted to its core: those who are renewing know they need or may need care.

Zeroing out the individual mandate for 2019 cannot have helped new enrollment, though new enrollment shrank just as much in 2018 as in 2019, when the mandate repeal went into effect. As the mandate repeal was pending through the fall of 2017 and became law in December 2017, many may have thought the mandate had been repealed as of 2018 -- if not the whole ACA, as Trump kept screaming. At the same time, discounts generated by silver loading (cheap gold and often-free bronze plans*) have probably improved retention. A higher percentage of enrollees are now subsidized, and the 87% of enrollees who are subsidized are paying lower premiums on average, as Charles Gaba has noted. Attrition has for years been much steeper among unsubsidized enrollees.

Better retention is reflected both in year-over-year renewals and in the level of attrition after first payments are due and throughout the year. In the 39 states, renewals were up slightly in 2019, while new enrollment shrank 16% (see CMS final snapshots 2019 vs. 2018). In California, the largest state-based exchange (SBE),  renewals were up 7.5% while new enrollment contracted 24%. Overall enrollment was down 4% in states and virtually flat (down 0.5%) in California.

Renewals up/new enrollments down is a two-year pattern. In 2018, for all states, renewals were up 2% while new enrollments were down 16%, according to public use files for 2017 and 2018. In California, however, new enrollment was up 5% in 2018, while renewals were down 5%. Hence Covered California's lament about the effects of de facto individual mandate repeal.

More starkly, in states new enrollments have dropped by about half since 2016, from 4,025,637 in that year to 2,072,115 in 2019.**

[UPDATE, 3/10]: In fact the steepest drop in new enrollment in states was in 2017, when it dropped to 3,013,107 from 4,025,637 in 2016, or 25%. In fact, in states the decline has been decelerating -- from 25% in 2017 to 18% in 2018 and 16% in 2019. For 2017, the Trump administration's cutoff of advertising in the last two weeks of open enrollment accounted for an enrollment drop in the range of 4-5%, or about 400,000. Enrollment at the end of OE skews toward new enrollees, but the drop would clearly have been steep in any case.  The pattern may be different in SBEs. In California, which accounts for half of SBE enrollment, new enrollments were flat from 2016-2018, then plummeted 25% this year.  Covered California attributes the sudden drop to repeal of the individual mandate penalty.

As for first-quarter attrition, after first payments were due in February, in 2018 90.5% of initial signups remained enrolled, vs. 88.5% in 2017 (when a CMS error is accounted for). The pattern holds through the second quarter. As of the "first half" snapshot for 2018, enrollment was 87.5% of initial signups, compared to 83% in 2017. There is no data as yet about attrition in 2019. [UPDATE, 3/10: In 2016, enrollment after the first quarter was 87.4% of signups as of the end of OE. So improved retention, along with declining new enrollment, is a multi-year trend.]

It should be noted that while enrollment is down 13.5% since 2016 in states, it's up 3% in states that run their own exchanges. State-based exchanges have their own funding source for marketing (insurer assessments) and are not affected by CMS's gutting of advertising (down 90% from 2016) and outreach/enrollment assistance (down 84%). SBEs also for the most part exercise more active oversight in the insurance markets, are more likely to ban or tightly constrain lightly regulated short-term plans,  and have enacted other enrollment-boosting measures such as standardized plans, additional state subsidies (in MA, VT and, temporarily, MN), and Basic Health Plans (in NY and MN).  But unless they take further action to counter Republican sabotage, the SBEs will probably also feel the progressive bite of mandate repeal in years to come.

* Silver loading refers to concentrating the cost of CSR subsidies (directly reimbursed to insurers by the federal government as stipulated by the ACA until Trump stopped payment in October 2017) in the premiums of silver plans, since CSR is available only with silver plans. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark (the second cheapest silver plan), inflated silver premiums create discounts for subsidized buyers in bronze and gold plans. And in states that allowed insurers to offer silver plans off-exchange with no CSR load, unsubsidized enrollees were protected from CSR costs, theoretically at least.

** The comparison is not quite apples-to-apples, since a) there 38 states on in 2016, with Kentucky (93,666 enrolled in 2016) not yet having ditched its SBE; and b) the 2016 total comes from the final enrollment report, issued weeks after open enrollment ends, as opposed to the immediate final weekly snapshot, which I can't find. The totals may have been slightly different in the earlier report. 

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