CMS subtext: The ACA marketplace is in recovery

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The CMS report on long-term enrollment trends in the ACA marketplace has a stark lede:

During two successive years of declining enrollment, from 2016 to 2018, unsubsidized enrollment declined by 2.5 million people, representing a 40 percent drop nationally. 

That's bad. But the report includes data that leads to a clear conclusion: The ACA-compliant individual market has stabilized. It is rife with problems and there are many enrollees whom it does not serve well, but it's passed through a crisis. Consider the following points (some derived from the report, others not):

1. Subsidized enrollment was higher in 2018 than in 2016, generally understood to be the enrollment peak. In fact, total on-exchange enrollment was higher in December 2018 than in 2016. (Off-exchange enrollment, where the bulk of unsubsidized enrollment occurs, did drop sharply in those years.)


2. Subsidized enrollment is higher in 2019 than in 2018, as of February of each year, when all enrollees have had at least one payment due (see CMS's  (2018 and 2019 Effectuated Enrollment Snapshots). 


3. In fact total on-exchange average monthly enrollment is likely to be higher in 2019 than in 2018. At the end of Open Enrollment, plan selections in 2018 exceeded those of 2019 by 306,034. As of effectuated enrollment in February, the gap had shrunk to 63,042, suggesting that retention may be better this year than last. When a drop of 60,617 in Virginia enrollment, triggered mainly by the state's 2019 Medicaid expansion, is taken into account, the February totals for the two years are virtually identical. 


4. It seems that while new enrollment is shrinking, retention is improving on two fronts: more enrollees re-enroll***, and enrollees stay in their plans longer. The yearly totals as of the end of Open Enrollment look quite different from yearly totals for average monthly enrollment:
   
   
   Changes in subsidized enrollment, ACA marketplace 2016-2019
   
   

   Year	Subsidized as of end of OE	Subsidized - avg monthly
   2016	10,525,955	8,248,839
   2017	10,100,808	8,025,959
   2018	9,770,291	8,356,247
   2019	9,710,535	8,374,783*
   2019 v 2016	-7.7%	+1.5%

   * Estimated, by multiplying the February total (9,250,243) by .905, the ratio between the 2018 February total and average monthly enrollment for that year.
   
   As discussed in the prior post, however, the average monthly figures are somewhat skewed by the longer open enrollment seasons in 2016 and 2017, when many enrollees' coverage was not effectuated until February and some not until March. Still, retention has improved from the end of Open Enrollment to December of each year:
   
   Yearly enrollment attrition, ACA marketplace, 2016-2018
   
   

   Year	Total enrollment - end of OE	Enrollment as of December	December/ End of OE
   2016	12,681,874	9,115,154	72%
   2017	12,216,750	8,916,244	73%
   2018	11,750,175	9,170,812	78%

   
   
5. Silver loading*, the predicted but probably unintended bounty yielded by Trump's cutoff of direct funding for Cost Sharing Reduction subsidies, has boosted enrollment by hundreds of thousands and perhaps contributed to retention, providing many enrollees with free or nearly free bronze plans and others with gold plans priced below benchmark silver.


6. The CMS report captured enrollment declines for the unsubsidized in the wake of premium increases of 21% in 2017 and 26% in 2018.  Since then, premiums have stabilized: they were down 1% on average in 2019, and the appear to be up about 1% in 2020. Whether unsubsidized enrollment rebounds at all remains to be seen.


7. Premium stabilization has been boosted by states' successful applications to CMS for federal reinsurance funding. Since 2017, 10 states have won approval and funding for these programs, Montana and North Dakota just this summer. Two more requests are pending.


8. As Louise Norris reports today, in 2020 insurers are entering new markets or expanding coverage in 15 states. That's not surprising, as insurers in the individual market have returned to profitability -- so much so that many will be on the hook to provide enrollees with large rebates stemming from Medical Loss Ratios well below the ACA's required 80% minimum (that is, paid claims have accounted for less than 80% of premium revenue).

None of this is to suggest that the marketplace is fulfilling the ACA creators' goals. Premiums, though flat for two years, have not come down from levels that cut the unsubsidized market by 40% in 2017-2018. More than half of enrollees are in plans with deductibles exceeding $1,500 per individual -- usually far exceeding that threshold once considered high. While nearly half** of enrollees receive Cost Sharing Reduction that keeps deductibles below $1,000, out-of-pocket costs rise yearly as the mandated Actuarial Values at different metal levels cover a fixed percentage of medical costs that keep rising -- so enrollees who select 70% AV silver pay an average of 30% of an ever-growing pie. The individual market as a whole serves only about half the number of enrollees projected by CBO when the law was enacted. 

But a growing market with stable premiums is better than a shrinking market with skyrocketing premiums.  From the beginning, it's been obvious that ACA marketplace subsidies are too low to  render adequate coverage truly affordable to all who affordable lack access to other insurance. Should Democrats win control of the federal government, and balk at further radical healthcare reform, a recovering market will be easier to bolster and improve than a collapsing one would be.
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* Silver loading is the byproduct of Trump's October 2017 cutoff of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are required to provide to low income marketplace enrollees who select silver plans. Faced with the cutoff at the brink of open enrollment for 2018, most state insurance departments allowed or encouraged insurers to price CSR into silver premiums only. Since premium subsidies, designed so that the enrollee pays a fixed percentage of income, are set to a silver plan benchmark, inflated silver premiums create discounts for subsidized buyers in bronze and gold plans.

** In 2019, 52% of on-exchange enrollees have CSR, but about 16% of them have the weakest level of CSR, which raises the actuarial value of a silver plan just three percentage points, to 73%. Deductibles at that weak CSR level average over $3,000. For those with the strongest level of CSR (enrollees with incomes up to 150% FPL, deductibles average $239 this year. At the next level (income 151-200% FPL), deductibles average $843.

*** In 2019, as of the end of Open Enrollment, new enrollment was down 15.7%, while re-enrollment (which is 3/4 of total enrollment) was up 2.3% [added 8/21].