The retentive ACA marketplace, revisited

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In my last post, I noted that enrollment drops in the ACA marketplace recorded in each year of the Trump era at the end of Open Enrollment more or less evaporate in yearly comparisons of average monthly enrollment, or end-of-year enrollment.

That is, it seems that fewer people in the last two years drop out without paying, and perhaps a higher percentage remain enrolled all year (many people in the ACA marketplace do have good reasons not to remain enrolled all year -- one of the marketplace's vital roles is as a stopgap). That's congruent with another change recorded in 2019: new enrollments down (-15.7%), re-enrollments up (2.3%), as of the end of Open Enrollment.

Why have apparent enrollment drops as of the end of OE in each of the last three years either shrunk or eroded entirely over the course of the year? A few possibilities:

• Reduced federal spending on enrollment advertising (down 90%) and outreach (down 84%); a shortened enrollment period; repeal of the individual mandate penalty; and the Trump administration's promotion of short-term plans have slanted enrollment toward those most conscious of their existing or likely need for medical treatment, i.e. those least likely to drop coverage. 


• Discounts created by silver loading -- particularly free bronze plans -- reduce the likelihood that a substantial subset of enrollees will drop out.


• Wider availability of short-term plans, coupled with repeal of the mandate penalty, reduce enrollment in the ACA marketplace among those who know their needs will be temporary, boosting average enrollment length (and average monthly enrollment relative to enrollment at the end of OE).* 


• Re-enrollees are likelier to remain enrolled year-round than new enrollees.

All of these factors pertain to subsidized enrollment only, which has remained almost static through a storm of regulatory, legislative, and attempted legislative change. Unsubsidized enrollment has cratered, as CMS emphasized in last week's report, and as Kaiser further shows with a report released today. According to Kaiser figures (estimated for 2019), unsubsidized enrollment is down a staggering 56% from the first quarter of 2015 to the first quarter of 2019, from 10.2 million to 5.7 million (subsidized enrollment is up 7%, from 8.7 million to 9.3 million, in the same period). 

One factor in the drop, though not the dominant one, is the fact that enrollees in pre-ACA plans that were grandfathered by the law or "grandmothered" by the Obama administration in 2013 in response to the uproar over cancellations do not seem to have enrolled in unsubsidized ACA-compliant plans as those so-called "transitional" plans phased out (or if they have, others have dropped out in even higher percentages). There were 3.3 million enrollees in transitional plans in Q1 2015, compared to 1.1 million in Q1 2019. 

Unsubsidized on-exchange enrollment has also dropped, from 1.7 million in Q1 2016 to 1.3 million in Q1 this year. That drop is attributable not just to the steep premium increases of 2017-18, but also to increased subsidy eligibility among enrollees with incomes in the 250-400% FPL range as a result of those premium increases. Enrollment at 300-400% FPL increased by 100,000 from 2016 to 2019 (as of the end of OE in both years).

The hot core of the enrollment plunge, however, is among those who enroll off-exchange in ACA-compliant plans. Off-ex enrollment has dropped from 5.4 million in Q1  2015 to 2.5 million in 2018 and a forecast 2.1 million this year, according to Kaiser.  That's mainly due to premium increases average 21% in 2017 and 26% in 2018, according to CMS, and it's no mystery. As Kaiser notes, those losses likely moderated in 2019, when premiums ticked down slightly (-1%). Premiums for 2020 are essentially flat. But they're stuck too high for losses to be reversed, absent legislation to make coverage affordable for people with incomes above the subsidy cutoff.

Update: Louise Norris draws a political lesson from these stats:

The sharp decline in unsubsidized enrollment is a reminder that without premium subsidies, coverage is simply unaffordable for many, regardless of other consumer protections that are built into the ACA.

With uncertainty around the judicial fate of the ACA, this is a key point. https://t.co/MLSXXZC87J

— Louise Norris (@LouiseNorris) August 21, 2019

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*Thanks to Kaiser's Cynthia Cox for alerting me to this possible factor.