In 2021, will attrition in the ACA marketplace go negative?

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Until the pandemic struck, enrollment attrition throughout the coverage year in the ACA marketplace was an established norm. Every year, effectuated enrollment (i.e. paid-up enrollment) as of the first month after the end of Open Enrollment (OE) was between 6% and 15% lower than the "plan selection" total as of the end of OE. From February through December, enrollment would downtick by 600-800,000.

Attrition was reduced throughout the Trump years; possible causes are discussed here. (In brief, the Trump administration made it harder to enroll, weeding out less motivated enrollees, while silver loading made coverage much cheaper for a significant number of enrollees.) Last spring, as the pandemic triggered tens of millions of layoffs, 12 state exchanges opened emergency Special Enrollment Periods (SEPs) in which anyone who needed insurance could enroll with relatively little friction (varying somewhat by exchange).  The Trump administration declined to open an emergency SEP for the 36 states using HealthCare.gov, but did reduce red tape for those who sought individual SEPs due to a qualifying "life change," usually loss of employer insurance. 

The net result was a steady reduction in attrition from 2017-2019 and a sharp reduction last year. In 2016, the year of peak plan selections as of the end of OE, average monthly enrollment (AME) was 79% of end-of-OE "plan selections." In 2019, AME was 86% of initial plan selections. In 2020, AME reached 92% of the end-of-OE tally.

ACA marketplace enrollment, 2016-2021: End of OE, early effectuated, average monthly

All-time high totals in red

Year	End of OE	Post-OE effectuated	Early effectuated/OE	Average monthly	Avg. monthly/OE
2016	12,681,874	10,828,894	85.4%	10,007,113	78.9%
2017	12,216,003	10,526,942	86.2%	9,763,076	79.9%
2018	11,750,175	10,515,192	89.5%	9,895,197	84.2%
2019	11,444,141	10,579,744	92.4%	9,810,613	85.7%
2020	11,409,447	10,673,516	93.5%	10,531,978	92.3%
2021	12,004,365	11,290,546	94.1%

Sources: CMS state-level public use files and effectuated enrollment snapshots

This year, we're in a different world. The Biden administration opened an emergency SEP in HealthCare.gov on February 15, extending August 15, and the state exchanges followed suit, with some variations. Then the American Rescue Plan, signed into law on March 11, provided a massive subsidy boost through 2022, with the new subsidies appearing live on HealthCare.gov on April 1, and in state exchanges pretty shortly thereafter.  Another ARP provision, offering free silver plans with the highest level of Cost Sharing Reduction to anyone who receives any unemployment insurance in 2021, goes live on HealthCare.gov in July and is already on offer on Covered California.

In response to this turbo-charging, CMS announced 1.24 million new enrollments in HealthCare.gov states from Feb. 15 through May 31 -- more than triple the 2019 total for the same period. The national total, with state exchanges included, is probably over 1.7 million, according to Charles Gaba's estimate.

Will this year's extended SEP, major subsidy boosts and free coverage for those who had a period of unemployment wipe out attrition entirely, or nearly so? California's state-based marketplace, Covered California, offers a test case of sorts, both in 2020 and this year. 

In 2020, Covered California opened an emergency SEP on March 20 and ran it through August 31, vigorously promoting it throughout. In a September report, the exchanged claimed 289,460 enrollments during the SEP, an increase of more than 100% over the same period in 2019. As a result effectuated enrollment in December 2020 was slightly higher than in March (up 0.3%) and only 3.8% lower than total plan selections as of the end of OE.

This year, Covered California opened an emergency SEP on February 1 (15 days before HealthCare.gov) and loaded the improved subsidies created by the ARP on April 12.  Through June 16, the state reports 246,640 SEP enrollments. Charles Gaba calculates that SEPs per day are running slightly ahead of last year's, and about twice the 2019 rate.  Effectuated enrollment in California is at an all-time high, 1,591,800, just 2% below total plan selections as of the end of OE, 1,625,546.

In the federal exchange, SEPs are more than triple the total for the same period in 2019, and the initial gap between end-of-OE plan selections and effectuated enrollment in February was at an all-time low. It therefore seems likely that effectuated enrollment now (June 2021) is higher than end-of-OE plan selections. Average monthly enrollment for the year may outstrip initial plan selections.  

If so, that would constitute a real year-over-year enrollment increase of at least 14% -- and a 20% increase over 2016, the previous peak.

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