Thursday, June 10, 2021

Obamacare mid-year enrollment is likely up 19% over past peak

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Charles Gaba estimates current enrollment in the ACA marketplace at 12.4 million. That's based on effectuated enrollment as of February of 11.3 million, plus about 1.6 million new enrollments during the emergency Special Enrollment Period (SEP) commenced on Feb. 15, minus an estimate of monthly attrition based on last year's monthly totals. Attrition may be a bit higher, but this is a good estimate.

A lot of people who pay attention to marketplace enrollment patterns have imprinted a number: 12.7 million. That was the (rounded) national total of signups for coverage as of the end of Open Enrollment  season (OE) in 2016 -- long understood to be the peak year for marketplace enrollment. Plan selections declined in subsequent years, probably due in part both to soaring premiums in 2017 and 2018 and Trump administration sabotage (which contributed to 2018 premium hikes though not to the correction of 2017).

Plan selections as of the end of OE is a very different metric, however, from effectuated enrollment, which measures people who are paid up on their premiums. Attrition was high in 2016: effectuated enrollment peaked at 10.8 million in March, and average monthly enrollment for the year was 10.0 million. Attrition fell in the Trump years, for reasons we'll touch on below, and fell further last year, as the pandemic triggered high SEP enrollment

This year, the emergency SEP, coupled with massive boosts to premium subsidies enacted in the American Rescue Plan, has triggered SEP enrollment that's 3.5 times higher than in 2019, the last pre-pandemic year. The SEP enrollments logged to date have almost certainly outpaced normal attrition as experienced in the pre-pandemic years.  The ARP subsidy boosts have likely reduced disenrollments as well as stimulating new enrollment.

Bottom line: marketplace enrollment growth is larger than meets the eye, at least for those who measure "12.4 million" against the 2016 end-of-OE peak. June enrollment as estimated by Gaba is 20% higher than June enrollment in 2016, and 19% higher than in June 2020, when SEPs triggered by the pandemic pushed mid-year enrollment to a new high. 

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The chart below tracks three measures: plan selections as of the end of OE each year, enrollment as of June (estimated for this year and last), and average monthly enrollment, January through June (estimated for this year).

ACA marketplace enrollment, 2016-2021: End of OE and January through June
Peak enrollment for each measure marked in red; second highest in green

Year

Plan selections: End of Open Enrollment

Effectuated enrollment: June

Average monthly enrollment Jan-June

2016

12,681,874

10,266,850

10,318,031

2017

12,216,003

  9,913,757

10,142,056

2018

11,750,175

  9,895,870

10,279,194

2019

11,444,141

  9,797,989

10,194,206

2020

11,409,447

10,410,621 (my est.)

10,543,098

2021

12,004,365

12,400,000 (Gaba est.)

11,800,000 (est.)

Sources:
CMS: First half effectuated enrollment data: 2019 2018 2017 2016
CMS: Early effectuated enrollment snapshot (with monthly enrollment in prior year) 2020 2019
Charles Gaba: Six years in one graph

Every year, as noted above, a certain percentage of "signups" never pay their first premium, and peak effectuated enrollment has annually been between 6% and 18% lower than end-of-OE plan selections (18% lower in 2016; 6% lower in 2020 and 2021). Additionally, total enrollment tends to drop by 100-200,000 monthly. In 2016, average monthly enrollment, 10.0 million was 21% below the end-of-OE "signup" total.  Attrition dropped sharply to 16% in 2018 and dropped further to 14% in 2019. 

Why the improved retention? For starters, the Trump administration reduced the open enrollment period from 2018 forward in the roughly three quarters of states using the federal exchange, HealthCare.gov, and gutted funding in those states for enrollment assistance (by 84%) and advertising (by 90%).  Those who enrolled were...motivated.

Further, Trump's abrupt cutoff in October 2017 of direct federal reimbursement to insurers for the Cost Sharing Reduction (CSR) subsidies they are obliged to provide to low-income enrollees led to a practice called silver loading, beginning with plans sold for 2018. With the blessing or encouragement of regulators in nearly every state, insurers priced the value of CSR into silver plans only, 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. Those discounts, which went all the way to zero-premium for a significant number of enrollees, may have increased retention.

In 2020, off-season enrollments triggered by the pandemic, and boosted by emergency Special Enrollment Periods (SEPs) enacted by the state exchanges, partially offset normal attrition. (HealthCare.gov declined to enact an emergency SEP, in which anyone who lacked insurance could enroll, but did smooth the path for individuals applying for a SEP due to a qualifying life change.) Average monthly enrollment through June 2020, 10.5 million, was the highest ever, surpassing the 2016 peak of 10.3 million.

This year, as Gaba notes, a flood of off-season enrollment, triggered first by the emergency Special Enrollment Period and then by the massive subsidy boosts enacted in the American Rescue Plan on March 11 (which apply to current as well as new enrollees), have more than offset normal attrition, so that June enrollment likely exceeds the end-of-OE signup total of 12.0 million. That offset translates to an enrollment boost in the neighborhood of 20%. 

There is one major caveat to this chronicle of enrollment growth. The huge premium hikes of 2017 and 2018, exceeding 20% each year, decimated unsubsidized enrollment, particularly in off-exchange ACA-compliant plans. From Q1 2016 to Q1 2019, off-exchange enrollment dropped from 5.0 million to 2.1 million, according to a Kaiser Family Foundation estimate. Three years of essentially flat premiums, from 2019 to 2021, don't seem to have made much of a dent in off-exchange enrollment. The American Rescue Plan removed the income cap on subsidies: now, no one who lacks access to other affordable insurance will pay more than 8.5% of income for a benchmark silver plan. A portion of the roughly 1.6 SEP enrollments this year (Gaba's estimate) presumably have incomes above 400% FPL, the subsidy cutoff prior to ARP passage. Some may have been uninsured, and some may have switched from off-exchange (unsubsidized) enrollment, as the SEP allows. We don't know the proportions as yet.

Finally, marketplace enrollment can't be considered in isolation. Since 2016 has been reduced by several hundred thousand by belated enactment of the ACA Medicaid expansion in Louisiana, Virginia, Maine, Utah, Idaho, and most recently Nebraska. Medicaid enrollment, meanwhile, has increased by more than 10 million since the pandemic struck, and enrollment in the ACA expansion category in particular has increased from 15 million to 20 million, according to Gaba's most recent estimate.

Related: Is the U.S. uninsured rate at an all-time low?

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