Almost a quarter of all emergency SEP enrollees in ACA marketplace should have been in Medicaid

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For years, we have had to infer what percentage of ACA marketplace enrollees in states that have refused to enact the ACA Medicaid expansion have incomes below 138% FPL -- the Medicaid eligibility threshold in expansion states. It's a very large percentage, but as CMS's enrollment reports usually break out income in increments of 50 FPL percentage points, e.g., 100-150% FPL, it has to be inferred.

Just once, in 2016, CMS did provide enrollment results by state for the 100-138% FPL income range as well as for the broader 100-150% FPL bracket. In nonexpansion states, the former was about 85% of the latter. For years since, I've used 85% as a benchmark to estimate down from 100-150% FPL for the "should-have-been-in-Medicaid" cohort.

The final enrollment report for the 2021 emergency Special Enrollment Period, which ran from Feb. 15 to Aug. 15 in the 36 HealthCare.gov states, provides a tantalizing hint: 33% of all enrollment in those states was in the 100-138% FPL bracket. (All nonexpansion states use HealthCare.gov.) But what percentage of those were in the 13 states that had not expanded Medicaid as of the SEP period? (I'm including Oklahoma, which opened the Medicaid expansion gate on July 1 of this year.) 

The vast majority of enrollments in the 100-138% FPL bracket are obviously in nonexpansion states, but not all. Others include legally present noncitizens subject to the federal "5-year bar" against Medicaid eligibility, and enrollees who are subsidy-ineligible, e.g., those with an "affordable" offer of insurance from an employer, but somehow find their way to paying the full unsubsidized premium.  

Since all of the SBE states have expanded Medicaid, let's assume that the 5% of enrollment that falls into this bracket in those states is about the same in expansion states on HealthCare.gov. 

Under that assumption, about 42% of SEP enrollees in 13 nonexpansion states had incomes in the 100-138% FPL bracket -- that is, they would be eligible for Medicaid had their state enacted the expansion (as Oklahoma and Missouri have now in fact done, Oklahoma beginning July 1 of this year and Missouri October 1). These "should-have-been-in-Medicaid" enrollees accounted for nearly a quarter of all enrollment during the emergency SEP (23.4% by my estimate), totaling about 659,000 out of 2.8 million.*

Here is the calculation in detail:

Total SEP enrollment -- all states: 2,807,581
SEP enrollment - HealthCare.gov states: 2,069,596
SEP enrollment -13 nonexpansion states: 1,581,697
Enrollment at 100-138% FPL - HealthCare.gov states: 682,967
Enrollment at 100-138% FPL - expansion states on Hc.gov: 24,395 (5% of 487,899)
Enrollment at 100-138 FPL -- nonexpansion states on Hc.gov: 658,572
Percentage of total enrollment in nonex states at 100-138% FPL: 41.6%
Percentage of total enrollment in all states at 100-138% FPL in nonex states: 23.4%

That's in line with totals for 2021 signups as the end of Open Enrollment for 2021 ( which ran from Nov. 1  to Dec. 15, 2020). During OE 2020, about 50% of enrollees in nonexpansion states had incomes in the 100-150% FPL bracket, suggesting about 42% in the narrower 100-138% FPL (should-have-been-in-Medicaid) band.  That's about 2.5 million enrollees, or 21% of the 12 million who signed up for coverage nationwide during OE.

   Total enrollment and low income enrollment in nonexpansion states, OE 2021

     Source: CMS state-level public use files

Effectuated enrollment as of August 2021, 12.2 million, was slightly higher than the signup total as of the end of OE, 12.0 million. If all the nonexpansion states enacted the ACA expansion tomorrow, about 2.5 million current enrollees would become eligible for Medicaid instead. Conversely, if the Build Back Better bill passes and its current provisions for those in the "coverage gap" survive (eligibility for free marketplace plans for those with incomes below 100% FPL in nonexpansion states), perhaps a slightly smaller number will enter the marketplace. The Kaiser Family Foundation estimates the population currently in the coverage gap (ineligible for both marketplace subsidies and Medicaid in nonexpansion states) at just over 2 million.  And opening the coverage gates to the uninsured in nonexpansion states will probably draw additional enrollment at incomes above the 100% FPL threshold. Or maybe not, as enrollment at 100-150% FPL in nonexpansion states has already grown by 44% since 2019.

Postscript: reviewing this, I feel compelled to recap a few key facts (perhaps not always recognized) about the ACA marketplace. 

1. Just about half of all marketplace enrollment is in nonexpansion states.
    
2. Marketplace enrollment in nonexpansion states swelled during the pandemic, boosted by the CARES Act, emergency Special Enrollment Periods in 2020 (SBEs) and 2021 (all states), and the subsidy increases in the American Rescue Plan. From August 2019 to August 2021, enrollment increased by 44% in nonexpansion states and by 26% in all states. 
   
   
3. In nonexpansion states, per above, more than 40% of enrollees would be in Medicaid if the ACA Medicaid expansion were enacted in all states.
   
   
4. Pandemic relief legislation and administrative action have probably helped hundreds of thousands of people in nonexpansion states climb out of the coverage gap. Measures that helped in this regard include the large supplemental unemployment insurance granted in 2020 by the CARES Act; the provision in the American Rescue Plan deeming anyone who received any unemployment insurance income in 2021 eligible for free benchmark silver coverage; and a rule implemented in May 2021 that stopped the exchanges from seeking income verification from people who claimed an income over 100% FPL (the eligibility threshold) if "trusted sources" indicate that their income is lower.
   
   
5.  CMS could further shrink the coverage gap (e.g., if Democrats fail to pass legislation to end it, currently incorporated in the Build Back Better bill that's passed the House, albeit only through 2024) by following HealthSherpa in spelling out the minimum income threshold for marketplace subsidy eligibility in the application and shopping tool on HealthCare.gov.
   
   
6. Low income people in nonexpansion states who need health insurance should exploit every legal resource to produce a good-faith income estimate high enough to qualify them for subsidized (i.e., free) coverage.

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* Another 2-3% of marketplace enrollees have incomes below 100% FPL -- most of them, again, immigrants subject to Medicaid's 5-year bar (longer in some states). For those who are time-barred from Medicaid, subsidy eligibility in the marketplace begins at 0% FPL. At present, benchmark silver coverage is free to enrollees with incomes up to 150% FPL.

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