Monday, February 28, 2022

Whither the off-exchange individual market? Tea leaves in New Jersey

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Jersey City skyline

One open question created by the American Rescue Plan Act's boost to ACA marketplace subsidies is the extent to which off-exchange enrollment in ACA-compliant plans has migrated to the exchanges. A related question is how many people who would have been ineligible for subsidies and uninsured pre-ARPA (or insured in noncompliant plans) were drawn into the exchanges.

New Jersey, one of the few states that tracks off-exchange enrollment on a quarterly basis and has a large off-exchange enrollment cohort, will eventually provide an interesting sampling. Unfortunately, the off-exchange tally is at present only complete through Q4 2020. But the state's on-exchange enrollment reports provide some hints, explored below. 

The long-term impact of the ARPA subsidies depends on their extension beyond 2022. That once seemed a must-do for Democrats (imagine subsidies being radically cut just in time for the 2022 election), but with progress on what was once the Build Back Better bill long stalled, ARPA subsidy extension is now an open question.

The landscape altered by ARPA

ARPA removed the prior income cap on subsidies (400% FPL, which is $51,520 for an individual and $106,000 for a family of four this year). No one who lacks access to other insurance deemed affordable by ACA statute (mostly employer-sponsored) now pays more than 8.5% of household income for a benchmark silver plan. When the ARPA subsidies were implemented in March 2021, the Kaiser Family Foundation (KFF) estimated that 3.7 million people were newly subsidy-eligible, 1.4 million of them uninsured at that point, and that after the subsidy boost, 92% of then-current enrollees in ACA-compliant plans were subsidy-eligible.

At the time of ARPA enactment, on-exchange enrollment had been more or less flat for years. Average monthly enrollment shrank modestly during the first three Trump years, then passed the 2016 peak (10.0 million) in the first pandemic year, 2020, reaching 10.4 million, a 4% increase.* At the same time, off-exchange enrollment in ACA-compliant plans cratered from an ACA-era peak of 5.4 million in the first quarter of 2015 to an estimated 2.1 million in Q1 2019, according to KFF. Most of that decrease occurred in 2017 and 2018, when ACA premiums soared; they have dropped modestly in years following. Estimates of the off-exchange market since 2019 are hard to come by, as the pandemic roiled survey data collection as well as enrollment.

The dramatic two-year rise in marketplace enrollment during the pandemic -- from 11.4 million at the end of the Open Enrollment Period for 2020 to 14.5 million in OEP 2022 -- just about matches the drop in off-exchange enrollment in ACA-compliant plans. 

That is definitely not to suggest that the populations that dropped or opted not to enroll in off-exchange coverage and those who have newly entered the marketplace in the last two years are broadly similar. New marketplace enrollment skews heavily toward low incomes, especially after ARPA made high-CSR benchmark silver coverage free at incomes up to 150% FPL.  Some two-thirds of enrollment growth is in the 12 states that have refused to enact the ACA Medicaid expansion, where subsidy eligibility begins at 100% FPL, as opposed to 138% FPL in expansion states (where Medicaid is available below that threshold). Enrollment in those 12 nonexpansion states is up 45% over two years. Half the enrollees in the nonexpansion states have incomes below 150% FPL.

Whither affluent enrollees in New Jersey?

New Jersey makes an interesting sample case for the off-exchange market for several reasons. First, it has the fourth highest median household income among states, and so a relatively large cohort of subsidy-ineligible prospective individual market enrollees even under ARPA -- that is, individuals and families for whom unsubsidized benchmark silver coverage costs less than 8.5% of income. Pre-ARPA, as of Q1 2020, 30% of NJ enrollment in ACA-compliant plans (94,855) was off-exchange. Additionally, as of the end of Open Enrollment for 2020, 25% of on-exchange enrollment was unsubsidized. In total, about 48% of New Jersey enrollees in ACA-compliant plans were unsubsidized in 2020. 

By OEP 2022, many enrollees had been rendered newly subsidy-eligible not only by ARPA but by supplemental state subsidies, implemented in time for OEP 2021 and then extended to incomes up to 600% FPL as of July 31, 2021. The percentage of on-exchange enrollment that was unsubsidized (as of the end of OEP) accordingly dropped from 24.8% in 2020 to 19.5% in 2021 and 12.4% in 2022.  Total enrollment as of the end of OEP increased 9% in 2021 and 20% in 2022. (The latter jump closely tracked the national increase (20.7%) but was well above the average for expansion states, 11.5%.) Subsidized enrollment increased by 70,826 (33%), while unsubsidized enrollment decreased by 12,228 (10%). 

Enrollment changes in New Jersey ACA marketplace, OEP 2021 to OEP 2022


Total enrollment

Subsidized enrollment

Unsubsidized enrl









Change 2021-2022




Percent change ’21-22




What about off-exchange? In the first quarter of 2020, 94,885 people were enrolled in New Jersey's off-exchange ACA-compliant market. Year-round attrition was modest, with  90,885 enrolled in the fourth quarter. How many in this cohort may have migrated on-exchange in the wake of ARPA and the expansion of eligibility for NJ state subsidies to 600% FPL on July 31, 2021? (In 2021, the GetCoveredNJ kept an emergency Special Enrollment Period open from Feb. 15 to year's end.)  We don't know yet, but the migration is likely far from mass.

According to Get Covered NJ's end-of-OEP report for 2022, "More than 30,000 people newly eligible for expanded financial help have selected a plan."** The year-over-year decrease in unsubsidized enrollment (12,228) suggests that a substantial number of the newly subsidy-eligible were existing enrollees.  Others may have been new to the individual market (though some of those might have enrolled off-exchange had subsidy eligibility not expanded). 

What might off-exchange enrollment in Q1 2022 look like? Perhaps it will be down by about 10,000-15,000 since Q1 2020, to about 80,000. On the other hand, demand among the subsidy-ineligible may also have increased. The pandemic, labor force dropout, and a roaring stock market, may have thrown more affluent enrollees into the individual market. 

In short, the off-exchange market, already sharply diminished before the pandemic struck, may not be radically reduced, at least in wealthy states.


* See CMS effectuated enrollment snapshots for 2021 and 2017. Each annual first-quarter snapshot reports average monthly enrollment for the prior year. Average monthly enrollment was 10.0 million in 2016 and 10.4 million in 2020. It was 9.8 million in 2019.

** In full context (below), that wording is a bit ambiguous: it's not clear whether "newly eligible for expanded financial help" refers only to the state wraparound subsidies, which would mean 30,000 enrollees in the 400-600% FPL range, or also refers to the ARPA expansion of eligibility, which would include some enrollees both below 400% FPL  (if the unsubsidized benchmark silver plan cost less than 9.83% of income, the 2021 affordability threshold) and over 600% FPL (if the unsubsidized premium cost more 8.5% of income, even at, say, 650% FPL).

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1 comment:

  1. "What about off-exchange? In the first quarter of 2020, 94,885 people were enrolled in New Jersey's off-exchange ACA-compliant market, shrinking modestly to 90,885 by the fourth quarter."

    Regarding that, note no one who, at the time applying has a (projected) no-subsidy income and who has the possibility that their income will drop to subsidy-eligible, should get an off-exchange ACA compliant plan. (They should get an on-exchange.)

    Why? Because, should income drop over the year to eligible-in-income for subsidy, the off-exchange plan will not be subsidized. (See: the IRS Form 8962 Premium Tax Credit instructions: )

    An additional consideration: For such a higher-income person in a state like New Jersey or Massachusetts that estate recovers possibly all medical bills paid out by ACA expanded Medicaid for people 55 or older, what should the higher, but not-guaranteed subsidy-ineligible, income person do if also worried about the state Medicaid agency suddenly determining (either accurately or in error) them eligible for expanded Medicaid and giving them that, (with the state exchange knocking them off any on-exchange they got, so then all medical bills can be estate recovered.)

    I think these strategies will work:

    1)State exchange state that estate recovers (like my own MA). As I read the IRS document I linked to above, I think doing the original ACA application to the exchange, as "I want no help from the government in paying costs" will keep the Medicaid agency from determining you eligible by accident and yanking your non-Medicaid on-exchange coverage, and, at the same time, let you claim the tax credit on your taxes at 1040 time the following year if your income is actually high enough to keep you legitimately and clearly off of expanded Medicaid. (Income above 138% FPL, in certain states this is month-by-month, and in all cases with no asset cap for expanded Medicaid eligibility.)

    2)If you have the good fortune of being in a state that uses the Federal exchange, then you could apply "with help paying costs from the government", but use the little box 2 on p. 8, of

    "If anyone on your application is enrolled in Marketplace coverage and is later found to have other qualifying health coverage (like Medicare, Medicaid, or CHIP), the Marketplace will automatically end their Marketplace plan coverage. This will help make sure that anyone who’s found to have other qualifying coverage won’t stay enrolled in Marketplace coverage and have to pay full cost.

    Box 1: I agree to allow the Marketplace to end the Marketplace coverage of the people on my application in this situation.

    Box 2 I don’t give the Marketplace permission to end Marketplace coverage in this situation. I understand that the affected people on my application will no longer be eligible for financial help and must pay full cost for their Marketplace plan."

    (Yes, you have to go through these hoops in our well-known-to-be-byzantine-system!)

    For those unfamiliar with the issue of estate recovery, possibly of all medical expenses paid out by ACA expanded Medicaid, in certain states, for people 55 or older, see the Wikipedia article: (and note that the assertions there can be verified from the references there, which are all online.)

    (If you've read each post of Andrew's xpostfactoid blog over the last few years, you will know of the issue--a serious problem in the current ACA in many states. Otherwise, the press has kept you in the dark, and you likely won't know.)