Three cheer(ing) facts about the ACA marketplace for 2023

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HealthCare.gov posted available health plans and premiums in the ACA marketplace for 2023 this week. Many state-based exchanges also have their menus up. (So does commercial broker and Direct Enrollment platform HealthSherpa, the easiest place to check out plans and prices throughout HealthCare.gov states.)

On the whole, the markets are in good shape, albeit with some lead linings to bright puffy clouds. The ARPA-enhanced subsidies that boosted enrollment by 21% last year are still in place, thrown a three-year lifeline by the Inflation Reduction Act (though with Republican control of at least one house of Congress likely, their ultimate future is uncertain). Not only was enrollment up in 2022; retention was also good, at least through first payments, probably boosted by radically lower subsidized premiums (95% of those who selected plans in Open Enrollment had effectuated enrollment in February). 

Gold plans will be more affordable to more enrollees than ever this year, a boon to higher-income enrollees who don't qualify for the strong Cost Sharing Reduction that attaches to silver plans at incomes up to 200% of the Federal Poverty Level (FPL).  Insurers have newly entered several markets, though new offerings are more or less offset by the exit of Bright Health from 17 states (Louise Norris runs through market entries and exits nationwide here).

Three salient features of the national marketplace are outlined below. A caveat is that the first two deal in broad averages: prices and offerings vary widely by state, and often by county or even zip code.

On adding an out-of-pocket cost cap to traditional Medicare

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Medicare's annual Open Enrollment Period is in progress, and enrollment in Medicare Advantage (MA) is poised to exceed enrollment in traditional, fee-for-service (FFS) Medicare for the first time in 2023. Stat's Bob Herman spotlights advocates' case for erasing MA's most consequential competitive advantage by adding an annual out-of-pocket cost cap (OOP cap) to traditional, fee-for-service Medicare:

At least 1 in 5 people* who choose Medicare Advantage — the alternative to traditional Medicare that is operated by health insurance companies — say they choose it because of the out-of-pocket limits that insurers offer, according to a new survey from the Commonwealth Fund.

According to a Kaiser Family Foundation estimate, as of 2018, about one in six FFS Medicare enrollees (counting only those enrolled in both Part A and Part B**) lacked an OOP cap and were thus exposed to potentially catastrophic out-of-pocket costs. That comes to about 5 million enrollees in 2022. The other 25 million FFS enrollees in Parts A  and B have access to OOP caps -- usually quite low --  via either Medigap, an employer-sponsored supplemental plan, or dual eligibility in Medicare and Medicaid.

In a study commissioned by America's Health Insurance Plans (AHIP), Wakely actuaries calculated that adding a $6,700 OOP cap to FFS Medicare Parts A and B would increase per-person spending by 3.5%. Wakely cast that estimate as conservative, as it does not include an estimate of "induced demand"-- i.e., enrollees using more care because it's more affordable. A June 2022 Urban Institute analysis bears that out. Urban estimated the cost of a $7,550 cap -- the highest currently allowable by MA plans for in-network care -- at $25 billion per year, a 5% increase. But that cap is inclusive of Part D, which according to Urban's estimate accounts for about 18% of cost increases. A $7,550 cap for Parts A and B alone would presumably increase FFS costs by about 4%. Urban estimates that induced demand triggered by a $7,550 cap will increase total spending by all payers by $8 billion, or 1.6% (perhaps 1.3% with Part D omitted).  That added cost (not accounted for by Wakely) does seem to bring the Urban and Wakely estimates more or less in line. 

Total individual market enrollment in health insurance may (finally) be at an all-time ACA-era high

Please see a 2023 update at https://xpostfactoid.substack.com/p/aca-effectuated-enrollment-in-2023 

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

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....

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.

Well, the results are in, courtesy of CMS's early effectuated enrollment snapshot for 2022, which includes average monthly enrollment and month-by-month enrollment totals for the year prior.* And the answer is: almost! Or, in a sense, yes!  

Average monthly enrollment in 2021 came to 97.8% of  total plan selections as of the end of the year's Open Enrollment Period -- and to 106.3% of the early effectuated enrollment total reported as of February 2021.** 

ACA marketplace enrollment retention, 2016-2022 

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	10,433,850	91.2%	9,810,613	85.7%
2020	11,409,447	10,592,901	92.8%	10,408,892	91.2%
2021	12,004,365	11,034,220	91.9%	11,734,931	97.8%
2022	14,511,077	13,807,669	95.2%

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

AHIP's hooray for Medicare Advantage: Apples-to-candied-apples, and an open question

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Bob Herman of Stat casts a cold eye on a new claim from AHIP that Medicare Advantage provides superior value to the federal government:

America’s Health Insurance Plans, the industry’s primary lobbying group, funded a new report that was conducted by actuaries at Wakely Consulting Group. AHIP claims the report proves Medicare Advantage...is “saving Americans billions of dollars every year.” The actuaries, however, never use that language in the report.

STAT spoke with several independent Medicare policy experts, all of whom said AHIP’s report was incomplete at best and refuted by other studies that analyzed the same data. 

AHIP's press release asserts that "in 2019, rather than being 2% more expensive than original Medicare, on an apples-to-apples basis, average MA spending was actually about 7% lower than original Medicare."

That conclusion is based on two claims grounded in the Wakely analysis: