Nonexpansion states continue to power ACA enrollment growth

Open enrollment

Ever since ACA marketplace enrollment began rising during the Open Enrollment Period for 2021, enrollment growth has been concentrated in states that have refused to enact the ACA Medicaid expansion.  In nonexpansion states, eligibility for marketplace subsidies begins at an income of 100% of the Federal Poverty Level (FPL), compared to 138% FPL in expansion states, where Medicaid is available below that threshold.  

In OEP for 2021, enrollment increased by 10% in 14 nonexpansion states and marginally decreased, by 0.5%, in expansion states. In OEP for 2022, enrollment was up by 30.5% in 12 nonexpansion states, and up 11.5% in expansion states (Oklahoma and Missouri enacted the expansion in 2021).  Over two years, enrollment in the 12 states that still had not expanded as of OEP for 2022 was up 45.1%, compared to 27.0% for all states. Almost three quarters of all enrollment growth over those two years (73.3%) was in states that had not expanded Medicaid as of OEP for 2022. Nonexpansion states include the behemoths Florida and Texas, which together account for 31% of all marketplace enrollment (in 2022, 4.6 million out of 14.5 million total enrollees).

Now Charles Gaba reports that the pattern appears to be repeating during OEP for 2023, though there's a lot of unevenness and uncertainty in weekly reporting (e.g., the 18 state-based marketplaces, which all serve expansion states, have only reported through Nov. 27, versus Dec. 4 in HealthCare.gov states). With that caveat, enrollment appears to be up 26.7% in nonexpansion states and just 2.7% in expansion states.

(Word is that a pending CMS update will add 2.9 million "autoenrollments" -- automatic re-enrollments of existing customers--  from the state-based marketplaces. As the federal marketplace, HealthCare.gov, does not add autoenrollments until late in OEP, the nonexpansion-expansion contrast without that addition is closer to apples to apples, though still skewed by the smaller reporting period for SBEs.)

Ever since the American Rescue Plan Act boosted ACA premium subsidies in March 2021 (while an emergency Special Enrollment Period was open nationally), a benchmark silver plan enhanced with Cost Sharing Reduction has been free to enrollees with income up to 150% FPL. In nonexpansion states, where eligibility for marketplace subsidies begins at 100% FPL, more than 40% of enrollees have income in the 100-138% FPL range -- that is, an income that would qualify them for Medicaid (and not for marketplace coverage) in an expansion state. 

Since most adults in nonexpansion states with income below 100% FPL get no government help obtaining coverage at all, it's not surprising that enrollment in free coverage at low incomes would surge during a pandemic. (As marketplace subsidy eligibility is determined by an estimate of future income, and as low incomes tend to be uncertain, a strong desire for coverage may motivate more optimistic income estimates.) Generous emergency supplemental unemployment income provided by the CARES Act in March 2020 may have helped some marketplace applicants in nonexpansion states get over the 100% FPL threshold.

On the other side of the equation, another Covid-19 relief measure -- a moratorium on Medicaid disenrollments enacted as part of the Families First Act in March 2020, and still in effect -- has probably depressed marketplace enrollment in expansion states. Thanks to the pause in disenrollments, Medicaid enrollment has increased by about 20 million nationally since February 2020. Adult Medicaid enrollment is up by 13 million (from 34 million to 47 million). Total marketplace enrollment in March was 13.6 million. Normally, there is a good deal of "churn" in and out of Medicaid, and some of those who lose or drop coverage end up enrolled in marketplace plans. 

The moratorium on Medicaid disenrollments will end when the Public Health Emergency declared at the outset of the pandemic ends, probably in March 2023. CMS has been urging states to prepare for the "unwinding" to minimize what will certainly be severe disruptions. States that work in good faith to minimize coverage losses (i.e., not all states, by a long shot) will encourage transition from Medicaid to marketplace for enrollees eligible for subsidized marketplace coverage.  Those who lose Medicaid coverage will be granted a Special Enrollment Period for the marketplace. 

Thus the end of the Public Health Emergency may narrow the marketplace enrollment growth gap between nonexpansion and expansion states. But it will not eliminate that gap, as eligibility for free coverage in the 100-138% FPL income range (or low-cost coverage, before the ARPA subsidy enhancements) provides a permanently large pool of potential applicants in nonexpansion states alone. 

Photo by Any Lane