High auto re-enrollment rates in the SBMs, revisited

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Sometimes, you can do worse

My last post flagged dramatically different rates of “active” health plan renewal and autorenewal in the 33 states using the federal ACA marketplace, Healthcare.gov, compared to the 18 states (including D.C.) that run their own marketplaces. This post take a second run at whether the high autorenewal rates in the state-based marketplaces (SBMs) are problematic.

In HealthCare.gov (the “FFM,” or federally facilitated marketplace), 72% of renewals in the Open Enrollment Period 2023 were active, meaning the enrollee logged into the marketplace, updated their personal information, and affirmatively chose either to remain in last year’s plan or choose a new one. In the SBMs, just 28% of renewals were active; 72% of returning consumers were auto re-enrolled.

Auto re-enrollment can be dangerous, because 1) enrollees’ personal circumstances that affect subsidies — their income and the family members seeking coverage in the exchange — may change; 2) an enrollee’s current plan’s premium may rise in the coming year; and 3) most unpredictably, the benchmark (second cheapest silver) plan against which subsidies are set can change. If the coming year’s benchmark plan has a lower premium than the current’ year’s, subsidies shrink, since enrollees pay a fixed percentage of income for the benchmark plan. If the enrollee’s premium rises and the benchmark falls, it’s a double whammy.

I therefore presented high auto re-enrollment rates as a troubling feature of the SBMs, and maybe in some cases they are. But there are also differences in SBM and FFM practice that may make auto re-enrollment more viable for more enrollees in the SBMs.

Enrollees get better information earlier in at least some SBMs

Most strikingly, independent health insurance broker Sheron Sidbury, who serves clients both in Maryland, which runs an SBM, and Virginia, which uses HealthCare.gov, explained in a lengthy Twitter exchange that in Maryland, plans and prices are posted on October 1, well in advance of the Nov. 1 kickoff of Open Enrollment. In Maryland, Sidbury explains:

What's going on in the state-based marketplaces, cont.

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My last post put a spotlight on lagging enrollment growth in the ACA’s 18 state-based marketplaces (SBMs). Enrollment in the SBMs appears on track to drop 2.8% year-over-year, from 2022 to 2023, while enrollment in the 33 states using HealthCare.gov (FFM states) looks to increase by 19.6%. While enrollment growth throughout the pandemic years has been concentrated in states that have refused to enact the ACA Medicaid expansion, enrollment in the 21 FFM states that have expanded Medicaid is up 10.3% year-over-year — perhaps the most pointed contrast with the SBM states. Longer term, while growth in the current SBEs is up 6.4% since 2020, the all-state increase during those pandemic years is 43.3%.

Let me say at the outset before diving in below that I think in my last post I may have got the emphases wrong, in that greater market penetration in SBM states in years prior to the pandemic may be a major factor. As of 2021, the uninsured rates in the SBM states were significantly lower, not only than in states that have not expanded Medicaid as you would expect, but also than in expansion FFM states. The same is true of the Kaiser Family Foundation’s estimates of the percentage of subsidy-eligible state residents who enrolled in marketplace coverage in each state in 2020. Moreover, in 2022, drops in the state unemployment rate were steeper on average in SBM states than in FFM states. That suggests a reduced pool of people needing marketplace coverage. On the other hand, UI rates remain higher on average in SBM states than in FFM states.

With the exception of Idaho, the states running their own SBMs are “blue” states that have invested considerable effort, and often state funds, in making their marketplaces as affordable and accessible as possible. They have variously implemented state-funded supplemental subsidies, individual mandates (requiring state residents to obtain insurance or pay a penalty), reinsurance programs, public option plans, standardized plans, active oversight of participating insurers, and strict silver loading (requiring insurers directly or indirectly, to price gold plans below or on par with silver) — not to mention the trouble and expense of launching and administering an exchange.

Conditions in every state are different, and the SBEs, as noted in the prior post, outperformed the HealthCare.gov states during the pre-pandemic Trump years and had proportionately smaller uninsured populations going into the pandemic. Nonetheless, the weaker enrollment growth over several years in the SBEs is worth scrutinizing. If it persists, state governments intent on improving their marketplac