High auto re-enrollment rates in the SBMs, revisited

Note: All xpostfactoid subscriptions are now through Substack alone (still free), though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up!

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:

Do the ACA's state-based marketplaces have an auto re-enrollment problem?

 Note: All xpostfactoid subscriptions are now through Substack alone (still free), though I will continue to cross-post on this site. If you're not subscribed, please visit xpostfactoid on Substack and sign up!

Enrollment should be active

It has been clear since plan offerings were posted for the ACA marketplace’s second Open Enrollment Period (OEP) in fall 2014 that “auto re-enrollment” can be dangerous for enrollees.

If marketplace enrollees take no action during OEP — declining to log on and update their income and other information relevant to subsidy eligibility and subsidy size, and review available plans — HealthCare.gov or the relevant state-based marketplace will auto-enroll them in their prior year plans, tapping the IRS and other data sources to update income and other personal information. If that plan is no longer offered, the marketplace will “crosswalk” the enrollee into the nearest equivalent, e.g., a plan by the same insurer in the same metal level. If the marketplace determines that the enrollee is no longer subsidy eligible, it will enroll her with no subsidy, exposing her to hundreds of dollars per month in premiums (one month, if she fails to pay any premium in the new plan year). Disenrollment occurs only if the person logs on and initiates it — or fails to pay the monthly premium when the new plan year begins.

Even when the enrollee’s income and family composition are essentially unchanged, remaining in last year’s plan (or a substitute into which one is crosswalked) without examining this year’s options can lead to major new expense. The plan’s premium may rise significantly. Worse, if another insurer (often a new entrant into the local market) undersells last year’s benchmark plan — the second cheapest plan, against which subsides are set — subsidies may shrink, hitting an enrollee who stays in a plan with a rising premium with a double whammy. The media was full of such stories in the fall of 2014. I told one myself, about a family of 3 in Philadelphia whose premium for a silver plan would have gone from $0 to $196 per month if a navigator hadn’t provided guidance.

The problem is not new, and it hasn’t gotten any better. In fact it’s gotten worse, as narrow-network HMO plans have become prevalent at the lowest price points, and cut-rate new entrants sometime render plans with more robust networks more expensive.. Another aspect of the problem is also not new, but when when it was brought to my attention this week it rather shocked me, and it may have major policy implications.

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

Attention xpostfactoid readers: All subscriptions are now through Substack alone (still free). I will continue to cross-post on this site, but I've cancelled the follow.it feed (it is an excellent free service, but Substack pulls in new subscribers). If you're not subscribed, please visit xpostfactoid on Substack and sign up!  
------

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

Notes from the SEP: On record marketplace enrollment in August 2021

Subscribe to xpostfactoid

CMS today released a final enrollment report for the emergency Special Enrollment Period that ran in HealthCare.gov states from Feb. 15--Aug. 15 this year, and for mostly comparable lengths in the 15 state-based marketplaces. 

The top line: 2.8 million new enrollments nationally in that period. A few quick notes:

1. Effectuated enrollment in August 2021, 12,199,393, is up 14.6% over 2020, the previous high (10,642,088*), and 22% over enrollment in August 2016, the peak prior to 2020.  Caveat: off-exchange enrollment in ACA-compliant plans dropped by about 3 million from 2016 to 2019, according to KFF estimates. On-exchange enrollment is about 2.2 million above the August 2016 total.
   
   
2. While 2.8 million people newly enrolled in marketplace coverage during the SEP, total enrollment has risen by only 900,000 since February, when effectuated enrollment stood at 11.3 million.  That's steeper attrition than I anticipated when I estimated total enrollment at 12.7 million through July.
   
   

On average, ACA marketplace plans are gold equivalent

Kevin Drum has led me, indirectly, to an interesting fact about the ACA marketplace: the coverage in private plans sold there is not as skimpy as people tend to assume.

In a post published today, Kevin considers a Blue Cross Blue Shield analysis of their large ACA marketplace customer base. BCBS finds that marketplace enrollees on average are sicker and access more care than pre-ACA customers in the individual market, and also, to a lesser extent, than enrollees in employer-sponsored insurance (ESI).

Drum's response is basically hurrah -- people who were previously shut out of the individual market based on their medical history are now accessing the care they need (and insurers knew that they would be needier than existing customers in both markets; they just underestimated how much).

Drum notes that the health gap is much narrower between marketplace enrollees and those with ESI than between marketplace enrollees and those in the pre-ACA individual market. He then wonders:

Oddly, the BCBS report concludes that Obamacare enrollees used more medical services and ran up higher bills compared to those in employer plans. That's a little hard to make sense of, since Obamacare enrollees are no sicker than average and generally have higher deductibles and copays than people in employer plans, which should motivate them to use fewer medical services. One possibility is that this is related to heart disease, the one area where Obamacare enrollees really do seem to be sicker than average. Another possibility is that this is a one-time thing: lots of people had been putting off medical care, and when Obamacare kicked in they spent the next year or two making up for it.

Drum is not wrong in asserting that Obamacare enrollees on average "have higher deductibles and copays than people in employer plans" if you include those who buy ACA-compliant plans outside the marketplace, as the BCBS study does. Within the marketplace, however, it's only marginally true. And among the 83% of marketplace enrollees who receive subsidies, it's not true at all [updated 3/31 -- more below].

A quibble with Avalere over CSR takeup

9/3/15: See update at bottom for Avalere's response to questions posed here 

I may have to "never mind" this post if I'm missing something basic, but...it seems to me that Avalere Health lowballed Cost Sharing Reduction (CSR) takeup a little in an analysis released today.

Avalere's calculation is simple: 5.9 million buyers of private plans on ACA exchanges bought plans with Cost Sharing Reduction subsidies, available only to buyers with incomes under 250% of the Federal Poverty Level (FPL), and only if they selected silver plans.  8.1 million buyers were eligible for CSR, according to Avalere; hence about 2.2 million left the benefit on the table; most of them probably brought bronze plans with sky-high deductibles. The CSR takeup rate comes to just 72.8%,

Avalere says that it derived these numbers from HHS's March enrollment report,which broke out enrollees by income level in the 37 states using healthcare.gov, and a CMS update released in June, which adjusted for attrition (mostly no-pays) as of March 31.

We know where the 5.9 million figure for those who accessed CSR came from: the June update, which reported 5,850,936 enrollees with CSR. But what about the denominator, the 8.1 million? That's trickier. We know there were 10,187,197 enrollees as of March 31. But how many were CSR-eligible?

New data on Cost Sharing Reduction in ACA marketplaces

The latest ACA enrollment snapshot from CMS shed some new light on the extent to which ACA private plan buyers accessed Cost Sharing Reduction (CSR) subsidies. CSR reduces deductibles, copayments and maximum out-of-pocket costs for plan buyers with incomes under 250% of the Federal Poverty Level (FPL) -- but only if they buy silver plans (and forego the often much cheaper bronze plans).

CSR takeup is especially important for buyers under 200% FPL, because below that income level it raises the actuarial value of a silver plan from 70% to 94% (for buyers under 150% FPL) or 87% (for buyers in the 150-200% FPL range). At 200-250% FPL, CSR weakens, raising the AV just 3 points to 73%. Silver plan selection accordingly drops suddenly at 201% FPL.

The new report doesn't deliver any great surprises on the CSR front, but it does for the first time provide overall CSR numbers for the 13 states plus D.C. that run their own exchanges. The percentages of buyers accessing CSR in state-based marketplaces (SBMs) have always been lower than in the states using healthcare.gov, for several reasons

1. All the SBMs except Idaho have expanded Medicaid, which means that subsidized private plan eligibility begins at 138% FPL rather than 100% FPL.  The lower the income, the higher the CSR takeup rate - especially below 138% FPL, where the benchmark silver plan premium can't exceed 2% of income.
2. States with SBMs are generally wealthier, so a lower overall percentage of private plan enrollees are eligible for CSR.
3. Several SBMs do a much poorer job than healthcare.gov of highlighting CSR for those eligible -- though conversely, several SBMs do a better job than hc.gov on this front.

All that said, here are some new facts, along with some extrapolation from info that was in HHS's March report but not updated in this one.

1) In states using healthcare.gov (federal facilitated marketplaces, or FFMs) 60% of enrollees accessed  CSR -- 4,550,205* out of a total enrollment of  7,524,234.  In the SBMs, 49% accessed CSR -- 1,300,731 out of 2,662,964.