xpostfactoid: auto re-enrollment

Showing posts with label auto re-enrollment. Show all posts

Thursday, December 26, 2024

Passive auto re-enrollment spikes in the ACA marketplace

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Don't put your health insurance renewal on autopilot

Until late this morning, the narrative for the ACA marketplace’s Open Enrollment Period (OEP) for 2025 appeared to be that enrollment was down from 2024 highs. The December 4 enrollment snapshot showed 5,364,197 “active” plan selections nationally, compared to 7,299,900 as of December 6, 2023. That’s an apparent 26.5% drop, which should be discounted by about 5% to account for the two extra enrollment days in last year’s early December snapshot.

The “losses” appeared to be concentrated in HealthCare.gov, the federal marketplace (FFM), as active enrollment in the 20 state-based marketplaces was actually up a bit year-over-year as of early December, even discounting Georgia, which newly launched an SBM for OEP 2025. Taking all states together, new enrollees were down from 1,476,658 on December 6, 2023 to 987,689 on Dec. 4 this year (again, discount for two days).

But mid-OEP year-over-year comparisons are always dicey, and Charles Gaba, for one, has been skeptical as each snapshot since Nov. 1 indicated lagging “active” enrollment — which includes new enrollment and re-enrollment by those who logged on and actively chose a plan, as opposed to those who passively allow auto re-enrollment. Gaba put forward two reasons to doubt that enrollment this year would lag.

First, it seemed likely that much of last year’s large pool of new enrollees (4.2 million in the 32 FFM states) would passively allow auto re-enrollment. New enrollment last year was heavily concentrated at low incomes, and attributable in large part to the Medicaid “unwinding” — that is, the process of re-determining Medicaid enrollees’ eligibility after a three year pandemic-induced paused. Redeterminations began in May 2023 and continued into this summer. Most low-income enrollees pay no premium and may not be fully engaged in the enrollment process.

Second, some half dozen state-based marketplaces have been reporting strong enrollment growth in their own news releases. Also, CMS’s Dec. 4 report showed 11% year-over-year auto re-enrollment growth in the SBMs — up from 3,49,956 last December to 3,785,626 this year, again excluding Georgia’s total.* (The December reports show auto re-enrollment in the SBMs but not in the FFM because SBMs effectuate auto re-enrollment early in OEP or even prior to it, whereas the FFM books re-enrollments in mid-December. More on that below.)

Well, today CMS released new top-line figures, inclusive of auto re-enrollment in the FFM, and the new numbers vindicate Gaba’s prediction. Auto re-enrollment in the FFM almost doubled, from 3,624,950 as of the end of OEP 2024 to 7.4 million as of now for 2025 (auto re-enrollment happens all at once). That increase drove 2025 enrollment in the FFM to 16.6 million, already surpassing last year’s total FFM enrollment of 16.4 million, which included 1.3 million in Georgia (now included in the SBM total, which was not provided in today’s release). As of this time last year, FFM enrollment had reached 15.3 million. Strip out Georgia’s 1.2 million total from the tally for this time last year, and as Gaba points out, FFM enrollment is up by about 18%. Six SBMs that Gaba has tracked show a 23% year-over-year increase.

Massive auto re-enrollment in the federal marketplace is not an unmixed blessing. As I outlined in a prior post focused on differences in auto re-enrollment between the FFM and the SBMs:

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.

The problem is particularly acute in the FFM, because HealthCare.gov

sends out a renewal letter, but with no specific information as to subsidy and premium in the coming year for the enrollee’s current plan. Instead, the FFM requires insurers to send renewal letters prior to November 1 (first day of OEP), with an estimate of premium in the current year. But the insurer’s letter, while it provides the plan’s new premium (before subsidy) in the current year and an estimate of what it will cost net of subsidy, bases the subsidy estimate on the prior year’s benchmark.

Auto re-enrollment is less problematic in the SBMs, because the SBMs ensure that enrollees and their agents or brokers have better information as of the start of OEP: generally, an estimate of what their current plan will cost them in the coming year based on the next year’s premiums and benchmarks and assuming no change in the enrollee’s income. Accordingly, auto re-enrollment rates have historically been much higher in the SBMs than in the FFM. In the FFM in 2024, just 30% of renewals were auto re-enrollments, compared to 72% in the SBMs.

So far, about 51% of 2025 re-enrollments in the FFM are passive auto re-enrollments, up from 30% last year. (That percentage may drop a bit, as some auto re-enrollees may change plans before the Jan. 15 end of OEP, with the plan switch effective on Feb. 1).

In the FFM in 2024, 55% of enrollees had income below 150% FPL, entitling most of them** to free benchmark silver coverage, compared to just 16% of enrollees in the SBMs (all of the 2024 SBM states have expanded Medicaid, which cuts out the large pool of marketplace enrollees found in the nonexpansion states). Moreover, enrollment since spring 2022 has been available year-round to enrollees with income below that threshold, and the Medicaid unwinding continued through this summer. In short, there is a huge cohort of low-income enrollees in the FFM, most of whom probably paid no premium in 2024.

Lower income enrollees tend to be lower-information, often with limited English proficiency and/or limited access to or comfort with computers. Since early 2021, when enhanced ACA subsidies made high-AV coverage free for enrollees with income up to 150% FPL, the ranks of agents targeting this population has swelled. A large if hard-to-determine portion of agent-assisted enrollments are now executed by high-volume call centers, which in some cases have engaged in outright fraud and in perhaps a larger number of cases provide cursory service. (There are lots of good agents, but the soaring number of agents registered with HealthCare.gov — 83,000 in 2024, up from 49,000 in 2018, suggests a hypercompetitive market, and allegations of large-scale fraud, by CMS as well as by litigants, suggests entry of a significant number of bad actors). In the high-volume call centers, an enrollee may not have an ongoing relationship with a single agent, but rather connect with a new one at each contact, as in a customer service center.

Seven million-plus auto re-enrollments in the FFM marketplace may portend some rate shock in coming months.

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* The newly launched Georgia Access, Georgia’s SBM, appears to have auto re-enrolled essentially all existing enrollees, as the Dec. 4 snapshot lists 1.2 million auto re-enrollees for state. Georgia enrollment as of the end of OEP 2024 was 1.3 million.

** A small percentage of enrollees with income below 150% FPL may be ineligible for subsidies, e.g., because of an offer of “affordable” insurance from an employer. A somewhat larger percentage of the nearly 400,000 enrollees with income below 100% FPL are ineligible for subsidies. Subsidy eligibility begins at 100% FPL for all except lawfully present noncitizens subject to the federal 5-year bar to Medicaid eligibility (or to longer waiting periods in a few states).

Photo by JESHOOTS

Saturday, October 28, 2023

Walking the crosswalk: CMS seeks to boost CSR takeup

Let us lead you

When full enrollment data for the ACA marketplace in 2023 came out last spring, I expressed concern that the percentage of low-income enrollees forgoing strong Cost Sharing Reduction (CSR) subsidies, which are available only with silver plans, had risen to an all-time high. This in spite of the fact that since March 2021, the two cheapest silver plans in a given marketplace have been available for zero premium for enrollees with income up to 150% of the Federal Poverty Level, and for no more than 2% of income for enrollees with income in the 150-200% FPL range.

The table below shows metal level selection at the two income levels at which “strong” CSR is available in every year since 2017, the peak year for silver plan selection. (A weak version of CSR is available in the 200-250% FPL.)

CSR raises the actuarial value of a silver plan from a baseline of 70% (with no CSR) to 94% at incomes up to 150% FPL and to 87% at incomes in the 150-200% FPL range. Most low-income enrollees who forgo silver plans choose bronze plans, with an AV of 60%; a small but rising number choose gold, with AV of 80% (in about 10 states, gold plans can be cheaper than silver plans).

Virtually the only reason to pass up CSR at incomes up to 150% FPL is if the enrollee wants a more expensive insurer’s silver plan — i.e., in most cases, one with a more robust provider network — and finds it unaffordable. In June, I posited that the percentage of low-income enrollees choosing metal levels other than silver may be rising because of increasing prevalence in the ACA marketplace of ultra-narrow networks. That is, more enrollees may be forgoing CSR with eyes wide open.

Another possible cause of lower CSR takeup may be sheer confusion, as the number of plans on offer in most markets has proliferated to a ridiculous extent, only slightly trimmed back in 2024, thanks to a modest new curb on the number of plans an insurer may offer at each metal level.

In the Open Enrollment Period for 2024, officially kicking off next Wednesday (Nov. 1), we may get some clues as to the extent to which bronze selection at low incomes is due to inadvertence. For 2024, in the 32 states using the federal exchange, HealthCare.gov, CMS has undertaken* to push some low-income bronze plan enrollees into CSR silver:

New for PY 2024, the Marketplace has updated the automatic re-enrollment process to help more consumers take advantage of cost savings. Specifically, the Marketplace will automatically re-enroll certain income-based cost-sharing reduction (CSR)-eligible enrollees who would otherwise be automatically re-enrolled in a Bronze plan into a Silver plan. This automatic re-enrollment will apply only for consumers who do not make an active plan selection on or before the deadline for January 1 coverage, and only if a Silver plan is available in the same product type, with the same provider network, and with a monthly premium after premium tax credits that is no greater than that of the Bronze plan into which they would otherwise be automatically re-enrolled.

Those in “dominated” bronze plans who log on and re-enroll actively “will see the Silver plan highlighted in the online shopping experience if they return to HealthCare.gov on or before December 15 to review their options.” So there are two layers to this effort: a cross-walk (with opt-out) for those who remain passive, and a strong nudge for those who log on and newly assess available plans.

State exchanges may implement the CSR crosswalk if they so choose. Covered California did so beginning in plan year 2022, and Massachusetts auto-enrolled some enrollees in ConnectorCare (silver plans further enhanced by supplemental state subsidies) in 2023.

How many enrollees may be affected by the CSR cross-walk?

For a silver plan premium to be “no greater than” that of the bronze plan from which the enrollee will be switched out, the silver plan must be available for zero premium, as is the case for the two cheapest silver plans in every marketplace for enrollees with income up to 150% FPL. In a few cases, the cheapest plan in a given market may be zero premium at incomes above 150% FPL, and enrollees in a bronze plan from the same insurer with the same network may be auto-switched. For the most part, however, the new policy affects enrollees with income below 150% FPL.

In 2023, of the 5.6 million OEP enrollees in HealthCare.gov states with income in the 100-150% FPL range,** 1.1 million selected bronze or gold plans. Among re-enrollees (as opposed to new enrollees) in that income range, 3.0 million enrolled actively and 1.0 million were auto re-enrolled. For the three quarters of re-enrollees who actively re-enroll, a sharp prompt will push them toward silver if a silver plan from the same insurer with the same network is available at zero premium.

In 2023, the total number of re-enrollees in HealthCare.gov states (9.2 million) was about 90% of the enrollment total for 2022 (10.3 million). We might therefore expect some million non-silver current enrollees with income under 150% FPL to re-enroll (many of them will have enrolled after OEP for 2023, as marketplace turnover is constant, and enrollment is available year-round for those with incomes up to 150% FPL). The wild card is how many of those bronze or gold plan enrollees are in plans from insurers that offered the cheapest and second-cheapest silver plans in their area — and with the same network as the bronze plan the enrollee chose.

We’ve been here before

Covered California, the largest of the state exchanges, enacted the crosswalk to CSR silver in 2022, estimating*** that 32,000 bronze plan enrollees could get a $1/month silver plan from the same insurer (no plans in CA were $0 premium at that time). I looked at the results in April 2022. Silver plan takeup at incomes below 150% FPL ticked up modestly, by about 3 percentage points from 2021 — and that in the year when silver plans became free at incomes up to 150% FPL. In California in February 2022, 16,990 subsidized enrollees out of a total of 258160 with income in the 138-150% FPL range (6.6%) selected bronze plans. In June 2021, the nearest date for which I can find a comparison, 20,270 subsidized enrollees out of 215,490 with income up from 150-200% FPL (9.4%) were enrolled in bronze. In 2023, bronze selection among the subsidized crept back up to 7.9% (19,080 out of 241,350).

At the time of that estimate, in June 2021, only about 28,000 bronze plan enrollees enrolled via Covered California (including those with income under 138% FPL) had incomes under 150% FPL. I presume the analysis found that a considerable number of the 85,550 subsidized bronze plan enrollees in the 150-200% FPL income bracket could also get a free silver plan — possible, as there has been a wide price spread between cheapest and second-cheapest silver in some California rating areas in some years. From 2021 to 2022, the percentage of subsidized enrollees in the 150-200% FPL income bracket in California who selected bronze plans dropped from 19.1% to 15.2%, and held steady in 2023 at 15.1%. Again, though, subsidized silver plan premiums dropped dramatically from 2021 to 2022, thanks to the subsidy enhancements in the American Rescue Plan Act.

Effects may be stronger in HealthCare.gov states, as a much higher percentage of enrollees have income below 150% FPL, thanks to the nonexpansion states. Also, I don’t believe that Covered California implemented the heightened prompt to choose CSR silver for those who actively re-enroll. On the other hand, Covered California’s shopping tool does “default to silver” — that is, show silver plans at the top of the list of available plans — when silver plans are available for zero premium.

Do brokers need a prompt?

When assessing the possible impact of the CSR crosswalk (and strong nudge for active enrollees), it’s important to keep in mind that most ACA marketplace enrollees do not act alone, and many enrolled in the HealthCare.gov system never look at a HealthCare.gov screen. 71% of active re-enrollees in HealthCare.gov states were assisted by brokers ~~or nonprofit enrollment assisters~~ in 2023, as well as 58% in California and 76% in New York. A large majority of brokers use commercial e-broker platforms (enabled for “Direct Enrollment” or “Enhanced Direct Enrollment”), not the HealthCare.gov interface. HealthSherpa, the largest e-broker, alone accounted for 35% of enrollments in the HealthCare.gov system in 2023. The e-brokers are required, however, to follow form with HealthCare.gov in the CSR crosswalk, and to provide the enhanced “nudge'“ toward silver for active re-enrollees.*** Whether a significant number of brokers need such prompts to avoid placing their clients in dominated plans is an interesting question.

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* A crosswalk to silver from dominated plans was proposed in a 2021 article by David M. Anderson, Petra W. Rasmussen and Coleman Drake.

** In the ten states that have not yet enacted the ACA Medicaid expansion (soon to be nine, as NC is expanding on Dec. 1), all of which use HealthCare.gov, eligibility for ACA marketplace subsidies begins at 100% FPL. In states that have enacted the expansion, eligibility begins at 138% FPL; below that threshold, enrollees are eligible for Medicaid. A large majority of enrollees with income below 150% FPL are in the nonexpansion states, most of them in Florida and Texas.

138,000 enrollees in HealthCare.gov states in 2023 had incomes below 100% FPL. Legally present noncitizens subject to the 5-year federal bar on Medicaid eligibility are eligible for marketplace subsidies even if their income is below 100% FPL. I have left enrollees with income below 100% FPL out of the HealthCare.gov calculations above because a fairly large percentage are subsidy-ineligible.

*** HealthSherpa, which like many platforms will foreground silver plans for user eligible for strong CSR, provides this screen for such enrollees if they opt for another metal level:

Sunday, April 30, 2023

High auto re-enrollment rates in the SBMs, revisited

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?

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.