A sticky ACA marketplace: Effectuated enrollment (early 2024) and Average Monthly Enrollment (2023)

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zero premium is quite the adhesive

Early this month CMS released its annual report showing “early effectuated enrollment” in the ACA marketplace — that is, enrollment by state as of February, the first month after Open Enrollment ends for the current year (2024) in the federal marketplace, HealthCare.gov. The report also shows Average Monthly Enrollment and month-by-month enrollment for 2023.

In era where, thanks to the subsidy enhancements enacted in the American Rescue Plan Act in March 2021, almost half of all enrollees are eligible for free benchmark silver coverage, the percentage of those who select plans during OEP but never effectuate coverage (e.g., by paying a premium, if one is due) continues to drop. Of those who selected plans during the Open Enrollment Period for 2024, 97% had effectuated coverage as of February.

And in an era where, as of early 2022, prospective enrollees who report income below 150% of the Federal Poverty Level (46% of enrollees in OEP 2024) can enroll year-round, Average Monthly Enrollment as a percentage of initial enrollment during OEP continues to rise. In 2016 — the year of peak OEP enrollment before the ARPA subsidies kicked in for OEP 2022 — enrollment in December was 84.2% of enrollment as of March, the first month after OEP ended that year. In 2020, the last year before mass enrollment was enabled after OEP (thanks to a pandemic emergency Special Enrollment Period in 2021), December enrollment was 94.3% of enrollment in February the first month after OEP. In 2023, December enrollment was 113.5% of enrollment in February.

The upshot: enrollment growth in the post-ARPA era is far higher when measured in terms of Average Monthly Enrollment or Early Effectuated Enrollment as opposed to OEP plan selections. The two tables below illustrate. I’ve emphasized enrollment growth since 2016, the peak year for OEP on-exchange enrollment until 2022.

Sources: Marketplace Open Enrollment Public Use Files and Full-Year and February Effectuated Enrollment tables*, available via the 2024 Early Effectuated Enrollment Snapshot (links at FN 2).

Total marketplace enrollment likely approaches 13 million

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Axios reports that Vice President Harris will announce today that more than 2.5 million people have signed up for marketplace coverage during the emergency Special Enrollment Period that began on February 15 and ends on August 15. (Yesterday, Charles Gaba estimated 2.57 million total SEP enrollments as of July 31.) [Update: CMS's SEP report through July 31 is out and cites the 2.5 million total.]

Just for fun, let's take a stab on where total marketplace enrollment likely stands right now. 

We know that effectuated enrollment totaled 11,290,546 in February, and that about 2.5 million additional enrollees have been logged since then. The wild card is disenrollments during those months. To estimate them, our best hints come from monthly enrollment tallies in 2020, recorded in the effectuated enrollment snapshot for February 2021.

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

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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.

Attrition was reduced throughout the Trump years; possible causes are discussed here. (In brief, the Trump administration made it harder to enroll, weeding out less motivated enrollees, while silver loading made coverage much cheaper for a significant number of enrollees.) Last spring, as the pandemic triggered tens of millions of layoffs, 12 state exchanges opened emergency Special Enrollment Periods (SEPs) in which anyone who needed insurance could enroll with relatively little friction (varying somewhat by exchange).  The Trump administration declined to open an emergency SEP for the 36 states using HealthCare.gov, but did reduce red tape for those who sought individual SEPs due to a qualifying "life change," usually loss of employer insurance. 

The net result was a steady reduction in attrition from 2017-2019 and a sharp reduction last year. In 2016, the year of peak plan selections as of the end of OE, average monthly enrollment (AME) was 79% of end-of-OE "plan selections." In 2019, AME was 86% of initial plan selections. In 2020, AME reached 92% of the end-of-OE tally.

Emergency SEP enrollment, shrinking attrition boost ACA marketplace enrollment beyond yearly top lines

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In a report issued last September, Covered California, the golden state's ACA exchange, announced that effectuated enrollment in private health plans through the exchange had reached an all-time high of 1.53 million (1,527,730) as of June 2020.   That was in the midst of an emergency Special Enrollment Period (SEP), effectively a second open enrollment season, implemented by California in response to the Covid-19 pandemic.  (In normal years, SEPs are open only to individuals who can demonstrate a qualifying "life change," such as loss of job-based insurance.)

The emergency SEP ran from March 20 through August 31, 2020. According to the September report, SEP enrollment increased by more than 100% over the same period in 2019, to 289,460.  As the CoveredCA report stresses, that's in contrast to a mere 27% increase in SEP enrollment in the 38 states then using the federal exchange, HealthCare.gov, for which the Trump administration refused to open an emergency SEP.  In September, active membership enrolled through CoveredCA reached a new all-time high, 1,551,470.  

Driven largely by the boost in SEP enrollment, plan selections as of the end of OE 2021 in California finally surpassed their 2016 high point of 1,575,340, reaching 1,625,546. (The term "plan selections" acknowledges that not all those who "enroll" in plans during OE make a first payment and thus "effectuate" enrollment and become, in CoveredCA parlance, "active members").  

While plan selections as of the end of OE have always served as the headline number for ACA marketplace enrollment, they provide a somewhat misleading picture. Every year, an average of about 10% of those who "enroll" in plans during OE never pay their first premiums, and attrition continues throughout the year, as disenrollments exceed SEP enrollments -- at least through 2019, the last year for which monthly enrollment has been published.  But attrition has been shrinking beginning in 2018, perhaps because the silver loading that began that year sharply reduced net-of-subsidy premiums for many enrollees, including a substantial number who paid zero premium.  In 2016, national enrollment as of December was 28% below the end-of-OE total for plan selections. In 2019, December enrollment was just 20% below the end-of-OE tally.

Estimate: Between 42 million and 50 million people have enrolled in ACA-compliant plans since 2014

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While only about 5% of the nonelderly U.S. population is insured through the ACA-compliant individual market for health insurance, a far larger percentage of us are likely to access the market at some point in our lives (if it survives). At healthinsurance.org, I've estimated that between 42 million and 50 million people have accessed the ACA marketplace since its launch in January 1, 2014.

I've referred readers of that post here for more explanation of the basis of that estimate. CMS does not provide a simple count, yearly or cumulatively, of unique enrollees at all times and venues: during the annual Open Enrollment, via Special Enrollment Period year-round, and off- as well as on-exchange. So here is what I have pieced together:

1. New enrollment on-exchange during Open Enrollment

In its reports and Public Use Files tallying annual marketplace enrollment, CMS breaks out the number of new enrollees (as opposed to renewals). Each year, after reporting on total signups during the Open Enrollment period, CMS later reports on effectuated enrollment  -- that is, the number of enrollees who have paid their premiums. Effectuated enrollment at its peak each year has averaged about 89% of initial signups.  In the right column below, I have estimated effectuated new enrollment in each year and in total.

Total New ACA marketplace enrollment, 2014-2020

    Source: CMS Public Use Files (see note at bottom for adjustments)

From 2014 through this year, approximately 27.7 million people have purchased plans during the annual Open Enrollment period and paid their first premiums, effectuating coverage ("approximate" because I'm applying the overall effectuated percentage to the new enrollees specifically).  Some "new" enrollees may have dropped out and returned.

CMS subtext: The ACA marketplace is in recovery

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The CMS report on long-term enrollment trends in the ACA marketplace has a stark lede:

During two successive years of declining enrollment, from 2016 to 2018, unsubsidized enrollment declined by 2.5 million people, representing a 40 percent drop nationally. 

That's bad. But the report includes data that leads to a clear conclusion: The ACA-compliant individual market has stabilized. It is rife with problems and there are many enrollees whom it does not serve well, but it's passed through a crisis. Consider the following points (some derived from the report, others not):

1. Subsidized enrollment was higher in 2018 than in 2016, generally understood to be the enrollment peak. In fact, total on-exchange enrollment was higher in December 2018 than in 2016. (Off-exchange enrollment, where the bulk of unsubsidized enrollment occurs, did drop sharply in those years.)


2. Subsidized enrollment is higher in 2019 than in 2018, as of February of each year, when all enrollees have had at least one payment due (see CMS's  (2018 and 2019 Effectuated Enrollment Snapshots). 

Is subsidized enrollment in the ACA marketplace really up since 2016?

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CMS's report on long-term enrollment trends in the ACA marketplace released this week emphasized the 40% drop in unsubsidized enrollment from 2016 to 2018. But the counterpoint came as something of a surprise: subsidized enrollment, according to CMS, is up since 2016.

If you look at the most often cited enrollment numbers for each year -- total plan selections reported by CMS annually at the end of the open enrollment season  -- total subsidized enrollment is down substantially -- 7.1% from 2016 to 2018, and 7.7% from 2016 to 2019. But average monthly enrollment was higher in 2018 than in 2016 -- and probably will be slightly higher this year.

It might appear that retention has improved -- more people stay in their plans for more of the year. But that's not clear, as average monthly enrollment in 2018 is not quite the same measure as in years prior.  Let's look at the numbers:

A CMS misinformation byte is getting into the woodwork

Axios today reports on the Kaiser Family Foundation's latest data note on individual market enrollment. The main takeaway is that unsubsidized enrollment is down by two million in 2018: brutal premium hikes are driving the unsubsidized out of the individual market.  I was brought up short, however, by this offsetting claim:

Subsidized enrollment grew by about 500,000 people.

Kaiser here is retailing CMS's comparison of effectuated enrollment as of March 2017 and March 2018, tallying those who enrolled on-exchange paid their premiums in February.  These snapshots show total on-exchange enrollment at 10.6 million in March 2018 and 10.3 million in March 2017, and subsidized enrollment at 9.2 million in 2018 vs. 8.7 million in 2017.

As I noted three weeks ago, that comparison is erroneous:

No, CMS, ACA marketplace enrollment isn't up this year, and doesn't justify navigator funding cuts

To justify gutting funding for the navigators who help low income people enroll in health insurance subsidized by the ACA (Medicaid as well as marketplace), CMS is turning a bogus talking point it concocted last year inside out. Here's the current claim, as reported by KHN's Phil Galewitz:

CMS also notes that after last year’s navigator funding was reduced, the overall enrollment in Obamacare plans increased slightly (when counting people who paid their first month’s premiums) to 10.6 million people.

Comparing 2017 and 2018 totals at the end of open enrollment  (before many enrollees have paid their first premium), total ACA marketplace enrollment was down 4% this year. CMS's comparison above uses the totals from the "effectuated enrollment snapshots" from 2017 and 2018, which tracked how many people were enrolled (and had paid their first premiums) as of February in each year. The reported total at that point was 10.3 million in 2017, vs. 10.6 million this year.

As Charles Gaba pointed out last year (and revisits here), however, the 2017 "snapshot" exaggerated early attrition by failing to take into account the fact that those who enrolled between 1/15 and 1/31 (the final day of OE in 2017) did not have payments due until March 1.  There were 539,352* enrollees in that time frame.  None of them could effectuated their coverage for February, which is the population counted in the "snapshot." If those enrollees effectuated coverage at the same rate as enrollees before 1/15 (88.5%), there were 10.8 million who had effectuated or would soon effectuate as of the time of CMS's tally. That total outstrips this year's by 2% .**

Unsubsidized ACA marketplace enrollees drop out early

Early this week, CMS reported that unsubsidized enrollment in ACA-compliant plans dropped 20% in 2018, while subsidized enrollment dropped just 3%. I pointed out that on-exchange unsubsidized enrollment dropped much more modestly, just 6%. That bespeaks a still steeper drop in off-exchange enrollment, suggesting that some previous off-exchange enrollees may have moved on-exchange in 2018 -- some obtaining subsidies, others not.

Today Charles Gaba notes that while unsubsidized on-exchange enrollment did not drop precipitously this year, first-month attrition among the unsubsidized who enrolled on-exchange was massive -- in a year in which overall attrition appears lighter than usual (over 80% of on-exchange enrollees are subsidized). While only 5.6% of subsidized enrollees are reported to have dropped coverage as March 15, 29%* of unsubsidized enrollees did.  This may not be surprising in a year in which premiums rose an average of 27%, largely as a result of Republican sabotage (cutoff of direct CSR reimbursement, radical cuts in enrollment assistance and advertising, weak enforcement of the individual mandate).

While the attrition among the unsubsidized this year is startling, it continues a pattern. Far higher percentages of unsubsidized than subsidized enrollees also dropped out in 2017 and 2016, rising each year. At the same time, attrition among subsidized enrollees dropped each year.

He who buys bronze absconds

In the spring of 2014 my son, knowing he'd enter a graduate program that September, switched his health insurance from COBRA to a bronze marketplace plan. Healthy, he gambled the premium difference between bronze and silver (or bronze and COBRA) against the deductible difference, essentially settling for catastrophic protection for a limited period.

Yesterday I noted that attrition in the ACA marketplace, which is sharpest in the months immediately following open enrollment since 10 percent or more of those who select plans never pay the first premium, is highest among those who enroll in bronze plans.   As of March 31 of this year, while bronze enrollment dropped 15.5%, from 2,873,422 to 2,427,337, silver dropped just 9.3%, from 8,520,787 to 7,721,983. A similar discrepancy was recorded in the spring of 2015.

It turns out that the same pattern held throughout the year in 2015. By December 31, total enrollment was down from 11,688,074 as of  Feb. 22, 2015 (not all of it "effectuated," or paid for in the first month) to 8,780,545, a 24.8% drop. Among bronze plan holders, the drop was 30.5%, versus 23.2% for silver, 18.8% for gold and 18.6% for platinum. Those with gold, hold -- relatively speaking.  And he who buys bronze... absconds.

As bronze plans typically carry deductibles over $6,000, many enrollees may decide that they're not worth the money. But I think it's also likely that those who know they have a short-term need for insurance, like my son, may lean toward bronze, basically holding their breath until employer insurance, or school-based insurance, or a spouse's insurance kicks in.

ACA Marketplace snapshot: Bronze plan enrollees drop plans at higher rate than silver plan holders

CMS just released its "attrition report" for the ACA marketplace -- that is, its first snapshot of "effectuated enrollment" as of March 31 after tallying total plan selections at the end of open enrollment on Feb. 1.

The drop is comparable to last year's as of March 31: enrollment is down from 12.7 million to 11.1 million. That is, it's down 13%. As CMS points out, enrollments took place earlier on average this year, so enrollees had somewhat longer to drop out by 3/31.

As I always keep an eye on takeup of Cost Sharing Reduction (CSR) subsidies, available only with silver plans, I was interested to note that as the smoke cleared, the overall rate of silver plan enrollment for the whole marketplace rose markedly, from 67.1% on Feb. 1 to 69.7% as of March 31. The percentage of enrollees in bronze plans went down, from 22.6% to 21.9%.

While bronze enrollment dropped 15.5%, from 2,873,422 to 2,427,337. Silver dropped just 9.3%, from 8,520,787 to 7,721,983.  It makes sense that more people would drop bronze plans, with their deductibles typically north of $6,000 per person. Similarly, by March 31 of last year, bronze enrollment had dropped 15.9% since the end of open enrollment, compared to 11.5% for silver. By June 30, 2015,  bronze was down 18.6%,, and silver 13.3%.

This year, then, silver attrition is 60% of bronze attrition, versus 70% last year. Last year, government audits of enrollees' income claims led to hundreds of thousands having their CSR (and premium) subsidies eliminated or reduced, though that drop was not reported until the enrollment snapshot for June 31, released last September. This year, better data matching has reduced such subsidy reductions by more than two thirds.  Perhaps the higher volume of data audits in 2015 induced a slightly higher proportion of silver plan enrollees to drop their plans, since a good proportion lost some or all of their CSR.

Updated 7/1.