ACA Exchange Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

ACA Exchange Enrollment Up By 100,000 From Last Year

In my opinion, one of the most important measures of ACA Exchange enrollment is NOT the initial enrollment numbers that come out at the end of “open enrollment.” What everyone should REALLY care about is how many of those people who enrolled during “open enrollment” actually paid their premiums for coverage that started Jan. 1^st.
- Analysis: According to HHS, 10.7 million Exchange enrollees paid their premiums as of March 15^th. This number is 100,000 higher than last year (where 10.6 million enrollees paid their premiums). To me, this is a significant statistic. Why? First, it confirms that the ACA Exchange market is stable. Second, it confirms that this aspect of the ACA (i.e., the “subsidized” ACA Exchange market) is NOT “a disaster,” and it is NOT “crumbling under its own weight.” Third, it confirms that the Federal government does NOT need to spend millions of dollars on marketing and outreach to get people enrolled. Now, you can make the argument that IF millions of dollars were spent on marketing and outreach, more than 10.7 million people would enroll and pay their premiums. To a small extent, I would say you are right. That is, I would agree that IF millions were spent on marketing and outreach, it seems logical to me that at least some more people would enroll who have not yet enrolled. BUT, how many people are we talking about?? At least in my opinion, we’re talking about a small number. And I feel that spending millions of dollars to ONLY enroll a small number of more people is NOT a productive way of spending these assets. In my opinion, there is a more productive way of spending these assets. Stated differently, I believe there is a more productive way to encourage enrollment outreach efforts WITHOUT spending millions of dollars. You have heard me say it before: I believe HHS should rely more heavily on private-sector companies that are performing enrollment functions on behalf of the ACA Exchanges to provide marketing and outreach services. Heck, maybe even give some government money to these private-sector companies to do just that. That amount would be MUCH lower than the millions of dollars ACA supporters want to spend on government-related marketing and outreach efforts. And, I would argue that private-sector company-marketing and outreach efforts would be more effective in enrolling those who have yet to enroll. BUT, we all of our opinions, of course. Now, some may also argue that the ACA is indeed “a disaster” and “crumbling under its own weight.” My response: That is NOT what the data is showing, AT LEAST as it relates to the ACA Exchange market (i.e., the “subsidized” market). YES, I would agree with you that the “unsubsidized” individual market remains a mess. And there is data that backs this up as well. For example, the Kaiser Family Foundation has confirmed that 2.5 million individuals exited the “unsubsidized” individual market in 2018 alone. If you go back to 2015, Kaiser tells us that 3.6 million exited the entire “individual” market. Now, I would argue that many of these “exits” were people getting jobs. As we all know, pre-COVID, unemployment was at an all time low. BUT, we also know that people “exited” because the cost of an “unsubsidized” individual market plan was so expensive. And, costs are generally NOT going down, although we saw a slight premium decrease for 2020. We are seeing slight increases for 2021 though. Last comment: This is something that I have been saying all the way back when I first started writing my updates in 2014: As long as there is a generous subsidy for a health plan that can be purchased through an ACA Exchange, the ACA Exchange market is GOING to remain stable. The data is backing this up. For example, Kaiser has estimated that in 2018 – at least in the Federal Exchange States – enrollment in the “subsidized” ACA Exchange market is 600,000 higher than it was in 2015. And now with this most recent data from HHS, we are seeing the same trend in 2020.

COVID and the ACA Exchanges

How Many More People Might Enroll In an ACA Exchange Plan During the Upcoming 2020 “Open Enrollment” Period?

You have seen the headlines and read the news stories: Due to the COVID pandemic, millions of people (double-digits) who were covered by an employer plan are now uninsured due to job loss (this includes both the employee and their dependents).
- Analysis: We also heard HHS announce that they estimated that 487,000 more people have enrolled in an ACA Exchange plan through the Federal Exchange on account of losing their job. States that opened up enrollment to anyone during the pandemic reported that they have enrolled close to 263,000 more people. BUT, out of this 263,000 number, we do not exactly know who lost their employer plan and enrolled – versus – an uninsured person enrolling during the State-based Exchange’s “pandemic special enrollment period.” Also note, only 8 State-based Exchanges – out of 12 – have reported their “pandemic special enrollment” numbers, so the 263,000 number will be slightly higher when all-is-said-and-done. The bottom-line is this: (1) Lots of people lost their job and (2) Some of them are enrolling in an “individual” market ACA Exchange plan. Sooooo, the $64 million dollar question now is: How many more people who lost their job due to the pandemic will enroll in an “individual” market ACA Exchange plan this Nov. 1^st when 2020 “open enrollment” starts? Well, Avalere Health is out with a study estimating that more than 1 million people could purchase an ACA Exchange plan on account of losing their job due to the COVID pandemic. It appears to me though, that this 1 million number already includes the 750,000 who have enrolled due to the pandemic (as discussed above). So, does that mean we will likely ONLY see 250,000 more people enroll in an Exchange plan during the 2020 “open enrollment” period? I do NOT think so. Again, because it appears to me that Avalere’s numbers are ONLY looking at enrollment during a “special enrollment period” due to the pandemic, and NOT estimating enrollment numbers for 2020 “open enrollment.” Well then, how many people are going to enroll in an “individual” market ACA Exchange plan during the 2020 “open enrollment”? Sadly, I cannot give you an exact number. BUT, here are my thoughts: I think there are a lot of non-Medicaid-eligible people who lost their job due to the pandemic decided NOT to enroll in COBRA and decided NOT to enroll in an “individual” market plan. I think they said to themselves: “Wow, my income has taken a significant hit. And, I am NOT sure I will be able afford ANY health coverage, even if it is subsidized coverage purchased through an ACA Exchange. Sooooo, I am going to go WITHOUT coverage for a couple of months until I can figure out what my future looks like. Heck, maybe I will get my job back in relatively short-order. I just don’t know.” Now, let’s say some of the people who came to this decision do NOT get their job back by Nov. 1^st. And/or, maybe more people lose their job between now and Nov. 1^st due to the ongoing pandemic, and they come to a similar decision. I would bet that a lot of these people in this situation will pull the trigger and enroll in an ACA Exchange plan, especially if they are premium subsidy-eligible. Why? By Nov. 1^st, I would suggest that these people will have a better handle on their financial situation, and the shock of being laid off will have finally sunk in. And, where they did NOT feel comfortable enrolling in a “subsidized” ACA Exchange plan before, they may now feel that the time is right to enroll in health coverage, even if they have to pay 10%, 20%, or 30% of the premium out-of-their-own-pocket (which will depend on their income level). Last comment: I truly believe that a lot of people who lost their job due to the pandemic froze. And with their whole world getting turned-upside-down, enrolling in health coverage – while important – was not on their list of must-dos (rent, and food, and other life expenses took precedent). BUT, as we have all adapted to living in the pandemic-induced world we are now living in, I think some of these people have generally grounded themselves to the extent they can. And I think this “grounding” will be enough to motivate at least some of those people who remain unemployed come Nov. 1^st to enroll in an ACA Exchange plan. My guess: Mid- to high-hundreds of thousands, but NOT a million.

Will the COVID Pandemic Increase Competition In the “Individual” Market?

We talk a lot about “increasing competition” in the “individual” market. We all agree that competition is good, and we want more of it. And, we all agree that competition will lower premium costs. There is data to back this up.
- Analysis: To me, Congress and HHS cannot really “increase competition” through some sort of policy change. Yes, maybe you can incentivize insurance carriers to re-enter the “individual” market or expand their footprint into other States – BUT – that ain’t gonna happen any time soon (actually – in my opinion – it will NEVER happen). Sooooo, the best – and again in my opinion – ONLY way you are going to “increase competition” is through market forces. And what better market forces than over a million more people entering the “individual” market (this includes the “special enrollment period” numbers and the possible numbers during 2020 “open enrollment”). As I have mentioned to you in a prior update, the insurance carriers see this coming too. While not the only reason, the increase in the number of lives in the “individual” market has motivated UnitedHealthCare (UHC) to re-enter the “individual” market, albeit in Maryland. BUT, UHC has said it wants to enter other States. And, we are ALSO seeing existing carriers in the “individual” market expand into other markets. Soooo, movement is afoot, and I think for good reason. This all ties back to something I also said in a previous update: I suggested that the COVID pandemic is going result in more people entering the “individual” market. And, while an argument can be made that these new enrollees may be on the less healthy side (which is why they are enrolling in coverage), there will likely be a natural mix of less healthy and healthy individuals who are enrolling in an “individual” market plan, especially among those individuals who have lost – or will lose – their employer health plan. And, if there is a relatively even mix of health risks entering the market (even if it is slightly skewed to less healthy), the more people that enter into the “individual” market, the better the market will become. Again, all due to COVID. This should have a ripple effect of encouraging more insurance carriers to re-enter the “individual” market. It will also encourage existing carriers to expand their footprint. These market forces should also bring down premiums. Then, if you have lower premiums on account of (1) more lives in the risk pool and (2) increased competition, things like “individual coverage HRAs” will likely become that much more attractive to small and mid-sized employers, and even some large employers in the low-income, high turn-over industries.