Health Insurance Marketplace Enrollment Lags Behind Projections

Study finds Affordable Care Act marektplace enrollment must grow to keep premiums stable and to remain attractive to insurers.

Enrollment for health insurance coverage under the Affordable Care Act has fallen short of expectations, according to an analysis by the Kaiser Family Foundation.

Although 12.7 million individuals signed up for health insurance at the end of the third open enrollment — a jump from 11.7 million in 2015 and 8 million in 2014 – the actual enrollment will end up being somewhat lower due to people not paying premiums or having coverage terminated because of inconsistencies on the application.

If 2016 shows a similar pattern as 2015 with a final enrollment of 10 million, then the established target by the Department of Health and Human Services (HHS) will be met, the study noted.

Initial projections by the Congressional Budget Office (CBO) in March 2015 showed an average monthly marketplace enrollment of 21 million in 2016, which was recently lowered to 13 million.

Researchers believe that the CBO enrollment projections were much higher than the outcome for several potential reasons.

Chiefly, the analysis noted that employer coverage availability has not decreased. Since individuals with access to affordable employer coverage are not eligible for marketplace premium subsidies, it was expected that some employers would drop coverage to allow employees to take advantage of the subsidies.

However, as a result of ACA penalties for employers with 50 or more full-time employees without coverage, the incentive to maintain benefits is stronger than originally thought.

There are also many people who continue to buy their own insurance outside the marketplace.

Currently, there are 3 types of individual coverage available outside of the marketplace: ACA-compliant plans, “grandfathered plans,” and transitional or “grandmothered” plans.

Although collecting current data that reflects how many people are buying individual coverage outside the marketplace is difficult, researchers estimate that it was 57% of all individuals at the end of 2014.

It’s possible that the estimate could have decreased since the market lowered the number of grandfathered and grandmothered policies, however, it’s still common for people ineligible for subsidies to buy outside the market. In fact, 82% of marketplace enrollees receive subsidies.

Lastly, people are still being met with the challenge of health care affordability. During a recent Kaiser poll, data showed that the majority of uninsured people lack coverage due to high costs.

Approximately 46% of uninsured, non-elderly adults said they attempted to obtain coverage but found it was too expensive.

However, there needs to be separation between lack of affordability and lack of awareness on available financial help. This issue could be addressed upon further intensive outreach.

Those who are part of the lowest income group (150% below poverty level) are qualified for the largest premium subsidies. However, typically they have to pay up to 4% of income towards the premium to be eligible to enroll in the benchmark Silver plan.

Enrollees with incomes up to 250% of the poverty level are eligible for cost-sharing subsidies, but unfortunately the copays and deductibles may still be too high for them. Low income households in states with expanded eligibility up to the ACA standards of 138% of the poverty level could qualify for Medicaid, however, they are frequently unstable both financially and employment wise, according to the study.

As of now, marketplace enrollment is continuing to grow, but this growth has been slower in the third year compared with the second year. During the 2016 open enrollment period, there was an increase of 1 million plan selections compared with 3.7 million in 2015.

The future enrollment growth is important and the question of whether or not enrollment will continue to grow and by how much has yet to be determined.

However, by looking at the experience of the top performing states, an estimation of potential growth could be made.

Researchers estimate that in the 10 best performing states, approximately 90% of people have selected a health plan and qualified for a subsidy. Since this is a high rate for a public program, data suggests that there would be little room to grow in these particular states, the study noted. In order to have any substantial growth, they would need to attract people who are not eligible for subsidies and are already buying their own individual coverage.

Still, there is room for enrollment growth in states that have enrolled a lower share of the market. If these states were able to improve their average to at least that of the best 10 performing states, the researchers estimate that total marketplace signups would meet 16.3 million.

Factoring in approximately 10% of people not paying their first month’s premium, would lead to an “effectuated” enrollment total of 14.7 million, according to the study.

Although there are signs that coverage signups could continue to modestly grow over the years, the researchers conclude it is unlikely that there will be any substantial increases in marketplace enrollment due to a lack of substantial gains in outreach or changing subsidies to reflect more affordable insurance.