Healthcare.gov enrollment declines; plan affordability a factor

The Government Accountability Office (GAO) found that in 2018, 5 percent fewer people enrolled in healthcare.gov individual market health insurance plans available on the exchanges than in 2017, most attributable to plan affordability. The GAO noted that premiums increased more than expected in 2018, detracting from enrollment. Conversely, larger tax credits helped exchange enrollment. Additionally, the report found that HHS reduced its consumer outreach for the 2018 open enrollment period (GAO Report, GAO 18-565, July 24, 2018).

Background

The exchanges, established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-149) allow consumers to enroll during an annual open enrollment period. HHS, along with other agencies, conduct outreach for the open enrollment period to encourage enrollment. The GAO report examined both outreach and enrollment for the exchanges using healthcare.gov.

According to the report, about 8.7 million consumers enrolled in heathcare.gov plans during the open enrollment period for 2018 coverage, five percent less than the 9.2 million enrolled for 2017 coverage. This decline represents a trend from the 2016 plan year, when 9.6 million consumers enrolled in these plans. Moreover, in 2018, enrollees new to healthcare.gov coverage comprised a smaller proportion of total enrollees in 2018 compared to 2017.

Affordability

Plan affordability likely played a “major role” in 2018 exchange enrollment. For example, in 2018, premiums across all healthcare.gov plans increased by an average of 30 percent. The GAO stated that because of the premium increases, plans were less affordable as compared to 2017 for exchange consumers without advance premium tax credits. Most stakeholders interviewed chalked up lower enrollment to decreased affordability of plans.

Although premium affordability reportedly played a role in enrollment, interviews with shareholders revealed that other factors likely affected 2018 healthcare.gov exchange enrollment. Many reported that there was consumer confusion about the ACA and its status, including the possibility or repeal or replace. As a result, the confusion played a “major role” in detracting from 2018 healthcare.gov enrollment. Other shareholders, however, dismissed this viewpoint, pointing to other factors for the decline.

As for consumer outreach, the report revealed that HHS drastically reduced the amount it spent on paid advertising, a 90 percent reduction, compared with advertising spending for the 2017 open enrollment period. Notwithstanding, HHS declared its advertising campaign in 2018 success. The GAO found that HHS reduced navigator funding by 42 percent for the 2018 open enrollment period compared to 2017. According to HHS, this was the result in a shift in its priorities, specifically HHS using a narrower approach and with “problematic data.” This included some consumer application data HHS acknowledged was unreliable and some “navigator organization-reported goal data that were based on an unclear description of the goal, and which HHS and navigator organizations likely interpreted differently.”

No targets

HHS did not set numeric enrollment targets for open enrollment in 2018, as it had in the past. According to the report, the lack of these numeric targets hampered HHS’ ability to evaluate its performance related to the specific open enrollment period, which in turn made it more difficult for HHS to make informed decisions related to its resources.

The GAO recommended that the HHS ensure that the data it uses to determine navigator organization awards is accurate, and recommended that HHS set numeric enrollment targets. Additionally, the GAO recommended that the HHS assess other aspects of the consumer experience. HHS agreed with all but the recommendation to set numeric enrollment targets

2016 marketplace enrollment comes in at 12.7M, downward readjustment likely

At the end of the 2016 annual enrollment period 12.7 million people have signed up for health care coverage in the marketplaces, up from 11.7 million in 2015 and 8 million in 2014, according to a March 2016 Kaiser Family foundation (KFF) issue brief. KFF cautions, however, that the actual 2016 enrollment will be lower because as in prior years some enrollees will not pay their premiums, some will have their coverage terminated because of inconsistencies on their applications, and some will drop out as they get jobs offering health insurance benefits.

The KFF issue brief also determined that 2016 enrollment in the marketplaces is lower than the 15 million enrollees the Congressional Budget Office projected because (1) the availability of employer coverage has not declined, (2) many people are still buying their own insurance outside of the marketplaces, and (3) marketplace plan affordability remains a challenge.

Employer coverage stable

The brief cites a Kaiser-HRET Employer Health Benefits Survey, showing 57 percent of employers offering health benefits in 2015, which is statistically insignificant from the 55 percent offering benefits in 2014.

Purchases outside the marketplaces

KFF also discusses three types of individual coverage outside of the marketplaces and the reasons for them:

  • “Grandfathered” plans. These are plans that were purchased prior to the enactment of the Patient Protection and Affordable Care Act (ACA) (L. 111-148) in March 2010. They can exist forever under pre-ACA insurance rules.
  • “Transitional” plans. These plans include coverage that was purchased after the enactment of the ACA but before the beginning of the first open enrollment period in October 2013. The Obama Administration has issued guidance permitting these plans until December 31, 2017. However, because discretion has been granted to states and individual insurers, transitional plans have not been allowed to continue in all cases.
  • Private ACA-compliant plans. These plans exist because for people not eligible for premium subsidies there is little advantage to buying through the marketplace. Insurers and brokers may also prefer the application process outside of the marketplaces when enrolling people not eligible for premium subsidies.

Affordability

With regards to marketplace affordability being a factor in lower than expected enrollment, the brief cites a recent Kaiser poll which determined that the overwhelming reason why people are uninsured is cost. For example, the poll found that 46 percent of uninsured, non-elderly adults say they tried to get coverage but found that it was too expensive.

Conclusion

The brief concludes by surmising that marketplace enrollment could increase if larger numbers of employers drop health benefits for their workers, the buying experience in the marketplaces continues to improve, and the pool of purchasers grows as transitional policies get terminated over the next year and a half.

It further speculates, however, that enrollment could actually shrink if more states expand Medicaid, pulling low-income people (those with incomes between 100 and 138 percent of the federal poverty level) out of the marketplace, and if existing marketplace enrollees drop coverage if premiums continue to be unaffordable or the cost-sharing is too high.