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

Policies to strengthen nongroup insurance markets could fix ACA problems

Enrollment and stability in the nongroup insurance market continues to be threatened by the uncertainty of support for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Faced with the concerns in this environment, the Robert Wood Johnson Foundation and Urban Institute issued a report, Stabilizing and Strengthening Nongroup Markets, expressing the opinion that “[t]argeted policies could fix the ACA’s problems without sacrificing its gains in coverage, affordability, and access to care.” The report identifies policies that would stabilize the nongroup insurance markets, encourage insurer participation, improve affordability, and rein in premium growth. Some policies would be implemented immediately and others would be implemented in the long term; however, solving the problems will take significant political action.

“Strategies that increase the buying power of enrollees and increase enrollment would make participation more attractive to insurers.” To strengthen ACA marketplaces, the report suggested that policymakers learn from the Medicare Advantage and Medicare Part D markets that successfully compete with the traditional Medicare program.

The current climate

The report pointed out that neither Congress nor the Trump Administration has committed to paying cost-sharing reductions, and the administration signaled it does not intend to enforce the individual mandate penalties. Open enrollment periods have been shortened and federal outreach and enrollment funds will be cut 40 percent in the Navigator program, while the ACA advertising effort will be cut 90 percent. In addition, HHS will limit access to healthcare.gov every week during the 2018 open enrollment period. Such actions will reduce coverage.

Short-term commitments

According to the report, the federal government must commit to (1) reimbursing insurers on an ongoing basis for cost-sharing reductions; (2) enforcing the individual mandate penalties; (3) increasing funding for outreach and enrollment assistance; and (4) permanently reinstating a government-funded reinsurance for nongroup markets.

Long-term commitments

Long-term recommendations addressed in the report include strengthening marketplaces, expanding coverage, reducing premiums and cost-sharing requirements, and encouraging the broadest range of insurers to participate. In addition, the federal government should permit states to expand Medicaid, eliminate non-ACA-compliant nongroup insurance products, and reverse current administrative decisions that hinder enrollment. The report noted that the lack of insurer competition is associated with higher benchmark premiums because it eliminates insurer negotiating leverage.

The report suggests that improving affordability would increase coverage, reduce the number of people uninsured, and bring more healthy enrollees into the insurance pool, lowering average premiums. Other long term policy recommendations include providing additional financial assistance to lower premiums and cost-sharing requirements for nongroup coverage, attaching premium tax credits to gold rather than silver plans lowering out-of-pocket costs for all enrollees receiving tax credits, and increasing cost-sharing subsidies for people with lower incomes.

Additional policies

To strengthen the nongroup insurance market, the report described three additional policies:

1. Benchmark premiums. Changing the way benchmark premiums are calculated affects the size of nongroup premium tax credits allowing people to choose from more plans without additional premium contributions.
2. Capping payment rates. Payment rates charged to nongroup insurers by health care providers could be capped, making it easier for insurers to enter new marketplaces and counteracting provider monopolies.
3. Standardize insurance options sold in the nongroup market. Standardizing the insurance options sold in the nongroup market could reduce the complexity of the enrollment process, improving comparability and facilitating price competition.

According to the report, “nongroup insurance markets must become larger, less expensive for consumers in both premiums and out-of-pocket costs, and less financially risky for insurers.”

Despite dire predictions, ACA serves as economic stimulus

There is no evidence that the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) has had a negative impact on economic growth or jobs or that the ACA has undermined full-time employment, all effects that opponents of health reform warned about, according to a report by The Commonwealth Fund. Evidence actually indicates that the law has served as an economic stimulus by freeing up private and public resources for investment in jobs and production capacity.

Dire economic predictions

In 2010, when the ACA was enacted, policymakers were still dealing with the effects of the most severe recession since the Great Depression. Some worried that undertaking such a large-scale expansion of health insurance coverage, including the establishment of new requirements for health benefits provided by employers, would hinder job growth and economic recovery. However, The Commonwealth Fund report shows that since 2010, the U.S. economy has been growing slowly but steadily, with the gross domestic product (GDP) growing by 21 percent through 2015. Adjusted for inflation, gross private domestic investment through 2015 has grown faster than the GDP, paving the way for continued growth.

Job growth

The U.S. economy has gained nearly 14 million private sector jobs over five years, with full-time work accounting for all of the net gain. Currently, there are 5 million more people working now than during the peak level prior to the recession, and the unemployment rate has fallen. Jobs are growing faster than in any year since the 1990s. On a state and local level, job growth has improved state tax revenues.

Health care spending

Per-person private and public health care spending has slowed for the past five years. Reforms under the ACA related to Medicare have likely contributed to the slowdown in health care spending, thanks to the tightening of provider payment rates and the introduction of incentives to reduce unnecessary costs. The accrued savings in health care spending relative to pre-ACA projections of growth are substantial, and Medicare alone is projected to spend $1 trillion less between 2010 and 2020.

Looking forward

Without targeted efforts to sustain the growth of the past five years, market forces, such as rising drug costs and higher prices resulting from provider and insurer consolidation, have the potential to reduce positive trends. If such efforts are not made, the U.S. may find itself on a path where costs increase faster than the economy and people’s incomes, undermining the ACA’s goal of health care and insurance affordability.