Editor’s note: This post was updated on January 15 to include information regarding the two-month extension of the federal Pre-Existing Condition Insurance Plan.
On January 13, 2014, the Department of Health and Human Services released a report on the Health Insurance Marketplace covering the first three months of open enrollment, October 1 through December 28, 2013. The data are reported cumulatively over the three month period rather than only for December, recognizing the fact that enrollment is a process that happens over a period of time and thus data reported separately on a monthly basis could be duplicative. Nevertheless the trends are very clear: the federal and many of the state exchanges are now in business, and enrollment is increasing at a rapid pace.
As of the end of December 2,153,421 Americans had enrolled in a qualified health plan: 956,991 had selected a plan through the state exchanges; 1,196,430 through the federal exchange. Three times as many enrollees selected a plan through the state exchanges in December (729,000) than had done so in October and November (227,000); five times as many selected a plan through the federal exchange in December (1,059,000) than had done so in October and November (137,000).
As of December 28, 2013, the exchanges had received a total of 4,348,224 applications, covering 7,716,824 individuals. Of these individuals, 5,130,798 were determined eligible for enrollment in an exchange-qualified health plan; 1,584,509 were determined or assessed eligible for Medicaid or CHIP. These numbers were dramatically increased from the 2.3 million determined eligible for exchange coverage and 803,077 eligible for Medicaid as of the end of November. A recent survey by the Commonwealth Fund found that 59 percent of adults who are potentially eligible for exchange coverage, but who had visited the exchange and not enrolled or had not yet visited the exchange, planned to enroll by March 31, 2014, the end of the open enrollment period. It is likely that many of the three million who have been determined eligible but not yet enrolled will yet do so.
The December report reveals new information on enrollees who qualified for premium tax credits. In October only 30 percent of enrollees who were determined eligible for exchange enrollment were determined eligible for financial assistance; by November the percentage had climbed to 50 percent. In the December report that number climbed only marginally, to 53 percent. The December report for the first time, however, tells us the proportion of individuals who actually enrolled in a plan who received financial assistance: 78 percent in the state-based exchanges, 80 percent in the federal exchange. This is close to the level of subsidy-eligible exchange enrollees projected by the Congressional Budget Office and suggests that the exchanges are actually reaching the uninsured — those who could not have previously afforded health insurance — as well as individuals who had individual coverage previously but really could not afford it.
It also suggests that individuals who visit the exchange but find that they are not subsidy-eligible may be looking elsewhere for insurance. It is very possible that the fact that a high proportion of enrollees are subsidy-eligible is a good sign for the risk pool — these enrollees are not simply people who had purchased insurance previously with their own funds because they had health problems and are now switching to the exchange, but are new enrollees who were likely getting by without health insurance before.
Demographic data. The December report for the first time provides some demographic data on exchange enrollees. The headline of many articles on the Report is likely to be that only 24 percent of enrollees are ages 18 to 34, while 33 percent are ages 55 to 64. While 18- to 34-year olds make up 26 percent of the non-elderly population, close to the proportion enrolled in the exchanges, they make up a much higher proportion of the population eligible for exchange coverage — 40 percent according to a Kaiser Family Foundation estimate. Of course, many 18 to 34 year-olds are covered by their parents’ insurance under the ACA, and others will be eligible for Medicaid. But the 40 percent figure takes this into account.
It should not be surprising that 55- to 64-year olds are more likely to sign up for coverage than younger people. This group disproportionately includes early retirees and self-employed individuals who really need coverage. It is also a population who have more experience with health insurance and understand its value. It is likely, however, that the proportion of younger people in the risk pool will increase over time. The Massachusetts experience suggests that young people are more likely than older people to sign up for coverage later. The December report notes that the number of young people signing up in December increased more rapidly than the rate of increase in the number of enrollees generally. Moreover, the Kaiser young invincible study concluded that even if young people in the end made up only a quarter of the risk pool, this would increase rates only by about 2.4 percent, hardly enough to send exchange insurance markets into a risk spiral.
In the end, the real issue is not the age of enrollees, but their health status. Since premiums for older individuals are up to three times those paid by younger individuals, an insurer is better off with a healthy 64-year old than a healthy 26-year old. The exchanges do not collect information on health status, which is irrelevant to eligibility, so we do not know anything about the health status of enrollees, and may not know for some time. But presumably the people who were willing to struggle with the website through the dark months of October and November were those who were desperate for coverage, and between now and the end of open enrollment, as the real push for enrollment finally gets underway, a healthier cohort will sign up.
Another number the December Report does not contain is the percentage of enrollees who have selected a plan and who have in fact paid their premiums for the first month. Enrollment in a plan is not completed until an individual pays the premium to the insurer. In the federal exchange this is a transaction that occurs directly between the enrollee and the insurer, of which the exchange is only notified later. The fact that many enrollees signed up at the last minute and that due dates for payment have been flexible has, no doubt, resulted in confusion and delayed payments for some. There are reports that some individuals have had difficulty making payments to insurers for their selected plans, and that some insurers have had difficulty in identifying their enrollees and obtaining payment. But presumably people did not select a plan just for entertainment, and the vast majority of individuals who signed up for a plan will figure out how to pay for it.
The December report for the first time reports enrollment by gender. 54 percent of enrollees are female, 46 percent male. This is surprising, as men are more likely to be uninsured than women in the United States. It perhaps represents a gender-specific difference in risk aversion, or perhaps in income eligibility for premium tax credits. Since younger women tend to cost more than men to insure (they get pregnant, for one thing), this may, however, have a negative impact on the risk pool.
The report does not contain information on race or ethnicity, but the Spanish language federal exchange website got underway late, and the exchange presumably has some catch-up to do with enrolling Hispanics as well.
Metal-level data. The December report for the first time also discloses the metal level of plans that are being selected. The majority of enrollees, 60 percent, picked a silver plan. Bronze plans were chosen by 20 percent; gold by 13 percent; platinum by 7 percent; and catastrophic by only 1 percent. The number choosing a silver plan is encouraging, as cost-sharing reduction payments, which dramatically reduce cost sharing for enrollees with income at 200 percent of the poverty level and below (and marginally reduce cost sharing for enrollees up to 250 percent of poverty) are only available to silver plan enrollees. There has been a concern that applicants who would have been eligible for dramatically reduced cost sharing would choose bronze plans simply because they were cheap (sometimes free), ignoring this potential benefit. But many enrollees seem to have figured out that they are better off with a silver plan.
The low level of individuals who selected catastrophic plans no doubt reflects the fact that eligibility for a catastrophic plan based on lack of affordability or hardship (including the new cancelled-plan hardship exemption) requires that an applicant apply for a hardship or affordability exemption before enrolling in the catastrophic plan, and this takes time. But applicants under 30 are eligible for catastrophic-plan enrollment without a prior exemption determination, and apparently most are not taking this opportunity but rather enrolling in full coverage.
Medicaid. As noted earlier, almost 1.6 million applicants were determined or assessed to be eligible for Medicaid. HHS continues to state that 3.9 million individuals were determined eligible for Medicaid in October and December. But that number includes individuals who were already in the program and who reenrolled as well as new enrollees. It is apparently not possible to say what proportion of the 1.6 million exchange enrollees were in fact new enrollees, but it is likely that most individuals would reenroll through their state Medicaid agency rather than applying through the exchange, so a substantial proportion of these applicants are likely to be new enrollees.
The December report breaks down most of the data by state both for state-based exchanges and for the federal exchange. These data demonstrate what we already knew: Some exchanges like California (498,794 enrolled in a plan) or New York (68,058 enrolled) are doing great; others, such as Massachusetts and Oregon, are not. The state data also reveal some oddities — 44 percent of enrollees in North Dakota are signed up for a gold plan, as compared to only 9 percent in Mississippi. Only 9 percent of those signed up in the District of Columbia received financial assistance, perhaps reflecting all of those members of Congress whose coverage is being paid for by the federal government through other channels. But, although age and gender levels also vary by state, they are fairly consistent.
One number in the report is particularly concerning—over one million individuals remain in the pending/other category. This number includes everyone else who does not fit in another category, but surely contains may people who have applied for coverage but have still not been able to produce the documents they need to establish coverage, or are caught in a loop of some sort. It is to be hoped that this number will dramatically decrease as we get closer to the end of open enrollment on March 31.
Other developments. On January 13, 2014, Judge William Dimitrouleas of the United States District Court for the Southern District of Florida, dismissed Kawa Orthodonics v. Lew, a case that had challenged the delay of the enforcement of the employer mandate until 2015. The court held that the plaintiff had not been injured by the delay and thus lacked standing to bring the lawsuit. The plaintiff had argued that it had been injured by the delay because it had spent substantial time and resources preparing for the implementation of the mandate. The court held that the plaintiff would in any event have had to prepare for the mandate, which now goes into effect in 2015, and thus had not been injured by the delay.
On January 10, 2014, the Treasury Department stated, in a letter to Senator Mark Warner, that hours of volunteer firefighters and volunteer emergency medical personnel will not be counted in determining full-time and full-time-equivalent employees for purposes of the employer mandate. This issue will be addressed by the IRS’ employer responsibility rule, which will be issued “very shortly.” The treatment of volunteer firefighters and emergency personnel for purposes of determining whether an employer is a large employer, covered by the employer mandate, or a small employer, which does not need to provide health insurance, had become a serious question. Many fire departments in small communities and rural areas are staffed by volunteers. These organizations could have faced substantial additional costs if they were required to provide health insurance for their employees.
Federal high-risk pool extended. On January 14, 2014, HHS announced another extension in the Pre-Existing Condition Insurance Plan (PCIP). PCIP, which has assisted more than 135,000 Americans since it opened in 2010, was intended to provide stop-gap coverage for individuals with high cost medical conditions until the exchanges opened and the law banning pre-existing condition exclusions went into effect in 2014. About 30,000 enrollees remain in the program.
With the difficulties attending the launch of the exchanges, HHS announced in December that the PCIP would remain open an extra month until the end of January, 2014. On January 14, HHS announced that the PCIP will remain open another two months, until March 31, 2014, to give enrollees time to find coverage. PCIP enrollees will have to enroll in an exchange plan by March 15, 2014 to avoid a gap in coverage.
The PCIP, initially funded for $5 billion in 2010, has spent $4.7 billion to date, but apparently has enough money to last another two months. Several states have also extended their own state high-risk pools to allow enrollees time to transition to new plans.