On March 11, 2014, the Department of Health and Human Services released its Health Insurance Marketplace March Enrollment Report covering the period of October 1, 2013 through March 1, 2014. The Report covers, that is to say, five of the six months of the 2014 open enrollment period, which ends on March 31, 2014.
As of March 1, 4,242,300 individuals had selected a health plan through the federal and state exchanges, including 1,621,239 who signed up through the state exchanges and 2,621,086 who signed up through the federal exchange. New plan selections were down somewhat in February, with 942,000 individuals selecting a plan as compared to 1,146,000 in January, but February was a short month and the January report included a few days from December, so this does not necessarily indicate a drop in momentum.
There is every reason to believe, moreover, that enrollment will climb sharply in March, the last month of open enrollment. Experience with programs with open enrollment periods, such as Medicare Part D, Massachusetts Commonwealth Care, the Children’s Health Insurance Program, and the Federal Employee Health Benefits Program indicates that people tend to put off signing up for coverage until the last moment. During the 2012 FEHBP open enrollment period, 22 percent of those who changed enrollment did so in the last two days. The administration and partner organizations are also continuing to ramp up enrollment efforts, while exchanges continue to expand capacity.
It is quite likely, therefore, that the exchanges will sign up 6 million individuals—the revised Congressional Budget Office estimate—by March 31, perhaps more. Moreover, even after March 31, millions of additional Americans will qualify for special enrollment periods, for example because they lose Medicaid or employer coverage; thus, the total number of enrollees could easily exceed CBO estimates by the end of 2014.
Breaking Down The Enrollment Data
One metric that has been followed closely is the number of young adults who are selecting plans. In February, 27 percent of plan selections were by individuals between ages 18 and 34, the same as January, but up from 24 percent during the first three months of the open enrollment period. HHS expects this percentage to climb in the last month of enrollment and is making special efforts to reach out to young adults.
Young adults make up 40 percent of the uninsured. Since they tend to be healthier than older adults, they are desirable to balance the risk pool. But the difference in health status attributable to age is compensated for in part by the fact that older individuals pay three times premiums that are three times as high as those paid by young individuals. A Kaiser Family Foundation review projects that a risk pool with only 25 percent young adults would probably result in insurer’s costs exceeding premiums by only 2.4 percent. Moreover, the risk adjustment, reinsurance, and risk corridor programs will go far toward compensating for the increased cost of an older enrollee population. As a recent Milliman report points out, plans may actually find it more profitable to insure high- rather than low-risk enrollees after the premium stabilization programs are applied.
Individuals signing up for plans also tend to skew female. Forty-five percent of those who have selected plans so far are male, 55 percent female. This distribution is somewhat surprising, as nationally, 53 percent of the uninsured are male, 47 percent female. Young women cost more than young men to insure, but older women cost less than men. Because individuals who have selected plans tend to be older — and women who have selected plans tend to be older than men (54 percent over 45 compared to 51 percent for men) — the cost to the insurers should balance out.
Eighty-three percent of individuals who have selected a plan are eligible for financial assistance. This is up from 79 percent of enrollees in the first three months of enrollment. The CBO had projected originally that 6 of the 7 million individuals insured through the exchange would receive premium tax credits. In this respect, therefore, the exchanges seem to be on target.
Seventy-four percent of those who are selecting a plan with premium assistance in the federal exchange are choosing silver plans. This makes sense, as only silver plan enrollees are eligible for cost-sharing reduction payments, which for individuals with incomes below 200 percent of poverty can reduce cost-sharing very significantly. Only 13 percent are choosing bronze plans, which might be free for low-income individuals but are not eligible for cost-sharing reduction payments. Even fewer are signing up for catastrophic plans, which are available to individuals who are under 30 or who cannot afford other coverage — 3 percent of individuals 18-25 and 4 percent of those 26 to 34.
Federal exchange enrollees who are not receiving subsidies tend, on the other hand, to avoid silver plans. Thirty percent of those not receiving assistance have selected bronze plans, which are cheapest, while 26 percent have chosen gold and 13 percent silver plans, which provide better coverage than silver plans. Over a half million individuals have selected stand-alone dental plans.
Finally, the report notes that 4.38 million individuals have been determined or assessed eligible for Medicaid or CHIP by the exchanges, 3 million through the state exchanges and 1.38 million through the federal exchange. Those found eligible for Medicaid through the state exchanges show up in the monthly Medicaid reports, but those determined or assessed eligible through the federal exchange do not.
Again, there is far more information on the individual states than can easily be digested. As we already knew, California, with 868,936 individuals who have selected a plan and New York, with 244,618, are doing very well. In the District of Columbia and Hawaii exchanges, on the other hand, respectively only 6,249 and 4,661 individuals have selected a plan. The federal exchange has signed up 442,087 Floridians and 200,546 North Carolinians, but only 74,370 from New Jersey and 78,925 from Ohio.
Patterns of enrollment are also interesting. Of individuals who have selected a plan in the District of Columbia, 53 percent are below age 35; in West Virginia, 65 percent are above age 45. In Kentucky, 46 percent have selected a gold or platinum plan; in Colorado and Hawaii, 38 percent have chosen a bronze plan. In Wyoming, 92 percent of those who have chosen a plan are subsidy eligible; in the District of Columbia, only 13 percent are (not counting members of Congress and their staff who receive federal subsidies from the FEHBP). In Mississippi, 61 percent of those who chose a plan are women; in Minnesota 53 percent are men (the only state in which men are in the majority).
There are a number of questions the enrollment report does not answer. The first is how many individuals who selected a plan were previously uninsured. This is apparently not a question that is being asked of enrollees. A recent McKinsey report found that only ten percent of the exchange-coverage-eligible uninsured individuals surveyed had signed up for coverage for 2014, and of those who had signed up for coverage in February, only 27 percent were previously uninsured.
It is important to remember, however, that insuring the uninsured is not the only reason for the exchanges. The exchanges also exist to increase the affordability of coverage, and the fact that 83 percent of plan selectors are receiving assistance indicates that many Americans who were previously insured are now finding coverage more affordable. Moreover the individual market is very volatile — half of the individuals insured at the beginning of a year are not at the end of the year. It may well be, therefore, that an individual insured through the exchange who was insured at the moment he or she purchased exchange coverage may have been uninsured six months earlier or would have been six months later. If the exchange keeps these individuals insured, it will have served its purpose.
In any event, the exchanges seem to be having an impact on insurance coverage. A March Gallup Poll found that the percentage of those surveyed who were uninsured dropped from 17.1 percent in the fourth quarter of 2013 to 15.9 percent so far in 2014, the lowest level since 2008. Some of this decrease is growth in the Medicaid program, which Avalere Health estimates as having signed up 2.4 to 3.5 million new enrollees through the end of January. I suspect that some is also attributable to the effect of the individual mandate on persons who have access to employer coverage and who are accepting rather than rejecting offers of coverage. But the exchanges are also having an effect.
The other big question is how many of those who have selected a plan have carried through and paid their premium. Plan selectors are not “insured” until they do so. Some sources are claiming that as many as a fifth to a quarter of enrollees have not paid their premiums. Some of these individuals are likely persons who selected a plan and then cancelled it. Some are certainly individuals whose have had a difficult time getting insurers to accept payment. Insurers like the exchanges have encountered technical problems. It is hard to believe, however, that a million individuals have gone to the trouble of signing up for insurance and then simply abandoned their application.
Insurers are supposed, under the enrollment procedure, to send CMS an 834 once they have received a premium and effectuated coverage. Insurers are also supposed to be sending CMS enrollment estimates to receive premium tax credit payments. CMS should be able to determine how many individuals who have selected a plan are in fact enrolled and would do us all a service by producing this information.
A final puzzling number in the enrollment report is the 1.63 million individuals in the “pending/other” category. This number has grown significantly from 1.1 million at the end of January, with most of the growth in the state exchanges, where the number grew from 948,000 to 1.46 million. It is troubling to think that this many individuals may be attempting to get coverage but be stuck somewhere in the process. On the other hand, it may be that many of these individuals will eventually qualify for coverage, even after March 31, significantly raising the number of total insured.