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Implementing Health Reform: A Summary Health Insurance Marketplace Enrollment Report



May 1st, 2014

Editor’s note: This post was updated on May 2, 2014, with a few additions and corrections to the material on Marketplace enrollment, and with additional ACA-related material at the end of the post.

On May 1, 2014, the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (ASPE) released a summary enrollment report for the federal and state marketplaces (exchanges) for the entire 2014 open enrollment period — from October 1, 2013 to March 31, 2014, including special enrollment (SEP) activity reported through April 19, 2014.  The report was accompanied by a press release, an infographic, and an addendum reporting state level data, as well as the March Medicaid and CHIP enrollment report.

The headline of the report is old news by now: Over 8 million individuals selected a qualified health plan through the federally facilitated marketplace (FFM) and state-based marketplaces (SBM) during the covered period.  The SBM enrolled 2.6 million; the FFM 5.4 million.  The Medicaid report adds that as of March, 2014, Medicaid and CHIP enrollment has grown by 4.8 million, 8.2 percent, over baseline figures from the third quarter of 2013.

Both the marketplaces and Medicaid programs saw a dramatic surge in enrollment in March.  Nearly 3.8 million people selected a marketplace plan during March and April, 47 percent of the total (including 910,495 who enrolled during the April SEP).  Medicaid and CHIP enrollment in March increased by 1.8 million over that that reported in February.

Age distribution.  As expected, enrollees trended younger as the open enrollment period ended.  The number of young adults aged 18 to 34 who selected a marketplace plan doubled during the last month, accounting for 31 percent of March and April enrollment.  This surge increased the total proportion of young adult enrolled only to 28 percent, compared to 66 percent of enrollees above age 35 and 25 percent between ages 55 and 64 (with 6 percent below age 18).

This percentage of young-adult enrollees remains considerably below the comparable proportion of the uninsured who are in this age group.  This shortfall is likely to be a focus of much of the media coverage of the enrollment report because younger people are likely to be healthier and less costly, and thus balance out the risk pool with older people, who are likely to be less healthy and cost more.  The report notes, however, that perhaps as many as 5 million individuals have enrolled in the individual market outside the exchanges, and that E-Health reports that 45 percent of its off-marketplace enrollees are aged 18 to 34.  All plans that are neither 2010 grandfathered plans nor transitional 2013 renewal plans, in and outside of the exchange, are part of the same risk pool, so if younger people are purchasing plans outside of the exchange, this will balance out the risk pool for the exchange as well.

In any event, as I have noted often before, it is in the end the health — not the age — of individuals in the risk pool that is determinative of its cost, and recent statements by insurers indicate that the risk pool is turning out to be about what they expected when they set their premiums.

Gender distribution.  Women continue to outnumber men in the marketplaces, accounting for 54 percent of plan selections, although male participation increased slightly in the final month.   Women tend to be older than men, however, with 26 percent of them above age 55 compared to 24 percent for men.  Younger women are more expensive then younger men, but older women are less expensive than older men; on the whole the imbalance in gender may increase the riskiness of the risk pool.

Subsidy-eligible enrollees.  The percentage of individuals selecting plans who received financial assistance increased somewhat in March and April, from 83 percent through February to 85 percent by the end of the period.  Over the open enrollment period, 13.5 million individuals were determined eligible for enrollment in a marketplace plan, but only 8.7 million of those were determined eligible for financial assistance.  These numbers are in addition to 6.7 million individuals who were assessed or determined eligible for Medicaid.

Of those determined eligible for financial assistance 6.7 million selected a plan; of those not determined eligible, only 1.2 million did.  About 3.6 million of those eligible for financial assistance (and 2 million of those eligible for assistance) did not proceed to select a plan.  It is likely that many of those who were found ineligible for financial assistance purchased a plan in the off-exchange individual market, but some likely remained uninsured and others may have found employer coverage.  I would surmise that many who found they were eligible for financial assistance but still failed to select a plan remained uninsured, but some may have found coverage through the individual market or employment.

Seventy-six percent of FFM enrollees with financial assistance chose a silver plan, which was for many the most rational choice, as an enrollee must choose a silver plan to qualify for cost-sharing reduction payments.  Fifteen percent chose a bronze plan and 9 percent a gold or platinum plan.  Thirty-three percent of enrollees without financial assistance, on the other hand, chose a bronze plan, 25 percent a silver plan, and 31 percent a gold or platinum plan.  Twelve percent of FFM enrollees without financial assistance chose a catastrophic plan, as did 5 percent of 18 to 34 year olds.  Curiously, the number of individuals choosing a catastrophic plan increased over three times during March, although it still remained only 2 percent of the total.

Race and ethnicity for the FFM.  The March report for the first time includes racial and ethnic data, although only for the FFM.  The race and ethnicity questions were optional and over 30 percent did not respond.  Of those who responded, 0.3 percent identified themselves as American Indian/Alaskan Native; 7.9 percent as Asian; 0.1 percent as Hawaiian or Pacific Islander; 16.7 percent as African-American; 10.7 percent as Latino; 62 9 percent as White; and 1.3 percent as multiracial.  Compared to the population eligible for exchange enrollment, Asians and African-Americans were somewhat overrepresented; Latinos underrepresented.  Spanish language enrollment materials were late in coming, and although there was a surge in enrolling Latinos at the end, enrollment fell short.

It is likely, however, that the individuals who did not report their racial or ethnic status are not uniformly distributed, and thus the actual racial makeup of the population may not be as reported.  Racial composition varied considerably by state—95.9 percent of enrollees in Maine were white; 33.6 percent of enrollees in Texas were Latino; 59.5 percent of Mississippi enrollees were African-American; and 17.7 percent of Virginians were Asian.

Previous coverage status.  One question the report does not answer is how many of those who chose a plan were previously uninsured.  Information on insurance coverage was only collected from FFM applicants who requested financial assistance, and only was only requested as to current insurance coverage at the time of application.  Of the 5.18 million individuals who applied for financial assistance and selected a plan in the FFM, 695,011, or 13 percent, indicated that they were insured at the time of application.

HHS acknowledges, however that this number probably undercounts the number of individuals who had coverage prior to applying to the marketplace, and notes that New York has reported that 30 percent of enrollees had prior coverage while Kentucky reported 25 percent.  The report also notes Gallup, Rand, and McKinsey data reporting that over half of marketplace enrollees had prior insurance coverage, but observes that Rand, Urban, and Gallup have reported a significant drop in the number of uninsured Americans during the open enrollment period.  It will be some time before we know how many uninsured Americans have been covered through the marketplaces. It is important to remember, however, that the purpose of the ACA was not just to reduce the number of uninsured, but also to make health coverage more affordable, and if Americans are finding insurance more affordable through the exchanges, that is also a victory for the ACA.

Premium payment.  One of the most contentious issues concerning enrollment numbers has been how many individuals who have selected a plan have actually paid their premiums.  Although the report reveals how many individuals have selected a plan, individuals are not truly enrolled in a qualified health plan until they have paid their first month’s premium.  The report acknowledges that HHS does not have data on how many individuals who selected a plan in fact have paid their first month’s premium.

On April 30, 2014, as if launching a preemptive strike, the Republican members of the House Energy and Commerce released a report stating that only 67 percent of individuals who had selected a plan had in fact paid their first month’s premium as of April 15.   The report was based on information that the committee had requested and received from 160 insurers in the federal exchange.  Percentages varied from 42 percent in Texas to 88 percent in Arkansas.  It did not include information from state exchanges.  If this percentage accurately represents the total population of enrollees, however, the true enrollment number is closer to 5.5 than 8.1 million.

Democratic committee members responded immediately to the Republican report.  They noted that, in fact, because of the late enrollment surge, 3 million of those who were enrolled as of April 15 were not yet required to pay their premiums as of that date, as their coverage was not effective until May 1.  Enrollment in Texas, for example, grew from 295,025 at the end of February to 733,757 by mid-April, and it is not surprising that some had yet to pay their premiums for May 1 enrollment as of April 15.  The minority report also noted that insurers had raised this problem in their submissions to the committee.

Recent reports from Wellpoint, the Blue Cross and Blue Shield Association, and AHIP indicated payment levels in the 80 to 90 percent level.  California, which was not included in the Republican survey, had reported payment levels of 85 percent in mid-April.  An administration spokesperson responding to the report also claimed that the exchanges in fact included 300 insurers, so the Republican data was incomplete.

Payment rates, and thus enrollment rates, will never equal 100 percent.  Some of the shortfall is attributable to administrative difficulties with the exchanges, which have generated duplicate enrollments when individuals have enrolled in one plan and then cancelled and enrolled in another, and which have failed to send correct information to insurers, resulting in the exchange showing an enrollment for which the insurer does not have a record and thus does not bill.  Some of the shortfall is due to insurers, which also have had their administrative difficulties.  I have heard of a number of instances where individuals have tried to pay their premiums but have been unable to get insurers to accept them.

Some shortfall is undoubtedly due to the enrollment of people who have not been insured before and do not understand how insurance works, or who are among the 51 million Americans who do not  have a relationship with traditional banks and are not able to pay their premiums in cash.  Some of those who fail to pay are also individuals who applied and chose a plan, but then gained access to employer-sponsored coverage or Medicaid.  The individual market is notoriously unstable, and it is likely that many individuals who chose a plan but did not pay simply found another coverage option.  Again, it will be some time until we know how many are actually enrolled in a health plan, but it will probably be somewhere close to 7 million.

Medicaid and CHIP.  The March Medicaid and CHIP report shows that Medicaid enrollment grew by 4.8 million over the third quarter 2013 baseline.  Enrollment grew by 12.9 percent in expansion states; 2.5 percent in non-expansion states.  Sixteen of 22 expansion states reported growth rates of 10 percent or more.  Eight reported growth rates exceeding 25 percent.  Enrollment in most of the non-expansion states also grew, in Florida by 7.2 percent. But in most of them the number of enrollees grew much less, and in seven enrollment actually contracted.

These data understate actual enrollment growth because not all states reported and numbers are preliminary.  Moreover, they do not fully count some of the 6.7 million Medicaid applicants who were assessed or determined eligible through the federal exchanges, whose applications have not yet been fully processed.

Finally, the enrollment growth does not count 949,821 enrollees who gained coverage in seven states through ACA early option expansions antedating 2014, who are part of the baseline.  Reporting states received 2.9 million Medicaid and CHIP applications and determined 3 million applicants eligible for Medicaid and CHIP, although these numbers are subject to so many qualifications as to be largely meaningless.

Additional ACA-Related Developments

Tools for small businesses.  In late April, the Center for Medicare and Medicaid Services released two useful online  tools for small businesses.  A full-time equivalent employee calculator, which will assist small businesses in determining whether they have 50 or fewer employees and thus qualify as small businesses for the employer-responsibility requirement, was released on April 24, 2014.   A second calculator that small businesses can use to determine whether they are eligible for the small business tax credit was released on April 23, 2014.

Regtap.  On April 25, CMS released at its REGTAP website an Overview of Marketplace Survey and QHP Enrollee Survey issue brief.  CMS is developing the marketplace survey to obtain consumer perspectives on the services provided by the marketplaces (exchanges) to assist the marketplaces in improving their performance, and to assist state regulators and CMS with oversight.  It will be field tested in fall 2014, beta tested in 2015, and implemented in 2016.  The QHP (qualified health plan) enrollee survey is intended to assist CMS, state regulators, and the marketplaces in overseeing QHP performance, but also to assist consumers in selecting QHPs.  It will be field and beta tested in 2015 and be available in the fall of 2016 to assist consumers in choosing QHPs for 2017.

The Marketplace Survey will evaluate consumers’ experiences with the marketplace web site, telephone call centers, and in-person support with respect to:.
.

  • The application process;
  • Cultural competence;
  • The health plan enrollment process;
  • Information seeking services (Web, phone, and in person);
  • Premium tax credit eligibility determinations; and
  •  Specialized services.

The QHP Enrollee Survey expands on the CAHPS Health Plan Survey 5.0 by incorporating existing CAHPS supplemental items as well as new survey items. QHP Enrollee Survey topics include:
.

  • Access to care,
  • Access to information,
  • Care coordination,
  • Cost,
  • Cultural competence,
  • Doctor communication,
  • Health promotion,
  • Plan administration,
  • Prevention,
  • Shared decision-making, and
  • Specialized services.
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1 Trackback for “Implementing Health Reform: A Summary Health Insurance Marketplace Enrollment Report”

  1. Why The Government Is Trying To Increase Obamacare Outreach To Blacks And Latinos
    September 12th, 2014 at 5:05 pm

3 Responses to “Implementing Health Reform: A Summary Health Insurance Marketplace Enrollment Report”

  1. Ken Kelly Says:

    Thank-you for clarifying these issues. Your final point regarding the fixed indemnity plans is particularly interesting, as it explains the administration’s willingness to prompt further bad publicity by eliminating them.

  2. timothy jost Says:

    Mr. Kelly’s comment on the single risk pool raises an important issue and rightly points out that my statement about the single risk pool is not wholly accurate.

    Section 1312(c)(1) of the ACA states:
    (1) INDIVIDUAL MARKET.—A health insurance issuer shall consider all enrollees in all health plans (other than grandfathered health plans) offered by such issuer in the individual market, including those enrollees who do not enroll in such plans through the Exchange, to be members of a single risk pool.
    1312(c)(2) contains an identical requirement for the small group risk pool, while 1312(c)(3) allows states to combine the individual and small group risk pools.

    Risk pools are formed by issuer and by state and market (individual, small group), thus an insurer that operates in multiple states and markets would have a separate risk pool for each state and market. Grandfathered plans are not included. Neither, apparently, are transitional 2013 plans, although the guidance on this is not wholly clear. And neither are excepted benefit plans, such as fixed-dollar indemnity or specified disease coverage.

    Under the single risk pool rule, 45 C.F.R. 156.80, insurers are required to establish an index rate each year for each state and market based on the total combined claims costs for providing essential health benefits within that market. The index rate must be adjusted market-wide based on total expected market-wide payments and charges under the risk adjustment and reinsurance programs, payments for exchange user fees, and reductions to user fees for coverage of contraceptive services for religious organizations. The premium rate for each of the health insurance issuer’s plans in the relevant state and market must be based on the applicable market-wide adjusted index rate, subject only to the permitted plan-level adjustments.

    Plan level adjustments to the single index rate must be actuarially justified and are only permitted for five factors:
    • The actuarial value and cost-sharing design of the particular plan;
    • The plan’s provider network, delivery system characteristics, and utilization management practices;
    • Benefits provided under the plan that are in addition to the essential health benefits;
    • Administrative costs, excluding Exchange user fees; and
    • With respect to catastrophic plans, the expected impact of the specific eligibility categories for those plans.

    Separate, although similar, rules apply for pooling of experience for the risk adjustment and risk corridor programs. The experience of catastrophic plans, for example, is pooled separately from the experience of other individual coverage for purposes of the risk adjustment program. The risk corridor program applies only to qualified health plans and not to all individual plans, so experience is only pooled for exchange plans and “substantially similar” off-exchange plans which can be characterized as qualified health plans.

    If an insurer participates in a single state in both the exchange and off-exchange market, its experience in both markets will be pooled in a single risk pool for rate-setting and for the risk adjustment program (although not for the risk corridor program unless off-exchange plans are substantially similar to on-exchange plans.) Thus, experience with younger enrollees off the exchange will balance out experience with older enrollees on the exchange.

    If an insurer only sells coverage off the exchange in a particular state, its experience will not be pooled with on-exchange coverage. If an insurer forms separate corporations that are separately licensed as insurers in the same state to sell coverage on the exchange and off the exchange, it can separate its risk pools. State regulators could presumably question this evasive strategy. Transitional policies are not part of the single risk pool, nor are they part of the risk corridor or risk adjustment programs. This will significantly undermine the effectiveness of these programs for limiting risk selection for as long as transitional policies remain. Finally, insurers that market fixed-dollar indemnity plans or specified disease coverage can continue to risk select, indeed they can continue to apply pre-existing condition exclusions. To the extent this coverage continues to be sold it will continue to undermine the 2014 reforms.

  3. Ken Kelly Says:

    The following statement in this item is false:

    “All plans that are neither 2010 grandfathered plans nor transitional 2013 renewal plans, in and outside of the exchange, are part of the same risk pool, so if younger people are purchasing plans outside of the exchange, this will balance out the risk pool for the exchange as well.”

    Rather, only those off-exchange plans that are a) “substantially” similar to b) on-exchange plans sold by the same vendor in c) the same state share the exchange risk pools. Many companies selling off-exchange are not yet participating in the exchanges at all, and their enrollees are not included in the estimated 5 million off-exchange enrollees mentioned in the HHS report, and repeated in this item.

    HHS has naturally not addressed the question of the entire size the off-exchange market, but it is worth noting that the CBO estimated that the 2014 entire individual market (off- and on- together) would be larger by about 5 million (annually prorated) insured individuals than size of the 2013 market (similarly averaged). This would suggest at a minimum that there are ~ 4-5 million more individuals covered by QHP’s sold off-exchange than have been acknowledged so far.

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