February 13, 2019 | Ross Weiler

State-based Marketplaces Beating the Odds: 2019 Open Enrollment Growth Outperforms Federally-facilitated Marketplace

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Source: State Health Insurance Marketplace Types, 2018; Kaiser Family Foundation with DHS updates

According to 2019 enrollment data compiled by and published through ACASignups.net1, State-based Marketplaces continued to outperform the Federally-facilitated Marketplace.

  • Enrollment in the 12 State-based Marketplace states increased slightly (.4% on average) for Open Enrollment 2019 (OE19) and has remained stable since OE16.  7 of 12 State-based Marketplaces saw enrollment growth in OE19.
  • Enrollment in the 39 Federally-facilitated Marketplace states has steadily declined since OE16, with 1.3 million fewer people enrolling in OE19 compared to their OE16 peak.  Only 6 of 39 Federally-facilitated Marketplace states saw enrollment growth in OE19, with the average enrollment loss equaling 3.8%.
  • Massachusetts, Colorado and Rhode Island – all State-based Marketplaces – are among the top-performing states.

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Even maintaining enrollment levels can be viewed as a significant achievement considering continued efforts by the Trump administration to undermine the marketplaces, including2:

  • Increasing marketplace premiums by:
    • Repealing the Affordable Care Act’s (ACA) individual mandate, which is predicted by the non-partisan Congressional Budget Office to reduce the number of healthy people enrolled in marketplace plans and increase premiums for ACA coverage by as much as 10%3
    • Implementing new rules designed to increase enrollment in association health plans (AHPs) and short-term health plans that can forgo key ACA protections, further reducing the number of healthy enrollees in and leading to even higher premiums for ACA coverage4.
    • Proposing changes to formulas used to determine marketplace premium subsidies that could further increase premiums for millions of marketplace consumers.
  • Creating confusion and concern among participating insurers by:
    • Withholding critical ACA cost-sharing reduction payments to insurers, which helped lower out-of-pocket health care costs for millions of Americans.
    • Announcing that it will freeze ACA risk adjustment payments to insurers.
  • Slashing funding for marketplace outreach and consumer enrollment assistance programs, reducing states’ ability to educate and advise consumers about their options – including available subsidies.
  • Declining to defend the constitutionality of the ACA in legal action brought by 20 states’ attorneys general.
  • Releasing new guidance that drastically changes how the federal government evaluates states’ proposals for flexibility under the ACA (through section 1332 waivers), potentially allowing some states to forgo key ACA protections.

These changes are having an effect. From 2016-2018 the total population participating in Federally-facilitated Marketplaces declined by 10%, while the enrolled population in State-based Marketplaces remained largely stable, increasing by 2%5.  Coincident with the Federally-facilitated Marketplace’s steady decrease, the nation’s uninsured rate has increased – from 10.9% in November 2016 to 13.7% at the end of 20186.

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So, why are many State-based Marketplaces growing in spite of these changes?  Recent studies show that State-based Marketplaces perform better than states that rely on the Federally-facilitated Marketplace based on key indicators such as premiums and carrier participation.  For example:

  • Average projected 2018 premiums in State-based Marketplace states were 17% lower than Federally-facilitated Marketplace states7.
  • During the same period, Federally-facilitated Marketplace states saw an increase in the number of counties with just one carrier and a decrease in the number of counties with at least 4 carriers. For State-based Marketplaces, this trend was less pronounced, with most states retaining two or more carriers at the county level8.  Lower levels of competition tend to drive higher prices.

During a time of reduced federal support, State-based Marketplaces have a distinct advantage over Federally-facilitated Marketplace states.  For example9:

              • For the 2018 plan year, three-fourths of State-based Marketplaces extended their open enrollment periods beyond the new December 15 federal deadline and worked closely with insurers to ensure consumer choice.
              • Overwhelmingly, states reported that having the flexibility to extend the deadline was critical to fulfilling outreach strategies and giving consumers sufficient time to enroll.
              • In addition, most marketplaces are expanding or modifying their advertising to counter misinformation and remind consumers they are open for business.

Infrastructure costs are also decreasing for State-based Marketplaces, which is causing more states to explore transitioning to State-based Marketplaces.  New Mexico is one such state.  Cheryl Gardner, the CEO for beWellNM, estimates that the Marketplace will save more than $4 million a year by 2022, over $5 million by 2023 and over $8 million by 2025, according to a news release10.

Another transitioning state is Nevada. Nevada Health Link’s move from a State-based Marketplace using the federal technology platform to a standalone State-based Marketplace is expected to provide the state with flexibility to operate an exchange tailored to the needs of Nevadans while saving the state millions of dollars in operating costs11.  Nevada Health Link Executive Director Heather Korbulic has indicated that the state was seeking “a ‘marketplace in a box’ with all the pieces we need to make this work” while stressing the advantages of such an arrangement:

From our initial research, we have found that Nevada could save significantly by moving to a fully functional, demonstrated product. In 2020, the 3 percent user fee will be approximately $12 million for our state, but we estimate that with our own platform operational costs will be closer to $6 million — a savings of 50 percent!

We also believe this is a chance for us to control our own destiny by managing our own marketplace. Having been an SBE-FP for several years now, we have seen the limitations that come with working with the FFE. There is very little flexibility given to states — any small change we request to try to tailor the system is almost impossible to accomplish. There is also a lack of insight into our own state’s data. Without data, we have no sense of who our consumers are at any given moment.”

Despite consistent headwinds, State-based Marketplaces are finding ways to continue serving their mission.  Imagine how many more people would gain access to more affordable health insurance coverage if some of the breeze was aimed at their backs.

1 http://acasignups.net/19/01/30/breaking-state-based-exchanges-collectively-break-all-time-enrollment-record

2 https://www.cbpp.org/sabotage-watch-tracking-efforts-to-undermine-the-aca

3 https://www.cbo.gov/system/files?file=115th-congress-2017-2018/reports/53300-individualmandate.pdf

4 https://www.cbo.gov/system/files?file=2019-01/54915-New_Rules_for_AHPs_STPs.pdf

5 https://ldi.upenn.edu/brief/state-based-marketplaces-outperform-federally-facilitated-marketplaces

6 https://news.gallup.com/poll/246134/uninsured-rate-rises-four-year-high.aspx

7 https://www.commonwealthfund.org/blog/2018/health-insurance-markets-perform-better-states-run-their-own-marketplaces

8 Ibid.

9 https://ldi.upenn.edu/brief/state-based-marketplaces-outperform-federally-facilitated-marketplaces

10 https://www.bizjournals.com/albuquerque/news/2018/09/21/bewellnm-will-launch-its-own-exchange-platform.html

11 https://nashp.org/nevadas-insurance-exchange-director-heather-korbulic-talks-about-transitioning-to-a-state-based-marketplace