Open enrollment for the individual health insurance marketplaces has been underway for one month. Despite things looking positive for both premiums and carrier participation, the enrollment in the federal exchange, Healthcare.gov, has thus far been lower than last year. With this, we are seeing an acceleration of some of last year’s trends (in which premiums stayed about the same, carrier participation rose slightly and enrollment dropped slightly). This year, carrier participation rose, while premiums dropped slightly, and enrollment appears to be dropping more than slightly.
Here are this year’s highlights, so far:
Enrollment: Two-thirds of the way through open enrollment (Nov 1 thru 30), enrollment has been down 10% among consumers on Healthcare.gov (8% if we account for the fact that Nevada left the federal exchange). This is, by any stretch, a significant drop, although there is still time for people to sign up before December 15th.
The enrollment drop can be partially attributed to Medicaid expansion in several new states, as well as more people being covered through employer-sponsored insurance as a result of low unemployment. The elimination of the individual mandate, lower outreach budgets and new insurance offerings like Short-Term Limited Duration Insurance have also no doubt played a role. Additionally, some subsidized consumers are now less likely to buy because, since lower plan prices mean lower subsidies, they have seen a net increase in subsidized premiums.
Despite these concerning federal marketplace numbers, enrollment on state-based marketplaces, whose numbers have yet to be released, has in recent years shown more positive trends due to longer open enrollment periods and more outreach and marketing, and hopefully those trends will continue.
Premiums: A big story heading into open enrollment was that average premiums dropped 4% (last year they increased 3%). This is about as good news as we could hope for. Unfortunately, it doesn’t apply to everyone and rate changes still vary significantly between states, with Colorado’s average premiums dropping 20.2% and Indiana increasing by 13.5%. If you are interested in state-by-state changes, we highly recommend taking a look at Charles Gaba’s blog—he compiles state data into more digestible changes and averages. Still, this price drop is a very good sign for individual market stability and a fortunate outcome after much concern about how the individual marketplaces might be disrupted by things like Short-Term Limited Duration Insurance and the elimination of the individual mandate.
Carrier participation: Another encouraging story for the individual marketplaces is that carrier participation rose, also for the second straight year. A few newer insurers like Bright and Oscar have taken aggressive growth strategies for 2020, entering five and six new states, respectively. Both of these companies have unique strategies they think will give them an edge: Bright likes to use narrow networks and Oscar uses lots of consumer-facing technology and analytics, and if successful these entries could foreshadow evolutions in the market and broader changes in plan design and offerings. The upstarts aren’t the only ones expanding, however; Cigna, Anthem, Molina and others are also offering products in new states.
These entries are great news for consumers, who have more health plan options and are less likely to live in a one-carrier area as a result. In 2019, 37% of counties featured only one insurer. In 2020, this number dropped way down to 25%, leading to both lower prices and more options for consumers. It bodes well that insurers seem to finally have good understanding of the health of their populations and are optimistic that they can be successful, even without monopoly control.
That said, if enrollment is lower than anticipated in 2020, these numbers will be a cause for concern for insurers, who may be regretting and, next year, ultimately reversing their premium decreases, particularly if lots of healthy enrollees drop their coverage. We’ll be keeping a close eye on rate requests this spring to see how insurers react, especially if this enrollment trend continues.
Texas v. Azar: In the ongoing court battle over the Affordable Care Act, the case of Texas v. Azar has been looming over the open enrollment period. This lawsuit is currently being decided in the circuit court and, according to director of the Center on Health Insurance Reforms at Georgetown University Sabrina Corlette, “If that decision comes out before or during open enrollment, it could lead to a lot of consumer confusion about the security of their coverage and may actually discourage people from enrolling.” Despite the potential confusion, Secretary of Health and Human Services Alex Azar has said that open enrollment will continue, even if the circuit court finds the ACA unconstitutional.
After a decision is made in the circuit court, the case would not end up in the Supreme Court until next summer or fall, if the court decides to take it on. In spite of the political and legal turmoil, most legal experts believe the ACA will survive this lawsuit.