Center on Budget and Policy Priorities: Strong Demand Expected for Marketplace Open Enrollment, Despite Administration Actions
On
Nevertheless, the marketplaces have proven resilient in the face of
Administration Actions Will Depress Enrollment
After persistent efforts by congressional
Administration Actions Push Up 2019 Premiums
Premiums in 2019 are higher than they otherwise would be, due to a series of
Each of these actions exerted upward pressure on premiums in the individual market. Premiums in 2019 for silver "benchmark" plans are 16 percent higher on average as a result of the repeal of the mandate penalty, the loss of cost-sharing reduction payments, and the expansion of substandard plans, the
It's good news that many consumers live in areas that will see little to no premium growth in 2019. However, while tax credits shield the large majority of marketplace consumers from premium increases, as discussed below, that is not the case for people with middle to high incomes. For people who must pay the full cost on their own, high premiums could discourage them from enrolling.
Expansion of Substandard Health Plans Puts Consumers and Market Stability at Risk
In 2019, federal rule changes are expected to boost the number of people enrolled in short-term health plans and association health plans (AHPs). These types of health coverage do not meet ACA benefit standards or include the ACA's pre-existing condition protections, yet under the new federal rules, short-term plans and AHPs could become widespread alternatives to ACA plans in states that allow this to occur.
As of
Some consumers who would have enrolled in ACA marketplace plans could instead be lured to short-term plans or AHPs, particularly if they expect to be healthy or do not realize that the coverage is far less comprehensive than marketplace coverage. Companies offering short-term plans typically market them aggressively; in some cases they are explicitly targeting the ACA open enrollment period for a marketing push, even though there is no deadline to sign up for these plans.(7) This will likely increase consumers' confusion.
The looming expansion of substandard plans raises two major concerns. The first is that some consumers will enroll in a substandard plan and then get sick or injured, leaving them with high out-of-pocket costs or difficulty accessing coverage of needed services. The second is that the proliferation of such plans will cause the traditional insurance risk pool to deteriorate by siphoning off healthier enrollees, which would threaten the market's stability over time and leave individuals -- specifically, those ineligible for premium tax credits -- paying significantly higher premiums.
Repeal of Individual Mandate Will Raise Premiums and Depress Enrollment
The coming open enrollment period will be the first since the 2017 tax law repealed the individual mandate penalty. In 2019 alone, eliminating the penalty will lower Medicaid enrollment by 1 million people and nongroup insurance enrollment (on and off the marketplace) by 3 million, while raising the number of uninsured by 4 million, the
The individual mandate was intended to keep healthy people in the marketplace to maintain a stable risk pool. Without this nudge to enroll, premiums will rise. CBO estimated that premiums will be 10 percent higher in 2019 than they would be absent the change, as fewer healthy people will enroll in the regulated nongroup market and sicker people will remain.(11)Nearly 8 in 10 insurers surveyed said they increased 2019 rates due to repeal of the penalty, by an average of 5 percent.(12) This follows double-digit premium hikes in 2018 driven by concerns about non-enforcement of the mandate and the other regulatory uncertainty fueled by the
Outreach Cuts Will Mean Less Assistance and Lower Enrollment
The Administration has sharply cut marketplace outreach and enrollment assistance, making it less likely that new consumers will learn about the coverage and financial assistance available to them. Outreach and marketing have shrunk to
Similarly, CMS has cut funding for enrollment help by navigator programs by more than 80 percent since 2016, leaving only
Compounding the harm of the funding cuts, the Administration abandoned the practice of awarding multiyear grants, which was meant to promote continuity and expertise among navigator organizations, instead announcing single-year funding only seven weeks before open enrollment.(17) This left little time for awardees to set their budgets and hire and train enrollment workers, or for qualified applicants denied grants to replace that funding with money from other sources.
Proposed "Public Charge" Changes Could Raise Immigrants' Fears
The Administration recently proposed a rule that could frighten families that include immigrants from obtaining marketplace coverage for which they are eligible. If finalized, the
The proposed public charge rule is far from becoming final, and it specifies that changes related to benefit use in the immigration process would not begin until 60 days after the rule is finalized. This should provide some reassurance to families seeking to enroll in health coverage. Still, many people will likely be deterred, fearing that enrolling in health coverage could prevent them from realizing their families' immigration-related goals.
Efforts to Undermine ACA Have Created Consumer Confusion
Some people who need health coverage likely doubt the ACA is still law. A Government Accountability Office (GAO) report documenting the factors that likely affected 2018 enrollment cited consumer confusion about whether the ACA had been repealed and whether coverage was still available.(18)
Compounding consumer uneasiness, the Administration announced in June that it won't defend the ACA against a court challenge by 20 Republican-led states that seeks to invalidate the entire law.(21) In particular, the
The insurance landscape for 2019 will also leave consumers confused. As noted, a flood of new plans with substandard benefits will be marketed alongside more comprehensive plans during marketplace open enrollment. At the same time, there will be fewer impartial, trained experts to explain the differences and little time to do it: once again, open enrollment for states using HealthCare.gov will be only 45 days long (ending on
The shorter open enrollment period will leave consumers with fewer opportunities to hear about HealthCare.gov and less time to visit, shop for plans, and get questions answered. It will also deny them the option of waiting out the holiday season and signing up for coverage in January. Low- and moderate-income families experience especially high financial stress in December, which may discourage them from enrolling in coverage at that time of year, a study by Harvard and
Consumer Demand for Coverage Expected to Stay Strong
Despite the headwinds described above, marketplace coverage will remain attractive to consumers, for several reasons.
Most Marketplace Consumers Are Satisfied With Their Coverage
The starting point for open enrollment sign-ups is the roughly 10 million current marketplace consumers.(24) More than 80 percent of marketplace enrollees were satisfied with their coverage in 2017, similar to previous years, surveys show.(25) (See Figure 2.) Despite repeal of the individual mandate penalty, 90 percent of individual market enrollees (on and off marketplace) plan to re-enroll for 2019.(26)
Re-enrollment isn't appropriate for all consumers; some obtain job-based coverage, experience income changes that make them eligible for Medicaid, or otherwise find a new source of coverage. Nonetheless, in previous years, high satisfaction rates among marketplace consumers have translated into high re-enrollment rates. Last year, for example, nearly 5.5 million consumers came back to HealthCare.gov or their state marketplace and actively selected a plan, in addition to the nearly 2.9 million who were re-enrolled automatically.(27) Returning consumers made up 73 percent of all 2018 enrollment.
Additionally, high satisfaction rates mean that as the ACA marketplaces mature, a growing number of people have prior, often positive marketplace experience. They may be more likely to return to the marketplace as "new" consumers if their circumstances change again.
Insurer Participation Will Increase
In recent years, some insurers reduced participation in ACA marketplaces or left them entirely due to financial losses and the unpredictable policy environment. But in 2019, some insurers are newly entering the marketplaces, others that left in 2016 and 2017 are returning, and existing insurers are expanding the areas they serve. According to CMS, 23 more insurers will offer plans in 2019 than did so during the last open enrollment period, and only five states are expected to have a single insurer offering marketplace coverage, down from eight states in 2018.(28) This will increase some consumers' array of plan choices (on average, consumers will have 26 plans to choose from, up from 25 in 2018), which could help them find a plan with features -- such as a provider network and deductible level -- that meet their needs. Greater competition among insurers also could help reduce premiums for people who don't qualify for subsidies.
In addition, if participating insurers ramp up their marketing activities and enrollment assistance, this could boost awareness about marketplace plan options, ACA subsidies, and the benefits of adequate coverage.
Most Marketplace Consumers Are Protected From Rate Increases
Under the ACA, marketplace consumers with incomes below 400 percent of the poverty level (about
The large majority of both current and potential marketplace enrollees are eligible for a premium tax credit. Eighty-seven percent of 2018 marketplace enrollees qualified for a credit.(31) Likewise, the
See chart here (https://www.cbpp.org/research/health/strong-demand-expected-for-marketplace-open-enrollment-despite-administration).
Many Consumers Can Afford More Generous Plans
Many consumers eligible for a premium tax credit will be able to find good bargains for 2019 coverage, similar to 2018. A large share of last year's premium increases resulted from the
Consumers' premium tax credits rise to match increases in silver plan premiums, regardless of whether they purchase a silver plan or a different coverage tier. As a result, enrollees in 2018 coverage had a larger credit to apply to a marketplace plan; many found particularly good bargains among gold plans (which have higher premiums but significantly lower deductibles) and bronze plans (which have hefty deductibles but modest premiums), where the 2018 premium increases were much smaller than among silver plans. In 2018, the lowest-cost gold plan cost less than the lowest-cost silver plan in nearly 500 counties nationwide, and more than half of people who were uninsured and eligible for marketplace coverage could have obtained a bronze plan for zero net premium.(35)
For consumers eligible for premium tax credits, silver loading will result in similarly good deals for bronze and gold plans in 2019, despite a 3 percent drop in the average monthly tax credit.(36) Overall, HHS estimates that 79 percent of HealthCare.gov consumers can find a 2019 plan with a premium of less than
In addition to creating bargains among gold and bronze plans, higher silver prices made more families eligible for premium tax credits (since eligibility is based on benchmark premiums as a specified share of household income). As a result, in 2018, enrollment among people with income between 301 and 400 percent of poverty was up 10 percent in states that use HealthCare.gov.(38) With premiums relatively unchanged in many areas, the same trend should continue for 2019.
Even consumers who are ineligible for premium tax credits might benefit. More than half of unsubsidized consumers enroll in bronze or gold plans,(39) and because premium increases will be smaller for those tiers than for silver plans, unsubsidized consumers may find better deals than they expect in those tiers. (Most will still face significantly higher premiums than they would have if not for the Administration's actions, however.) In some parts of the country, gold plans will cost consumers about the same as, or less than, silver plans, allowing unsubsidized consumers to reduce their premium and lower their deductible by switching from silver to gold. Likewise, bronze plans may offer a better deal than silver plans: while they still have higher deductibles, the premium discount they offer is substantial, as it was in 2018. The lowest-premium plan costs 29 percent less than the benchmark silver plan in 2019 on average across HealthCare.gov states -- identical to last year.(40)
Footnotes:
(1)
(2) See "Sabotage Watch: Tracking Efforts to Undermine the ACA," Center on Budget and Policy Priorities, updated
(3)
(4)
(5)
(6) See
(7)
(8)
(9)
(10)
(11)
(12)
(13) For a general discussion, see
(14)
(15) Covered California, "Fiscal Year 2018-2019 Budget,"
(16)
(17)
(18)
(19)
(20) See, for example,
(21) Letter from the
(22) Six of the 12 states that operate their own enrollment platform (
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)
(37)Ibid.
(38)
(39)
(40)
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