Nov. 27—Enrollees in the new federally and state-run health insurance marketplace are qualifying for subsidies at a far lower rate than projected, according to a new analysis.
Avalere Health analyzed reported coverage from government-run marketplaces, or exchanges, created by the Affordable Care Acts and found only 30 percent qualified for federal premium subsidies as of Nov. 2.
That rate is far below the 84 percent of marketplace enrollees that Avalere projected will eventually qualify for financial assistance. It is also a far lower rate than the eight million out of nine million first-year marketplace enrollees that the Congressional Budget Office estimated would receive tax credits.
The Avalere analysis also found that the 14 state-operated exchanges (plus the District of Columbia) have sold subsidized coverage to only 23 percent of applicants, while the 36 federally operated marketplaces have qualified 34 percent of applicants for subsidies.
The ACA marketplaces offer subsidized coverage to all applicants with household incomes between 133 percent and 400 percent of the federal poverty level (FPL). In the 25 states that have not expanded Medicaid, the subsidies begin at 100 percent of the FPL.
Dan Mendelson, CEO of Avalere Health, said in a release that he expects a surge of subsidy-eligible applicants in the coming weeks as the deadline nears for plan enrollment before individual mandate penalties begin Jan. 1, 2014. A spokeswoman for the U.S. Department of Health and Human Services recently said enrollees will have until Dec. 23 to enroll in a marketplace plan and have coverage start by Jan. 1.
“As lower-income Americans determine that they have access to subsidized commercial insurance products, we can expect to see many enroll to save money,” Mendelson said.
The lowest subsidy rates occurred in the District of Columbia, Hawaii, Nevada, Oregon, Massachusetts, and California, which all reported selling no subsidized plans as of Nov. 2. Those states were all operating their own exchanges. The highest rate occurred in the Maryland-operated marketplace, where 75 percent of the insurance plans were subsidized.
The reasons for the low rate of subsidized enrollment are unclear, according to health policy experts. Possible causes range from a slow start by low-income applicants to the subsidy process creating another level of complications on a federal enrollment infrastructure fraught with widespread failures.
Health insurers are pushing to directly enroll applicants, but many have reported problems with the step in the enrollment process where they must connect with the federal website to check applicants’ eligibility for subsidies. States are able calculate subsidy eligibility on their own, but some, such as Oregon and Hawaii, have had massive technological failures in their own enrollment websites.
Publication Date: Wednesday, November 27, 2013