It’s unclear how 2018 premiums will shake out outside of the ACA marketplaces—where more than one-third of all individual-insurance policyholders buy their coverage and where enrollment data is elusive.

Nov. 14—An early surge in individual-insurance plan selections may be linked to increased affordability, which may have made moot federal reductions in marketing and outreach.

Early sign-ups for marketplace coverage under the Affordable Care Act (ACA) surged at the fastest rate of any of the five open-enrollment periods since the marketplaces began operating in 2014. The surge came despite deep cuts in outreach and enrollment assistance by the Trump administration and may have stemmed from the fact that suddenly plans were cheaper.

In the first 11 days of open enrollment—which runs from Nov. 1 to Dec. 15—1,478,250 people selected plans through one of the federal government-run marketplaces (, according to federal data.

“Average daily signups among new consumers are up 53 percent over last year,” Larry Leavitt, a spokesman for the Kaiser Family Foundation, said in a tweet.

New Affordability

The enrollment surge comes amid a new level of affordability for ACA plans. Although the national unsubsidized premium for the lowest-cost Silver plan is increasing by an average of 32 percent, the end of out-of-pocket subsidies and insurers’ shifting of that cost to premiums has led subsidies for premiums to increase significantly.

Among the practical effects, according to a Kaiser Family Foundation analysis, is a steep drop in the cost of Bronze plans for those receiving premium subsidies. For a 40-year-old earning $25,000, for example, subsidies cover the entire the premium for the lowest-cost Bronze plan in 1,679 counties.

“For consumers who receive premium tax credits, the amounts that they will have to pay will often be lower in 2018,” Kaiser analysts wrote.

That improved affordability could help insurers.

“If you have a product that is entirely subsidized, you’re not going to have adverse selection and that’s probably going to be a stable insurance risk pool,” Matthew Borsch, managing director for BMO Capital Markets, said. 

The improving affordability—and early enrollment surge—followed the Trump administration’s slashing of the outreach budget for open enrollment from the $100 million spent by the Obama administration last year to $10 million this year. The administration also cut funding for navigators, who help people sign up for coverage, from about $63 million last year to $36 million. Many ACA supporters complained that such cuts would doom the marketplaces to steep enrollment losses this year. For instance, the high-profile tracking site projected that the Trump administration’s actions would cut 2018 enrollments by 2.2 million.

Some insurers have said in recent interviews that they expected only small decreases in their volume of ACA enrollees in 2018. But many insurers told Borsch leading up to open enrollment that they expected big enrollments drops—without quantifying the extent of the expected drop.

“Maybe some of them are going to start to retroactively revise their projections,” Borsch said laughing about the latest enrollment figures.

Some industry analysts have long complained that ACA rules require marketplace plans to be priced so high that enrollees cannot afford them, so no amount of marketing would improve the situation. The high prices especially have impacted young adult enrollees, said Kurt Giesa, a partner for Oliver Wyman, due to the ACA’s 3-to-1 age-rating band. Such perceived lack of affordability was repeatedly linked in surveys to the fact that enrollment by so-called young invincibles never has exceeded 28 percent of total enrollees—far below what is needed to achieve actuarial soundness.

The improved affordability comes amid new data that found the rate of underinsurance among all individual-market enrollees worsened from 36 percent in 2014 to 44 percent in 2016.

Off-Exchange Impacts

It’s unclear how the 2018 premiums will shake out outside of the ACA marketplaces, where more than one-third of all individual-insurance policyholders buy their coverage. Such unsubsidized coverage continues to have appeal because insurance companies can offer different health plan options off-exchange versus on-exchange, said Kev Coleman, head of research and data for HealthPocket.

“For example, an insurance company might have an off-exchange plan that has a wider doctor network [for a higher premium],” Coleman said in an interview. “If a consumer is deeply committed to keeping his or her doctors and hospital, then there may be circumstances where they would have to go off-exchange to find them in-network. Since on-exchange plans have a significant use of narrow networks and often won’t cover non-emergency care out of network, this can affect consumer shopping behavior.”

Although the unsubsidized have borne the full burden of ACA premiums that have increased by an average of more than 100 percent since the marketplaces opened, according to an analysis by the U.S. Department of Health and Human Services, others expect that many such plans will be more affordable this year.

For instance, after the end of cost-sharing reduction payments, many states limited premium spikes off-exchange to Silver plans only, said Jessica Altman, acting insurance commissioner of Pennsylvania. The ACA requires insurers sell the same policies off-exchange that they sell on the ACA marketplaces. However, insurers may sell off-exchange versions without corresponding ACA marketplace plans.

Altman urged off-exchange shoppers to compare options with those available through insurance brokers and directly through a variety of insurers.

Another option coming for off-exchange enrollees is the Trump administration’s plan to lift three-month restrictions on the duration of short-term policies after those limits were imposed midway through 2016, said Avik Roy, president of the Foundation for Research on Equal Opportunity.

However, insurers have warned that such plans—which are rarely bought—could pull many enrollees out of more-expansive plans in or out of the ACA marketplaces.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, November 14, 2017