ACA Enrollment

Thank the Lord for tariffs and the Fed — if only because they are something to talk about that is not the Affordable Care Act (ACA). Lately most of the talk has not really been about the ACA, however. It was instead the political theater of the left attacking conservatives for their putative decision to end guaranteed coverage for pre-existing conditions (note to reader: not quite, but that is a tale for another day) or what would happen if the Supreme Court ultimately upheld the decision of Texas U.S. District Judge Reed O’Connor to overturn the ACA nationwide.

The ACA, however, continues to operate. But how well? One metric is to focus on the individual market, and particularly the premiums charged to enrollees. As AAF has previously noted, the premiums have largely stabilized, showing only modest upward pressures for 2019. The first indicator is “benchmark plans” — the second-lowest-cost Silver plan that serves as the index for the ACA’s premium subsidies. Because rankings change, the same plan is not always the benchmark plan. Indeed, only 15 percent of all rating areas still have the same benchmark plan as 2017. But those benchmark plans from 2018 that are still offered in 2019, even if not as the benchmark, rose by an average of 5 percent—the lowest average increase since the ACA marketplaces began operating. 

A slightly different metric is the change in the benchmark itself; the average 2019 benchmark plan premium is 1 percent higher than the average 2018 benchmark plan — a modest increase. Another insight is the increases facing people who are not in the Silver plans. In 2019, the lowest-cost Bronze premium increased by an average of 1 percent, while the lowest-cost Gold premium increased on average by about 14 percent.

Good performance is in the eye of the beholder, but the combination of additional insurers entering the market and modest premium increases is promising. However, there is a second side of the market — demand — and yesterday the Department of Health and Human Services (HHS) released the enrollment “snapshot" through December 15 — the end of the enrollment period. (These figures cover only the federal exchange; state-run marketplaces are excluded.) While there will be some additional adjustments due to late reporting, the basic picture is in: open enrollment ended with approximately 8.5 million people enrolled, down about 4 percent from the 8.8 million people last year. This is not a surprise. Two weeks ago, AAF foreshadowed the lower enrollment. The next question is: Why?

Higher premiums might seem like the answer, but remember that subsidies rise with the cost of the benchmark plans. This seems unlikely to be the reason. There is as well the demise of the individual mandate penalty, greater employment (and thus employer insurance), or other options created by Trump Administration initiatives around association health plans and short-term limited-duration plans, aimed at providing cheaper alternatives to ACA-compliant coverage. 

Or, it could be advertising. As Chris Holt wrote at the time: “The fifth factor that comes to mind, and the one that may well be having the largest effect, is the Trump Administration’s spending reduction for advertising and navigators, who help people through the ACA signup process. ACA enrollment crested in 2016, and has been declining ever so slightly since—as has been federal spending on advertising and navigators."

The ACA remains a political football with sweeping implications. But the individual markets have stabilized in enrollment and premiums and the insurance exchanges themselves are now a fixture of the health care landscape. The larger issues would seem to be improving their performance; not necessarily repealing, overturning, or replacing them.