The individual mandate penalty may be too low and exchange coverage may be too expensive to incentivize enrollment in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) marketplaces, according to an analysis of exchange enrollment figures by the Council for Affordable Health Coverage (CAHC) and Avalere Health. The analysis was conducted to explain why ACA exchange enrollment projections for 2016 predict that only 10 million individuals will enroll in exchange plans in 2016 when the Congressional Budget Office (CBO) projected in 2010 that 21 million individuals would enroll in the exchanges by 2016. The analysis concludes by suggesting that privatization of exchange functionality could be the solution to increased enrollment.
Attrition. To identify reasons for the decline, the analysis examined enrollment trends and drew comparisons between current enrollment demographics and expectations. The CAHC pointed to attrition—the fallout caused by individuals who select a plan but do not pay their first month’s premium or do not stay enrolled throughout the whole year—as a key factor for low enrollment. Because of attrition, enrollment at the end of the year is about 20 percent lower than at the close of the annual open enrollment period. The analysis suggests that, in addition to cost factors, attrition is sometimes caused by individuals obtaining other coverage—like Medicaid and Medicare—or moving out of state.
Demographics. Some of the low enrollment numbers may be attributable to demographic factors. For example, Hispanics and higher income individuals are underrepresented in exchange enrolment. While individuals with incomes between 100 and 400 percent of the federal poverty level (FPL) are eligible for exchange coverage, individuals with incomes at 100 to 150 percent of the FPL represent 82 percent of marketplace enrollees. In order for the exchanges to remain sustainable, the CAHC suggested that exchanges will need to start attracting individuals across income levels. The analysis explained that, under the status quo, higher income individuals lack the same incentives to enroll as individuals with lower incomes who receive insurance subsidies. Additional disparities arise over age. Young enrollees are unrepresented on the exchanges. For example, while individuals 55 and older comprise only 16 percent of the target exchange population, they account for 26 percent of exchange enrollees. In order to grow and balance exchange enrollment, the CAHC recommended that exchanges increase efforts to attract younger enrollees.
Additional reforms. According to the CAHC, approximately 33 million individuals in the U.S. remain uninsured, despite the fact that 11 million of those individuals may be eligible to enroll in exchange coverage. Additionally, many of those 11 million individuals may qualify for subsidies. To reach out to those potential exchange enrollees, the CAHC recommended changes to exchange functionality, including greater reliance on the private sector. Specifically, the CAHC recommended exchanges: (1) employ private shopping websites, (2) develop a subsidy process that uses a "PayPal-like" icon that would appear on private shopping websites to indicate an individual’s eligibility for subsides, and (3) allow small employers to purchase coverage through private shopping websites. Additionally, the CAHC recommended that states change certification processes to certify that there is at least one website in each state that shows the pricing for of all insurers offering individual and small group coverage and offers the "PayPal-like" system for subsidies.
Companies: Council for Affordable Health Coverage; Avalere Health
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