As we near the end of this, the 6th Open Enrollment period since the ACA was implemented; all indicators are that the overall enrollment numbers are down. While it is easy to point to the most common reasons we might hear is the cause, a deeper dive into all factors surrounding enrollment is essential to understanding all of the various drivers of the dismal enrollment numbers.
WHAT WE KNOW & WHAT WE HEAR:
Depending on your perception of the ACA, it’s value and purpose (which also may influence which media outlet from which one tends to get their information), many are quick to point to the Trump administration’s continued attempts to dismantle the law and/or at the very least inhibit its success. No question that steps taken by the administration have had an impact on enrollment this year but to what level, we can only speculate. Here’s what we do know:
- Reduced funding for education, navigators and marketing – under the Obama administration, funding was allocated to various aspects of promoting and influencing enrollment in the marketplace; however, under the Trump administration this funding has been significantly reduced (in some cases up to 90%). During the Obama years, HHS allocated $62.5m in funding for navigators & groups that helped people enroll. Today, under a Trump HHS, funding has been cut to $10 million.
Noticed any TV ads this year promoting the Federal Marketplace and/or the Open Enrollment season? Not likely as funding for advertising has been reduced as well from $100 million to approximately $10 million.
- No Penalty – while a Republican led congress was unsuccessful in completely eliminating the Affordable Care Act, they were able to get the individual mandate penalty reduced to $0.00. As a result, consumers fearing the potential tax, fine or penalty (whichever term you subscribe) have the ability to weigh all options in making a decision and some just might choose to go without.
- Short Term Plan Options – prior to the ACA, various insurance companies offered what became known as ‘mini-med’ plans. These plans offered limited coverage with annual maximum benefits, often times excluding things like maternity and in-patient care. As a result of these limitations, mini-med plans were significantly less expensive (for obvious reasons) but became all but extinct following thee ACA. They did re-emerge following the ACA under a new name - “Short Term” plans. This new identifier was given as under the Obama Administration, these types of plans were limited in their availability, only offering coverage for up to 3 months. Under the Trump Administration, the availability of these plans has grown significantly as regulations have been loosened as has their shelf-life. Under current regulatory structure, these plans are now able to be in place for up to 12 months with the ability to renew them annually up to three years.
OTHER FACTORS TO CONSIDER
While it’s easy to point figures and assume that a reduction in enrollment is a negative, beyond the regular talking points we’ve just outlined which certainly are playing a role, there are also other factors that may be having a direct impact on the overall enrollment numbers this year – and there might be some positives as well. If we want to be ‘fair and balanced’ let’s look at all sides of the story, not just the ones that fit a political narrative. Beyond the previously mentioned talking points, here is what we are seeing is also impacting the decline in enrollment:
- The Economy is Up: many Americans who have previously enrolled in ACA market options were receiving access to government assisted subsidies which are based on minimum household income. The economy is up and more and more people have jobs, thus incomes are up. When incomes go up, the ability to qualify for government assistance goes down. The unintended consequence of a family making $60K a year (where they might have only been making $35 or $40K per year in the past may be that they don’t get government assistance for healthcare. Families are left to decide whether or not to now pay the enormous insurance premiums or drop coverage altogether – in many cases they simply choose not to enroll in health insurance at all. In addition to the impact of joblessness, when people get jobs, many of those same people get access to employer sponsored healthcare. Per the ACA, if someone has access to an employer sponsored plan that meets both affordability and value requirements, they no longer qualify for subsides. Based on our findings employer sponsored enrollment is up – likely the increase in the employer market enrollment is having an impact on the individual market as well.
- Health Insurance Premiums Continue to Rise: year by year, health insurance premiums continue to increase faster than the economy grows. As a result, more and more Americans can no longer afford it, plain and simple. Until we do something to curb the cost of healthcare, health insurance (which is a derivative of the cost of health care) will continue to rise, and more and more Americans and families (especially those that do not qualify for subsidies or government assistance) will have to make the difficult decision whether or not to pay the increased premiums.
- Marketplace Insurance Options are Bad: even if a family can afford health insurance without government assistance, because of how the market has been impacted by the ACA, the options within the individual market are bad. Americans are looking at what they can get for the price and are often making the decision that it’s just not worth it. Across the country, health insurance options within the marketplace have continued to dwindle with some geographic markets only having one or two options at best. Of those options, the costs are often still high with very limited coverage (i.e. HMO’s or limited access). Many Americans, regardless of their income, are living paycheck to paycheck. For middle class Americans who make too much to get assistance, but not enough to get out of the paycheck to paycheck life, when they look at market premiums around $20K per year for coverage that quick frankly stinks, many are simply choosing to go without and roll the dice.
- The fastest growing states didn’t expand Medicaid: across the U.S. Americans are getting jobs (this is what happens in a booming economy). That said, some states are seeing faster growth than others. States like Utah and Nevada for example are the two fastest growing states in the U.S. Growth means that people are moving into these states because jobs are available. Neither Utah nor Nevada took the Medicaid expansion offered via the ACA. Because Medicaid eligibility varies from state to state, if a family had access to subsidies and/or government assistance in a state that DID take the expansion, but moves to a state that did not, they would lose that assistance and/or coverage (if Medicaid). This is the result of a good economy, and many families are opting to work and go where the jobs are rather than stay just because of government assistance in healthcare.
WHAT CONSUMERS SHOULD KNOW
Regardless of the reasons why enrollment is down, they key thing for consumers is to be just that, CONSUMERS. Like every other aspect of your own personal economic life, consider the options – this year there are some – options that is. Here are some of those things that might be available to you:
· State & Federal Exchanges – average monthly premiums this year are higher than in years past (just over 3% on average); however, some plans – SILVER OPTIONS – are actually seeing a slight reduction over years past. Regardless, Marketplace options are still available as are subsidies/assistance based on household income.
· Short Term Plans – while not new to the marketplace, Short Term plans are more readily available. What is new is how long you can enroll in them. Prior to new regulations, Short Term plans were only available for up to 90 days, but now under the Trump Administration, these plans are available for up to 12 months, with the option to renew them each year for up to three years.
· Association Health Plans (AHP's) – earlier this year the DOL released new rules surrounding AHP’s following an Executive Order signed by President Trump which, in effect, was meant to expand access of AHP’s by loosening some of the rules imposed by the ACA. While not as available as some proponents would like, consumers (especially sole proprietors) should look into options that may be available to them based on possible memberships in various associations.
· Employer Plans – as mentioned earlier, the job market is good and most employers offer as a condition of employment, access to health insurance. Take a look and evaluate what options may be available to you. Don’t have options from your employer? Consider looking for an employer that DOES offer something. In a low unemployment market, jobs become available for those that are willing to earn them – evaluate health insurance as part of the overall compensation package and weigh your options.
· Nothing – effective 1/1/2019, the penalty associated with the individual mandate portion of the ACA has been reduced to $0.00. As a result, consumer can choose to simply ‘go without coverage’ and not fear fines imposed by the government.
The Devil is in the Details: As with everything, consumers should be aware of what is (and isn’t) covered in any plan they consider. While the price tag on Short Term plans might be attractive to many consumers (especially those who are healthy), gambling on the future is risky (especially when it comes to one’s health. If consumers choose to pay less and enroll in a Short Term plan, those plans do NOT have to meet the basic requirements of the ACA and may not cover many major conditions and/or may have an annual maximum of benefits available. If consumers find themselves in one of these plans, and ultimately need something that provides a higher level of benefit, they will have to wait until the next annual open enrollment period to get a ACA qualified policy.
There is no Penalty: as mentioned earlier, the individual penalty for NOT enrolling in qualified coverage has been reduced to $0.00. That said, it’s important to note that the individual mandate portion of the ACA is still very much intact, but the penalty is $0.00. Consumers should be aware that they are free from being penalized for now, because the ACA (and the mandate) is still the law, future Administrations and Congress’ could reinstate the penalty at a later time. ALE’s (Applicable Large Employers) should also be aware that the penalty for NOT providing qualified and affordable coverage to their employees is also still very much in effect.
Going without is not the best option: as stated earlier, while there is no penalty for NOT enrolling in a qualified plan, there still is the possibility of significant financial burden if one gets sick. Because of the annual open enrollment structure imposed by the ACA, persons who choose to ‘roll the dice’ are exposing themselves to possible financial peril if they choose to forgo any coverage and take their chances.
In the end, not all news that appears negative on the surface is actually negative. While a strong individual market is necessary for the continued improvement and stability of all insurance markets, strength isn’t always measured in enrollment. Roughly 80% of those that have historically accessed ACA market options have done so by way of getting a subsidy. When jobs are up, and income as well, subsidies often go down. Combine that with the increased availability of employer plans (due to the lack of joblessness) along with access to non-market options, and you have a recipe for a reduction in enrollment. While we all should be glad that the economy is doing well and sometimes a reduced enrollment in plans that are largely accessed by utilizing government assistance is a sign of how good things may be for some, there are still those that need access to quality plans and affordable prices. There are also those that continue to need assistance from Uncle Sam. They key is to know your options – recognize what you might need and the risks you may be taking by doing nothing. Do your due diligence and spend some time looking at all the options.