On December 20, 2019, the Centers for Medicare and Medicaid Services (CMS) released its week seven open enrollment snapshot for the 2020 open enrollment period. Slightly more than 8.3 million consumers selected a plan in the 38 states that use HealthCare.gov. This is down by about 2 percent relative to last year. Separately, CMS released a proposed rate review timeline and draft actuarial value (AV) calculator and methodology, both for the 2021 plan year. CMS is accepting comments on these guidance documents through January 2020; both are relatively similar to last year.
HealthCare.gov Enrollment Remains Stable, Declines Only Slightly
On December 20, the Centers for Medicare and Medicaid Services (CMS) released its week seven open enrollment snapshot for the 2020 open enrollment period. Overall, just over 8.3 million consumers selected a plan in the 38 states that use HealthCare.gov. Of these, about 2 million were new consumers and about 6.2 million were renewing their coverage from last year.
CMS’s data accounts for a 36-hour extension of the 2020 open enrollment period. Following reports of technical difficulties on December 15 (when website traffic is often at its highest), CMS announced a brief extension from 3pm ET on December 16th to 3am ET on December 18th. Under the Obama administration, CMS repeatedly extended the December open enrollment deadline, but similar extensions have not been allowed by the Trump administration until this year. (States with their own marketplaces also announced extensions even though many of these states have final enrollment deadlines later in December or January.)
Despite these technical issues, overall enrollment through HealthCare.gov remained stable and is only down by 2 percent relative to 2019 (when about 8.4 million people enrolled through HealthCare.gov). Enrollment declined only slightly even with one fewer state using HealthCare.gov (Nevada transitioned from HealthCare.gov to its own state-based marketplace for 2020) and with two states (Maine and Virginia) expanding their Medicaid programs. (The individual market generally contracts after a state expands its Medicaid program as individuals whose income is between 100 percent and 138 percent of the federal poverty level migrate from marketplace coverage to the Medicaid program.) These policy changes were expected to reduce the number of people purchasing coverage through HealthCare.gov by about 110,000 people in 2020. CMS estimated that Medicaid expansion in Maine alone reduced enrollment by about 12,000 people. When adjusted for the policy changes in these three states, enrollment through HealthCare.gov is down just 0.4 percent relative to last year.
Enrollment may still tick up because CMS’s data does not yet account for consumers who 1) enrolled in coverage between midnight and 3pm ET on December 18; or 2) could still enroll after leaving their contact information at the call center due to high volume. This data also does not reflect enrollment in many state-based marketplaces whose deadlines are later in December or January. CMS plans to release an updated snapshot on HealthCare.gov enrollment during the second week of January and a more detailed final open enrollment report in March 2020.
The data show a consistent surge as the December 15 deadline neared. More than half—about 4.4 million people (or 53 percent)—of all consumers who selected a plan did so from December 8 to December 17. This included an additional 1 million new consumers relative to the prior week.
Enrollment of new consumers was up relative to last year. This is notable since new enrollment has declined significantly—by about 50 percent—since 2016. New enrollment is critical to maintaining the health of the overall risk pool because new enrollees tend to be younger and healthier.
The final week of enrollment numbers are also higher because this data includes individuals who were automatically renewed in 2020 coverage. Recent data suggests that more consumers retained their marketplace coverage in 2019 relative to previous years. Having more people enrolled in marketplace coverage at the end of the year likely contributed to stable enrollment as a result of auto-renewal.
Based on an analysis from Get America Covered, enrollment grew in 11 states and fell by more than 5 percent in 10 states. Enrollment grew the most in Florida (by 7 percent), Iowa (by nearly 11 percent), and Mississippi (by nearly 12 percent). As expected, enrollment fell the most in Maine and Virginia.
CMS did not include an estimate of how many consumers enrolled in coverage through HealthCare.gov versus the new enhanced direct enrollment (EDE) pathway. EDE enables a consumer to complete the entire marketplace enrollment process on the website of a third party, such as a web broker or an insurer, without ever having to visit or create an account with HealthCare.gov. Hopefully additional data on EDE enrollment will be forthcoming in a future enrollment report.
Yes, But Enrollment Should Be Higher
The final data show the stability of the marketplaces and continued demand for comprehensive individual market coverage. This was true even in a year with low awareness, no individual mandate penalty, the expansion of short-term and other non-ACA plans, and continued funding cuts for navigators and advertising. The fact that enrollment remained stable also cuts against one of the arguments in Texas v. United States over the impact of the individual mandate penalty: The past two open enrollment periods (since the mandate has not been in effect) make it clear that the penalty was not driving enrollment nearly as much as expected, and none of the dramatic negative consequences predicted by the district court in Texas have come to pass.
That said, enrollment—while technically “stable”—has declined every year since 2016 when about 9.6 million people enrolled in coverage through HealthCare.gov out of a total of almost 12.7 million consumers. This steady decline is troubling, especially because enrollment through state-based marketplaces has remained stable or increased since 2016. The differences in these trends are best illustrated in a chart from Charles Gaba available here.
Enrollment continues to decline when it should be increasing due to a variety of factors. CMS has touted lower average premiums and higher insurer competition relative to recent years. Twelve states have adopted a state-based reinsurance program to help reduce premiums for unsubsidized consumers. Silver loading has led to more generous premium tax credits for millions of subsidized consumers, including an estimated 4.7 million people (about 28 percent of Marketplace-eligible uninsured people) who are eligible for a plan with a $0 premium. In its press release, CMS points to a stronger economy as one reason for the stable numbers, but the uninsured rate is rising. Even as the poverty rate falls, more Americans are uninsured, including more children, workers, and higher-income people.
Given the anticipated strong showing in the state-based marketplace states, overall 2020 enrollment will presumably reach or surpass overall 2019 enrollment of 11.4 million individuals. However, HealthCare.gov’s downward trend could be easily reversed by, at a minimum, improving HealthCare.gov glitches and investing further in outreach and marketing.
Proposed Rate Review Timeline For 2021
Also on December 20, CMS released a proposed rate review timeline for the 2021 plan year. The rate submission deadlines apply to health insurers offering single risk pool coverage in the individual and small group markets for 2021. Single risk pool coverage includes qualified health plans (QHPs) sold through the marketplaces and non-QHPs sold outside of the marketplaces. CMS will accept comment on the proposed rate review timeline until January 20.
Consistent with prior guidance, insurers in states without an effective rate review program—Oklahoma, Texas, and Wyoming—would submit proposed rates for all single risk pool coverage to CMS by June 3. Insurers in states with an effective rate review program would submit their proposed rates to state regulators and CMS no later than July 22. These states could set an earlier deadline if they wish. Insurers that wish to offer QHPs through HealthCare.gov would submit their QHP rates to CMS by July 22.
On July 31, CMS would post the proposed rate filing justifications here for all single risk pool coverage. Rate information would be posted regardless of whether there is a rate increase or not. Insurers would make all changes to their proposed rate filings in the Health Insurance Oversight System Unified Rate Review module on July 22. Final rate filings would be posted on the same website no later than November 2. Ahead of that date, insurers would finalize QHP rate filings on August 19 and non-QHP rate filings on October 15. Insurers offering QHPs in states with their own marketplace would also submit final rate filings on October 15. States that want to make this information available at an earlier date would need to notify CMS in writing at least five business days prior to making the information public.
Draft Actuarial Value Calculator And Methodology for 2021
Also on December 20, CMS released its draft 2021 AV calculator and calculator methodology. This guidance is issued annually to help insurers ensure that their individual and small group plans have the appropriate AV of 60 percent, 70 percent, 80 percent, and 90 percent for bronze, silver, gold, and platinum plans, respectively. CMS will accept comments on the drafts until January 21.
First, CMS updated the AV calculator using claims data from 2017 that is projected forward to the 2021 plan year. CMS also adjusted demographic and plan-type weights to better reflect expected individual and small group enrollment in 2021 and capped enrollee spending at $1 million to reduce the effect of enrollees with very high spending. Second, the calculator reflects trend factors of 5.4 percent for medical costs and 8.7 percent for drug spending and an updated annual limit on cost-sharing of $8,700. Insurers will be required to comply with the annual limit outlined in the payment rule regardless of the projected estimates in the calculator. Third, CMS changed certain ranges in its continuance tables and added a column for “percent of enrollees,” with the goal of providing more accurate weighting.
Fourth, CMS updated its algorithm to more accurately reflect spending on services and items that are subject to the deductible and have a copay. This type of benefit design raises the total spending point at which an enrollee will meet their deductible. Prior versions of the AV calculator did not cap enrollee spending in the deductible phase at the plan’s maximum out-of-pocket limit, and CMS made a few changes to ensure that this plan design is better accounted for in the draft 2021 AV calculator.
Fifth, the draft 2021 AV calculator does not include an adjustment for “transitional” or “grandmothered” policies, even though prior versions of the calculator did. When CMS was initially developing the national claims data set to create the AV calculator, there were many more of these policies. CMS proposes to remove them from the draft 2021 AV calculator because there were very few transitional plans in the 2017 data set and no significant impact on the risk pool.
Consistent with last year, CMS considered, but did not propose, the use of EDGE data (instead of the current underlying claims data) to generate a standard population for 2021. CMS analyzed differences between the current AV calculator’s claims data and the available enrollee-level EDGE claims data from 2016 and 2017. To maintain stability, CMS will not use EDGE data to generate a standard population for 2021 but will continue to investigate ways to inform updates to the AV calculator in future years. CMS also considered, but did not incorporate, changes to the AV calculator based on utilization of specific services such as habilitative services, wellness incentives, urgent care, and preferred generic drugs.