Final open enrollment for ACA health insurance exchanges under President Obama begins: What do the numbers tell us?

The open enrollment period for coverage for 2017 through the health insurance Exchanges created under the Affordable Care Act (ACA) begins today, Tuesday, November 1, 2016. This is the fourth open enrollment period since the Exchanges opened in 2014 and the final open enrollment period of President Obama’s Administration. The open enrollment period will close on January 31, 2017.

Sylvia Mathews Burrell, Secretary of the Department of Health and Human Services (HHS), on October 19, 2016, announced that the Administration expects 13.8 million people to enroll in coverage for 2017 during the open enrollment period. Following the 2012 Supreme Court decision that upheld the ACA’s individual mandate and made it easier for states to opt out of the ACA’s Medicaid expansion, the non-partisan Congressional Budget Office (CBO) projected that 25 million people would be enrolled in coverage through the Exchanges in 2017.1 Notably, enrollment in employer-sponsored coverage has not decreased as CBO projected in 2012, and Medicaid enrollment has exceeded the 2012 CBO projections.

The open enrollment period begins amid news of national and regional health insurers reducing participation in Exchanges following ongoing financial losses. Overall, for the states using the HealthCare.gov Exchange platform and state-based Exchanges for which data are available, Exchanges experienced a net decrease of 73 in the number of issuers participating in Exchanges from 2016 to 2017. This figure reflects the exit of 89 issuers from the Exchanges from 2016 to 2017 and 16 issuers joining the Exchanges over the same period.2 By comparison, Exchanges using HealthCare.gov experienced a net increase of five issuers from 2015 to 2016, reflecting the exit of 35 issuers and 40 issuers joining the Exchanges. For 2014 to 2015, Exchanges using HealthCare.gov experienced a net increase of 44 issuers participating in the in the Exchanges.3 Importantly, each of these snapshots of issuer participation in states using HealthCare.gov reflects a different sample size because more states have used the HealthCare.gov platform each year.

Premium increases in the Exchanges also garnered headlines ahead of the beginning of the open enrollment period. For the 39 states using Healthcare.gov for 2017, premiums for the second-lowest-cost silver plan increased by 25% on average. HHS cites the increase for the second-lowest-cost silver plan because this is the benchmark plan for premium assistance tax credits in Exchanges. Premium increases from 2014 to 2015 were 2% on average, and increases from 2015 to 2016 were 7% on average.4

In releasing the premium information for the 2017 benefit year, HHS underscored that individuals who receive tax credits for Exchange coverage will generally be shielded from the full force of the premium increases because premium assistance tax credits will increase so that individuals’ contributions to premiums do not exceed certain percentages of their household income, adjusted on a sliding scale as household income increases. Individuals who do not receive premium assistance tax credits and purchase coverage in Exchanges will face the full premium increases. HHS also said that many individuals purchasing coverage via Exchanges could find lower-premium plans if they enrolled in coverage different than what they had for 2016.

In addition, 2017 will be the first benefit year for which the temporary risk corridor program will not apply, potentially contributing to the increase in premiums. Centers for Medicare & Medicaid Services (CMS) on September 15, 2016, announced that based on the agency’s preliminary analysis, all risk corridor collections for 2015 would be used toward remaining 2014 risk corridor payments. CMS said that no funds were expected to be available at that time for 2015 benefit year risk corridor payments. Collections for 2016 will be used toward remaining 2014 benefit year risk corridor payments, then for 2015 benefit year risk corridor payments, and then for 2016 benefit year risk payments. It remains unclear how HHS will make payments for the 2016 benefit year if there is a funding shortfall, and a number of plans have sued in federal court seeking risk corridor payments that have not been made to date.5 The Administration has opened the door to potential settlement of the suit, but it remains to be seen whether Congress would seek to block any such settlement when Congress reconvenes after the election.

In an effort to shore up health insurers’ participation in the Exchanges, HHS on September 6, 2016, published its Proposed Notice of Benefit and Payment Parameters, including  changes to the risk adjustment program and greater limitations on the use of special enrollment periods. Health insurers generally supported the proposals in their comments to HHS. Stakeholders are waiting for a final Notice of Benefit and Payment Parameters to see which proposals HHS will adopt for 2017.

With a similar eye toward boosting Exchanges, Secretary Burwell and Acting CMS Administrator Andy Slavitt, at a forum in October 2016, encouraged insurers participating in the Exchanges to work to improve effectuation rates and consumer retention. At the forum, an HHS official said the median effectuation rate for Exchange coverage was 85% but noted that there was “significant variation” among issuers.

Sustainability of the ACA Exchanges is poised to figure prominently on the health care agenda of the next Administration and Congress. The outcome of the presidential and congressional elections will have significant implications for the future of the Exchanges and the ACA writ large. Importantly, immediate regulatory action will be difficult regardless of the outcome of the elections, given the time it will take to nominate and confirm new leaders.

Authors:

Anne Phelps
Principal | Deloitte Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Amy Kroll
Principal | Deloitte Advisory
Health Plans Sector Leader
Deloitte & Touche LLP

Daniel Esquibel
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

Heather Hagan
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

1“Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision,” Congressional Budget Office, July 2012.
2“Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace,” HHS ASPE Research Brief, October 24, 2016.
3“Health Plan Choice and Premiums in the 2016 Health Insurance Marketplace,” HHS ASPE Research Brief, October 30, 2015.
4“Health Plan Choice and Premiums in the 2017 Health Insurance Marketplace,” HHS ASPE Research Brief, October 24, 2016.
5“Risk Corridor Payments for 2015,” Centers for Medicare and Medicaid Services, September 9, 2016.

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