Behind the Numbers: Enrollment in the ACA's Insurance Exchanges

by Santosh Rao, Associate Editor

Topics: Health Care Reform, Exchanges

Thursday, March 20, 2014 -- With fewer than two weeks left in the six-month open enrollment period for the Affordable Care Act's insurance exchanges, expectations are high that the Obama administration will enroll least six million U.S. residents in coverage through the exchanges by March 31.

But does the final enrollment number by that date matter?

Analysts have said the outcome of the first open enrollment period is important because it could set precedents for subsequent open enrollment periods and the long-term success of the exchanges.

For example, insurers will look at the data and decide whether to offer more or fewer plans in the exchanges. In addition, the data will influence premiums and provider payment rates.

Meanwhile, providers might reconsider whether to participate in exchange plans, and consumers who are in the market for coverage might decide to enroll in an exchange plan or seek other coverage options.

From Seven Million to Six Million

The enrollment goal for the first open enrollment period wasn't always six million. In May 2013, the Congressional Budget Office officially projected that as many as 24 million people would be enrolled in the federal or state exchanges by 2023, with seven million enrollees by March 31, 2014.

The administration appeared to endorse CBO's projection. In September 2013, CMS Administrator Marilyn Tavenner circulated an internal memo with projected monthly enrollment targets for the exchanges during the six-month open enrollment period. It stated (screenshot below) that slightly more than seven million people would enroll in the exchanges by March 31, 2014. HHS Secretary Kathleen Sebelius was among the recipients of the memo.

Enrollment Targets

However, it seemed that Sebelius already had anticipated seven million enrollees in the exchanges. During a press briefing in June 2013, she said, "We're hopeful that seven million is a realistic target ... we're going to be driving our efforts toward that kind of enrollment effort." She cited that figure three months later during an NBC News interview when she said that "success looks like at least seven million people having signed up by the end of March 2014."

Enrollment Falls Short of Targets

After the exchanges opened for enrollment in October 2013, HHS' monthly enrollment data showed that actual monthly enrollment rates were falling short of projections. About 106,185 people had enrolled in the federal or state exchanges by Oct. 31, 2013 and about 2.1 million had enrolled by Dec. 28, 2013.

In early February 2014, CBO lowered its total exchange enrollment projection from seven million to six million, citing the troubled rollout of the federal health insurance exchange website in fall 2013. In mid-February, Vice President Biden said that enrollment "may not get to seven million, but if we get to five or six million that's a hell of a start."

A few days later, Sebelius echoed Biden's comment in a HuffPostLive interview. She said, "First of all, seven million was not the administration. That was a [CBO] prediction ... I'm not quite sure where they even got their number," adding that "[Biden] has looked and said it may be closer to five to six." In March 2014, HHS reported that about 4.2 million had enrolled in the exchanges by Feb. 28, 2014 and at least five million had enrolled by March 16, 2014.

However, Avalere Health projected last week that total enrollment in the exchanges likely will fall short of six million, estimating that only about 1.2 million more people will enroll by March 31 for a total of about 5.4 million.

Admin Steps Up Outreach, But Will It Be Enough?

Despite data showing that monthly enrollment rates are lower than expected, the Obama administration clearly has not given up on reaching six million enrollees. The administration and allied organizations have strengthened their promotion and outreach efforts to encourage more people -- particularly young college students and social media-savvy adults -- to sign up for coverage.

Health insurers have long said they need young, healthy individuals to enroll in the exchanges to offset the cost of insuring older and sicker consumers and keep premiums down. The administration has also been targeting women (especially mothers), sports fans, the LGBT community and Latinos.

Will these efforts be enough to help accelerate enrollment in the exchanges during the waning days of the open enrollment period? The administration seems to think so, since Sebelius was adamant last week about not extending the initial enrollment period.

In an interview with American Health Line, Sarah Dash -- a research fellow at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute -- said it would be "hard to predict whether any given outreach effort will work." However, she noted that any efforts to make the exchanges and open enrollment period "more visible is important, given the consumer confusion and lack of awareness surrounding the law and the open enrollment period." She added, "Ultimately, it's going to come down to awareness, ease of use, and affordability."

However, Brian Haile -- senior vice president for health policy at Jackson Hewitt Tax Service -- doesn't think such outreach efforts will very helpful. However, what might be helpful is if HHS declares a special enrollment period for the first 15 days in April, he says. That's when a sizeable number of people typically file their tax returns. In a memo this week to industry associates, Haile wrote that "recent enrollment correlates with the disbursement of tax refunds" and that "people will buy health insurance only when they have the funds to do so."

In a follow-up interview with AHL, Haile -- who previously served as eligibility chief for the District of Columbia's Medicaid program -- said he discovered that Medicaid enrollment rates were directly linked to what he called a "tangible material incentive." He said that when low-income individuals were given a combined application with food stamps and Medicaid, they had a tangible material incentive to complete the process for both benefits.

Haile added that a similar concept should be adopted widely during the tax-filing season, specifically when it comes to tax refunds and the earned-income tax credit, which is paid out with the tax refund to qualifying low- and moderate-income individuals. He said the EITC often is the largest amount of money that many people receive during the year, and if they are given the opportunity to enroll in coverage at the same time, they would be more likely to do so and learn if they qualify for a federal exchange subsidy.

Does Six Million Matter?

So how important is it for the administration to reach the six-million enrollment goal, and what happens if enrollment falls short of the mark? Will that tarnish the public's perceptions about the law and its exchanges moving forward?

Some of the experts AHL spoke with say the enrollment numbers are not significantly important. Linda Blumberg, a senior fellow at the Urban Institute Health Policy Center, said what is important is for the exchanges to have a good mix of health care risks. That means having a good proportion of enrollees with high-cost medical needs and enrollees who are generally in good health with substantially lower-cost needs.

Blumberg said that "even the specific age mix matters less than having good mixes of risks." She noted that in the earlier years of the exchanges, there are several policies in place that will help ensure stability if there is a higher number of enrollees with high-cost risks. So "the difference between five and half million or six million [enrollees] in the end doesn't really make a difference," Blumberg said.

Haile, of Jackson Hewitt Tax Service, agreed. He said it is "probably not" important for the long term stability of the ACA, but "is it important politically? Yes." Dash, of the Center on Health Insurance Reforms at Georgetown, echoed Haile, saying the six million and seven million figures "were CBO projections that became political benchmarks for whether or not the law is succeeding."

If the administration does not reach the six million target, Blumberg said "there is no reason to presume that falling short is going to impede the ability of the [exchanges] to succeed," noting that March 31 is not a definitive end of enrollment, as many people believe. She added, "We believe there will be a substantial number of people who will end up qualifying for special enrollment periods," often as a result of life changes, such as changes in income, their marital status, or they have children or no longer qualify for dependent coverage. "So the numbers are going to keep going up in 2014," Blumberg said.

As for future enrollment periods, Caitlin Sweany -- a senior manager at the PwC Health Research Institute -- believes this year's enrollment period is "not likely to have a significant impact on 2015 enrollment." She told AHL that insurers have to submit their bids for 2015 by the end of May, which means "they may not have much claims experience to draw from when calculating plan rates for next year."

As a result, many insurers might draw primarily from "historic models and experience with other populations to make their bids," while others are "proactively seeking information on the new members through surveys or physical exams ... to learn as much as possible about their health status," Sweany said.

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