Record enrollment of on-Exchange ACA health insurance

Earlier this morning, the Centers for Medicare and Medicaid Services (CMS) released their December enrollment report for the 2022 plan year:

This year’s Open Enrollment Period is outpacing all previous years, a historic high of more than 13.6 million people already enrolled in health insurance coverage for 2022 through HealthCare.gov and State-based Marketplaces (SBMs). The American Rescue Plan (ARP) has made coverage more affordable and accessible for people across the country: 92% of people in HealthCare.gov states who signed up for plans through December 15, 2021, will receive premium tax credits for 2022 coverage. Moreover, more than 400,000 people will receive tax credits for 2022 coverage, to date, that would have been inaccessible to them prior to the ARP.

Wow. That is a big number.

I think there are several things going on here that we need to understand.

Giving a damn matters. The Biden Administration has prioritized making the ACA work. This means they have increased advertising. They have increased navigator funding. They have sought ways to lower administrative burden. Some of my previous research showed that the transition from a supportive administration to an oppositional administration had immediate and significant enrollment declines. Paul Shafer and some of my other frequent co-authors found immediate changes in information seeking behavior in Kentucky when the state government administration flipped after the 2015 election from ACA supportive to ACA oppositional. We don’t have strongly identified academic research yet, but we can likely assume that switching from oppositional to supportive administrations have large effects.

Secondly, there is a bit of over-counting here. The ACA has two market segments. The first is “ON-Exchange” which is insurance purchased through either Healthcare.gov OR a state based marketplace. This is the only spot to qualify for subsidies. The second is “OFF-Exchange” which also sells ACA regulated plans without any subsidies. OFF-Exchange is mostly a market that is for people earning over 400% FPL. On-Exchange is what gets reported every year on a weekly basis as it is immediately visible to CMS. Off-Exchange is reported with significant lags for the risk adjustment system. The passage of the ARPA led to people earning over 400% FPL to qualify for subsidies if they buy ON-Exchange. Some people who were previously insured with an OFF-Exchange policy converted their “invisible-ish” coverage to subsidy eligible and visible for reporting purposes ON-Exchange coverage. Given that the report says 400,000 people gained subsidies that were only available due to ARPA, it is some fraction of that is newly visible enrollment versus truly new enrollment.

Third, this is in the context of significantly more Medicaid expansion than the previous record year of 2016. Medicaid expansion enrolls people who earn up to 138% FPL. The biggest chunk of enrollment in the ACA marketplaces are people who earn under 150% FPL. When a state expands Medicaid a big chunk of the biggest chunk of enrollment moves to Medicaid. If we had held everything else constant to 2016, we would have expected significantly more enrollment for 2022 than we actually see. However, we are pretty confident that for people who are on the border of eligibility between Medicaid Expansion and ACA Silver CSR-94 plans at 120-150% FPL, Medicaid offers better financial protection.

Fourth, inertia matters. The COVID Special Enrollment Period from February to August picked up a lot of new enrollees. I’m betting that a lot of these people re-enrolled either actively or through automatic re-enrollment for 2022. COVID and fear of COVID is a significant plausible motivator but also not having to do as much and having already paid the administrative hassle costs of setting up accounts and learning something about health insurance makes the incremental cost of a new choice significantly lower.

Finally, these numbers should increase a bit more in January as a combination of the last procrastinators make a decision and people who made an error in their initial application in November and December have a chance to fix things and get coverage for February 1st.