Health and Human Services (HHS) exceeded its goal for 2015 Open Enrollment in the health insurance marketplaces with 11.4 million enrollees. This includes 8.6 million individuals who enrolled through the federally facilitated marketplaces (Marketplace).
Key Observations from 2015 Open Enrollment:
• This year 70 new entities participated in the exchange marketplace, and the number of plans offered in 2015 was up 40 percent compared to 2014.
• More than 1 million consumers are estimated to have selected plans offered in the Marketplace during the last week of Open Enrollment. States like North Carolina saw a surge in first time sign ups – about 180,000 Americans.
• Consumers who had 2014 coverage and re-enrolled in 2015 accounted for 47 percent of the total plan selections.
• Data from CMS shows there were more new consumers to join the Marketplace than consumers with 2014 coverage who re-enrolled for 2015.
• The number of Bronze and Silver plans on the exchanges almost doubled in 2015 compared to 2014, giving consumers more options to select their coverage.
• Health plans that got a large percentage of customers in 2014 increased their rates for 2015 by 10 percent.
• Health plans that were new to the exchanges in 2015 or had fared poorly in 2014 offered aggressively low rates in an effort to undercut the market leaders.
• 73 percent of the subsidy eligible population saw net premium increases in lowest Silver-priced plans and therefore had an incentive to shop around during the 2014 Open Enrollment.
The data above is evidence consumers have become comfortable with exchanges far more quickly than expected and the dynamics of the exchanges are giving them reason to do so. More than half felt confident enough to engage in the exchange to make a new selection for 2015. In fact, the success of open enrollment this year appears to be the result of actively engaged retail health consumers.
This willingness of the consumer to consider shifting to a different insurance carrier came as a surprise to federal officials when we consider the recent HHS ruling on active and passive renewals. Passive renewals, also referred to as auto-enrollment, allow a consumer to continue with the plan they enrolled in through the Marketplace in 2014 or a plan with similar benefits from the same issuer if they did not select a plan ahead of the December 15 deadline. The functional goal is to automatically renew coverage for people who didn’t come back to the state exchange and federal marketplace, thus minimizing the risk of consumers dropping out of health coverage. This ruling was seen cynically by many as another attempt for the Obama administration to bolster 2015 enrollment. When the results of actual member activity in the exchange started rolling in, hwoever, the level of consumer engagement surprised people on both sides of the ACA debate.
While passive renewal might be successful in the commercial group and self-insured businesses, it appears not to have been a good fit for an active, consumer-centric healthcare market. In hindsight it would seem intuitive that people who buy things online are comfortable with the digital shopping experience, and we should have expected them to actively engage with this new purchase for 2015. As a result, we can anticipate 2016 enrollment will see many more exchanges and third parties catering to an emerging consumer category.
Aside from the emergence of the engaged, retail health consumer, there were certainly some financial and structural aspects to the 2015 Marketplace offerings that drove active re-selection on the part of consumers.
The most significant was price. A combination of price factors emerged with regard to the consumer experience. First, the actuarial experience, the balance of healthy and sick people who signed up in 2014, varied significantly across the states resulting in premium changes by each of the Qualified Health Plans (QHP). Premium increases, on a county-by-county level nationwide, saw significant swings by as much as 40 percent up and down. Statewide average ranges showed more moderate increases and decreases of only 15 percent. The national average, however, was a modest two percent increase for the benchmark Silver plans. When the after-subsidy premiums for 2015 are tallied on a state-by-state average, the vast majority of enrollees had premium decreases of almost one percent. Beyond the direct experience of price increases, curiosity about potential savings alone might logically drive current enrollees to explore the exchange for 2015. When exposed to the very improved shopping experience (relative to 2014) as well as the broader choice, it makes sense that we would see a lot of movement in plan choices.
Another driver for active plan changes by enrollees may have been consumer choice. With more QHP’s entering the federal and state markets, consumers correctly assumed they might find a better match to their needs relative to 2014.
However, the most interesting aspect of the 2015 experience that needs to be considered is the potential shift to a consumer marketplace for health plan products and services. Part of the explanation for what we saw in 2015 certainly had to do with the demographic behavior characteristics of the enrollees – many of whom have been “e-shopping” for well over a decade and whose relationship to Internet technology is one of comfort and dependency.
Many consumers came to the exchanges in 2014, because it was their only alternative for good healthcare coverage. Once there, however, online behaviors likely contributed to some of what we saw in 2015 and will continue to see with each enrollment period.
The new entrants to the exchange market in 2016 will probably reflect more of the same consumers from recent open enrollment rather than the previous year, wherein the experience was primarily associated with the disenfranchised healthcare consumer looking for the most they can afford. This change in participants will influence the investments made by both the public and private exchanges in creating a more personalized guide, creating a true retail experience like Amazon or Orbitz.
The experience of 2015 provides sound evidence that the U.S. healthcare consumer is ready to embrace the exchange model. Regardless of the politics of the ACA, the clear intent of healthcare reform was to create a vibrant market for consumer-based purchasing of healthcare benefits. The 2015 numbers demonstrate consumers may actually be ahead of the politics, and the long predicted move to defined contribution methods for employer-based healthcare is a fact merely waiting for recognition, action and modest maturation of the exchange portals. Future success will depend on the ability of health plans to handle the transition.
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