How COVID-19 Impacted The Individual Health Insurance Marketplace

November 23, 2021 - The individual health insurance marketplace saw changes in enrollment and in enrollees’ healthcare spending risk as a result of the coronavirus pandemic in 2020, a Health Affairs study found.

“At this time, there is limited information on how the pandemic and subsequent changes in Marketplace enrollment criteria affected individual-market enrollment in 2020, including during special enrollment periods. There also is little information on how similar policies enacted in 2021 could affect the numbers or composition of enrollees,” the researchers explained.

The study analyzed enrollment changes and healthcare demand changes in individual health insurance marketplace plans that were compliant with the Affordable Care Act from 2019 to 2020. To do this, the researchers leveraged the Wakely National Risk Adjustment Reporting projection database. 

The results represent 29 states and over three-quarters of the ACA-compliant individual market population.

The researchers split these states into four categories: federally-facilitated marketplaces in states that had adopted Medicaid expansion, federally-facilitated marketplaces in non-expansion states, state-based marketplaces in expansion states, and California, where a state-based marketplace coexists with Medicaid expansion and state-financed premium subsidies.

States with federally-facilitated individual health insurance marketplaces that did not adopt Medicaid expansion saw the largest upward swing in individual marketplace enrollment. Enrollment in 2020 was 10.3 percent higher than it had been in 2019.

California saw the second largest increase in enrollment in 2020. The state’s 2020 enrollment was 8.9 percent higher than its 2019 enrollment.

Meanwhile, in states with state-based marketplaces and Medicaid expansion enrollment was 2.9 percent higher and in states with both federally-facilitated marketplaces and Medicaid expansion 2020 enrollment was 0.7 percent higher compared to 2019 enrollment.

Beyond enrollment data, however, the researchers also estimated how individual enrollees’ healthcare spending might have changed from 2019 to 2020. CMS requires health plans to use demographic and clinical factors to predict enrollee healthcare spending and distributes funds accordingly.

The researchers found that healthcare spending risk in states with federally-facilitated marketplaces without Medicaid expansion had the highest increase in healthcare spending risk from 2019 to 2020 (3.8 percent). Federally-facilitated marketplaces with Medicaid expansion followed, with an increase in healthcare spending risk of approximately 2.0 percent.

However, state-based marketplaces with Medicaid expansion and the state of California’s marketplace saw a drop in healthcare spending risk from 2019 to 2020. California saw the biggest decline in healthcare spending risk among enrollees, dropping 0.8 percent. State-based marketplaces with Medicaid expansion declined 0.5 percent in healthcare spending risk.

All states in the study saw a large influx in enrollment after the coronavirus pandemic started in 2020. January and February enrollment in California and federally-facilitated marketplaces without Medicaid expansion saw a small spike when comparing 2019 to 2020. 

But from March through December all four categories of states saw massive enrollment increases of varying sizes when comparing the same timeframe in 2019 and 2020. State-based marketplaces with Medicaid expansion and the state of California’s marketplace got the biggest boost, while the federally-facilitated marketplace in states with Medicaid expansion had the lowest increase.

Finally, the researchers also observed changes in enrollment and healthcare spending risk based on a state’s economic recovery, following the initial coronavirus pandemic unemployment shock.

“Among federally facilitated Marketplace states that did not expand Medicaid, there were both enrollment and relative risk increases among the enrolled from 2019 to 2020; slow-recovery states had larger percentage enrollment increases in 2020 compared with fast-recovery states,” the researchers found. 

“Among federally facilitated Marketplace states that expanded Medicaid, however, enrollment did not measurably change in 2020, but relative risk increased, particularly in slow-recovery states.”

State-based individual health insurance marketplaces and the California marketplace saw increases in enrollment but decreases in spending risk. To the researchers, this indicated that enrollees were conducting favorable selections on the individual health insurance marketplace plans in these markets.

Special enrollment periods drove enrollment growth on the individual health insurance marketplace in 2020, the data also indicated. Moreover, marketplace enrollment was higher in states where Medicaid coverage was more restricted.

Trends within these groupings do not necessarily indicate that the categories themselves were driving the trends, the researchers were careful to point out. However, the results may demonstrate that premium subsidy expansions can effectively drive enrollment and enrollment growth could have a neutral or even a positive impact on enrollees’ spending risk.

Looking toward 2022, experts have predicted that the coronavirus pandemic will have little impact on healthcare spending in the individual health insurance marketplace in the new year.