Off-Exchange Individual Health Plans Have Highest Disenrollment

August 22, 2019 - The individual health insurance market decreased another five percent in the beginning of 2019 following the individual mandate repeal, the Kaiser Family Foundation (KFF) reported.

After the enactment of the Affordable Care Act, the individual health insurance market grew by 6.8 million enrollees.

However, following its peak at 17.4 million enrollees in 2015, enrollment declined to 13.7 million in the first quarter of 2019. While the decline in the first quarter of 2019 is small compared to the 11 percent and 12 percent decreases of the previous two first quarters, the figure represents 651,000 fewer individuals on the individual health insurance market than a year ago.

Individual enrollment continued to go down even though ACA exchange and premiums stabilized.

KFF attributed the decline to higher premiums, the rise in plans that are not ACA-compliant and are less regulated, the individual mandate repeal, and shifts to employer-sponsored coverage or similar trends.

The main question that experts have yet to answer is: where are the former enrollees going for healthcare coverage?

Though that answer has yet to be pinpointed, KFF’s research can help suggest the causes of the plan migration.

For example, the researchers determined that around 400,000 individuals left the unsubsidized off-exchange, ACA-compliant plans potentially as a result of the individual mandate penalty repeal and premium increases.

Off-exchange plans experienced the biggest dip in enrollment from 2015 to 2018. With the steady premium escalation through 2018, the drop in enrollment could signify that off-exchange members are relinquishing their healthcare coverage due to premium increases.

In particular, unsubsidized, off-exchange, ACA-compliant plans bear the brunt of premium costs and are the most affected when the premiums rise and fall.

The KFF report showed that between 2016 and 2018, states with large premium hikes were more likely to see higher declines in unsubsidized enrollment.

On-exchange unsubsidized enrollment has stayed steady since 2015, but off-exchange compliant plans and off-exchange non-compliant plans have only declined in the past four years, as demonstrated by first quarter numbers. Off-exchange non-compliant plans fell from 3.0 million enrolled to 1.3 million and on-exchange non-compliant dropped by approximately 47 percent over the same timeframe, from 4.9 million to 2.6 million.

In total, at the beginning of 2019, 11.4 million consumers were enrolled on ACA exchange plans, both subsidized and unsubsidized.

The report made clear that there are many influences at play in the decline in enrollment and in the premium fluctuations. The researchers argued that the individual mandate penalty repeal contributed to higher premiums along with beneficiaries switching to less regulated plans, but this was counteracted somewhat by over-pricing and similar factors.

While there has been much emphasis on the effect of repealing the individual mandate penalty, KFF stated that other economic factors and industry trends balanced the effect slightly in the individual health insurance market. The report also noted that, despite the decreases, enrollment is still higher now than it was in 2013 when the ACA was fully implemented.

“While there may be no signs of the individual market collapsing, there remain concerns about affordability of coverage for people who do not qualify for a subsidy, many of whom have already left the individual market,” the report explained.

“The numbers also provide some perspective on the often hot debate over the ACA’s marketplaces. More than 150 million people are covered through the employer market, 11 times the number covered in the individual market overall and 14 times the number covered through the marketplaces.”

The researchers projected that enrollment may stabilize after a couple years, as long as enrollees continue to receive subsidies.