ACA Special Enrollment Members Have Higher Healthcare Spending

August 24, 2020 - Affordable Care Act marketplace beneficiaries who enroll in plans during special enrollment periods tend to exhibit higher healthcare spending, a recent Health Affairs article revealed.

The researchers exercised data from an Optum database of around 1.5 million members under 65 years of age. These individuals were enrolled in plans on the Affordable Care Act marketplace under a single national, commercial insurer between the beginning of 2015 open enrollment and the end of 2016 open enrollment.

The researchers also identified individuals who reenrolled in 2016 after they enrolled in 2015. However, for new enrollees the study was unable to tell whether enrollees were simply switching to a new plan on the marketplace from an old one, or whether they had not been on the marketplace prior to their enrollment between 2015 and 2016.

The study found that nearly 25 percent of these members enrolled through a special enrollment period in 2015 and 18.5 percent enrolled via a special enrollment period the following year.

Those enrolling during a special enrollment period had around 34 percent higher healthcare spending than open enrollment members in 2015 as well as 2016.

This difference was largely bolstered by hospital costs, specifically emergency department and inpatient healthcare spending.

On average, special enrollment members spent 11 to 19 percent more than open enrollment members. For inpatient visits, special enrollment members spent nearly $98 more per member per month in 2015 than their counterparts and nearly $165 more per member per month the subsequent year. This is a 69 percent to 114 percent increase over open enrollment members.

In contrast, outpatient costs were fairly similar between the two groups and the prescriptions filled did not demonstrate a major difference either.

Demographically, special enrollment period enrollees skewed younger, around 33 to 36 years old as opposed to 40 to 41 years for open enrollment period enrollees. A little over 55 percent of both enrollment groups were female for the study period.

While special enrollment members tended to have a shorter average enrollment length, they also were more likely to be on the plan at the end of the calendar year than their open enrollment counterparts.

Also, between 2015 and 2016, special enrollment members were more likely to reenroll. Almost ten percent more of those who enrolled during the 2015 special enrollment period decided to renew, as compared to open enrollment members from that same year.

In 2016, those who reenrolled tended to be older women with prescriptions to fill from more drug classes, as well as higher emergency department and inpatient costs, as opposed to 2016 open enrollment members.

However, those who re-enrolled in 2016 who were 2015 special enrollment members were likely to fit the overall special enrollment member profile of younger and higher cost—both inpatient and outpatient. They also tended to have drop their plan by the end of 2016, which was not true of new enrollees.

“Higher costs, especially among a slightly younger population, may suggest potential adverse selection among SEP members, which could contribute to increased premiums and insurer exit from vulnerable Marketplaces,” the researchers identified.

“Our results highlight how increased costs from SEP enrollees could be detrimental to health plans, especially if risk adjustment algorithms underpay for these enrollees.”

Policymakers determined in 2017 that enrollment length should be factored into risk adjustment, since the Marketplaces see high churn—including for both special enrollment members and open enrollment members.

But the Health Affairs researchers pointed out that the probability that a special enrollment member will leave is more closely aligned with the member’s healthcare spending. Higher spenders are less likely to renew. This means that while the individual may be staying for a short time, their costs could still be high, leaving their health plan underpaid.

Underpaying plans can have a variety of negative impacts including higher premiums, not just for special enrollment members but across marketplace plans and enrollees.

The researchers called for more study into special enrollment members’ adverse selection and also for better outreach to people eligible for special enrollment.

This research comes as payers try to leverage special enrollment to increase healthcare coverage during the coronavirus pandemic.

These special enrollment periods have seen an overwhelming response, in comparison to previous years. As late as June 2020, it remained unclear how these special enrollment periods will affect rate setting for 2021.

On top of these uncertainties, the future of the Affordable Care Act marketplaces remains in limbo as the Trump Administration continues to push for repeal, even as Congress has recently moved to expand it. The Supreme Court recently announced that it will hear the case on November 10, exactly a week after the election day.