The number of people who have to buy health insurance coverage on the individual market and fork over the whole cost themselves has decreased by some 651,000 (five percent) in the wake of the repeal of the individual mandate penalty for the Affordable Care Act.
A new Kaiser Family Foundation analysis finds that all of the losses occurred in the off-exchange market, where people are not eligible for tax credits. Marketplace plans, on the other hand, saw their enrollment hold steady at 10.6 million during the first quarter of this year; that includes 9.3 million low- and moderate-income enrollees who do receive tax credits as an assist to pay for plan premiums.
According to the Centers for Medicare and Medicaid, the number of new consumers signing up for plans in 2019 dropped by 16 percent, from 3.2 million to 2.7 million. KFF says that the decrease in new signups could be a result of several factors, including ”reductions in outreach and consumer assistance, repeal of the individual mandate penalty, or broader economic factors that may make people less likely to come into the market.”
Unsubsidized enrollment has fallen as subsidized enrollment has risen, with KFF theorizing that in Q1 2019 more than two thirds of individual market enrollees are getting a premium subsidy.
Individual market enrollment declines, says KFF, could result from numerous factors that include “rising premiums for ACA-compliant coverage; the expansion of loosely regulated plans that may not be considered individual market coverage yet could attract customers away from the individual market; the effective repeal of the individual mandate; and broader economic trends, like gains in employment, which could lead to more people having job-based coverage.” It can’t yet be determined, however, whether the 2019 decline means that those people no longer have coverage or whether they were able to get coverage through other sources.
The individual market lost numerous enrollees in 2017 after major premium increases—early rates were set too low when insurers underestimated how sick the new risk pool would be—and also lost insurers that exited the market over profitability concerns. However, the remaining insurers began to show profits, and premiums were expected to hold fairly steady in 2018 without the substantial price hikes that were put in place in 2017.
But then uncertainty over ACA repeal debates in Congress and the Trump administration’s termination of cost sharing payments drove premiums up further in 2018. In 2019 the individual mandate penalty went away against a background of mostly flat premium costs, and subsidized enrollment held fairly steady, the report says.
It adds, “We estimate enrollment in unsubsidized off-exchange ACA-compliant plans declined by about 400 thousand from 2018 to 2019 (corresponding with the effective repeal of the individual mandate penalty but also relatively flat premium growth), which is smaller than previous declines in this part of the market that corresponded with steep increases in premiums.”
The KFF report continues that “given continued strong financial performance by individual market insurers and enrollment that remains higher than before the ACA, there do not appear to be any signs of market collapse so far in the absence of the individual mandate penalty.”
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
