Following three years of steady growth, enrollment on the Affordable Care Act’s (ACA) marketplaces began to dip in 2017. Recently reported numbers show that trend continued into this year, thanks to a number of headwinds.
Along with steep cuts to federal funding for advertising and enrollment assistance, the federal penalty for not complying with the ACA’s individual mandate to purchase health insurance was zeroed out as of January 1. Both policy actions were predicted to reduce the number of people who enroll in marketplace plans. Moreover, the Trump administration adopted rules that increased the availability of products sold outside the regulated individual market. It also proposed a policy that would make it more difficult for immigrants to obtain citizenship if they applied for public benefits, which may have deterred some immigrants from applying for marketplace subsidies. Further, an ongoing court case challenging the constitutionality of the ACA added another layer of confusion onto an already complex health insurance landscape.
While enrollment growth is not the only indication of market health, it is a vital sign. During the 2019 open enrollment period, we saw enrollment trend differences between the 34 states that use the federally run marketplace and the 17 state-based marketplaces. The U.S. Department of Health and Human Services reported a nearly 4 percent decline in plan selections in the federally facilitated marketplace in 2019, but overall plan selections reported by state-based marketplaces stayed steady. This discrepancy suggests that certain policies or operational features of the state-based marketplaces may have made a difference in the number of people enrolling.
Of the 17 state-based marketplaces, 12 operate their own eligibility and enrollment platforms, while the remaining five use the federal enrollment platform HealthCare.gov. Plan selections among state-based marketplaces operating their own eligibility and enrollment platforms increased 0.9 percent between the 2018 and 2019 open enrollment periods, while plan selections in states using HealthCare.gov decreased by 3.8 percent. Overall, more than 80 percent of states on the federal platform experienced a decrease in plan selections, whereas 75 percent of state-operated platforms outperformed HealthCare.gov.
State Policy, Operational Choices Contributed to Better Performance
What factors contributed to the higher plan selection rate in state-based marketplaces?
Better Advertising and Outreach. First, during the 2019 open enrollment period, most state-based marketplaces invested significantly more than the federal government in advertising and outreach efforts. The majority of state marketplaces with larger budgets than the federal government performed better than the federal marketplace. Four of the five state marketplaces that budgeted the most per uninsured resident on advertising and navigator funding outperformed the federally facilitated marketplace, with two of the five, Rhode Island and New York, reporting plan selection growth greater than 4 percent.
Additionally, because state-based marketplaces can tailor enrollment marketing and assistance efforts to their own specific needs, many launched innovative and data-driven campaigns that proved effective. Rhode Island’s marketplace, which had 4.6 percent more plan selections in the 2019 enrollment period, found that providing enrollment assistance at local community health centers was a popular one-stop shop, where people were able to take care of both insurance and care needs in one setting. Because Massachusetts has an individual mandate that remains in effect in the absence of the ACA’s mandate penalty, the state’s marketplace launched a social media campaign to educate consumers and promote compliance with the state-level coverage requirement; the marketplace had a 13 percent increase in plan selections. Other marketplaces that reported higher plan selections this year, such as Colorado, found success in marketing strategies that targeted certain populations, such as advertising on Spanish radio stations.
A Longer Sign-Up Period. Extending the sign-up period appeared to boost enrollment. While the annual open enrollment period for HealthCare.gov is limited to 45 days, states operating their own platforms have the option to extend that time frame. The eight state-based marketplaces that extended their enrollment period during the 2019 open enrollment period reported a 2 percent increase in plan selections. In contrast, plan selections on marketplaces that had only a 45-day open enrollment period dropped by 3.8 percent.
More Flexible Online Platforms. Finally, the greater flexibility and autonomy associated with state-run platforms may improve consumers’ online experience, making it more likely they will ultimately enroll. Unlike HealthCare.gov, state platforms can be customized. Several state-based marketplaces have deployed innovative online tools that make it easier for consumers to obtain an eligibility determination and select a plan. Additionally, the officials operating the state-run eligibility and enrollment systems have access to valuable, real-time data that can offer insights into consumers’ online experiences, helping to identify problem areas and respond to them as they occur.
Other policies had more variable success. For example, both Washington, D.C., and Massachusetts have an individual mandate in place for the 2019 plan year. The D.C. marketplace had a 6.5 percent decline in plan selections this year, while Massachusetts had a 13 percent increase. The longevity of Massachusetts’ requirement — enacted in 2006 — could have been a factor, along with its active marketing campaign about the mandate. D.C.’s individual mandate is new. Coupled with likely consumer confusion over the concurrent repeal of the federal mandate penalty, it may take more time for D.C.’s mandate to have an impact.
Still other factors may have curbed marketplace enrollment in some states. Vermont, for example, reported a 12.3 percent decline in marketplace plan selections. This could be in part because, unlike most states, Vermont did not institute “silver loading” (where insurers “load” the expenses of lost cost-sharing reduction reimbursements onto the premiums of marketplace silver plans) until 2019. As a result, premiums are now higher than they were in 2018 for marketplace silver plans compared to off-marketplace silver plans. This may have driven some unsubsidized consumers to opt for coverage outside the marketplace.
The 2019 open enrollment period was challenging for federal and state marketplaces alike. A number of federal policies likely hindered marketplace enrollment. In addition to federal actions, factors like employment growth and state-level policy changes, such as Medicaid expansion, may have shifted people away from coverage via the ACA’s marketplaces. State-based marketplaces were not immune to these challenges, and several experienced reduced plan selections, particularly those using the HealthCare.gov platform. However, many states that operated their own enrollment platform, extended the open enrollment period, and launched innovative, well-funded advertising and outreach campaigns were able to defy the odds, maintaining or even increasing plan selections. Given the numerous obstacles to enrollment growth, this accomplishment, along with the overall moderate decrease in plan selections across all states and platforms, reflects the high demand for comprehensive insurance that covers people with preexisting conditions and provides access to health care when people need it.