Millions of people in the United States lack comprehensive health insurance. Although many are eligible for marketplace subsidies under the Affordable Care Act (ACA), costs associated with health insurance, lack of awareness, and administrative enrollment barriers have hindered coverage take-up. Additionally, some consumers who sign up for marketplace coverage wind up in plans with high out-of-pocket costs, leaving them underinsured with limited access to care.
Reducing barriers that lead to people being uninsured and underinsured requires innovative policies to simplify enrollment and help consumers access more generous plans that fit their budget. California recently adopted strategies for its state-run marketplace to decrease friction in the enrollment process and help current marketplace enrollees move into plans with lower cost sharing.
Reducing the Number of Uninsured
Preventing coverage gaps when people transition from Medicaid to the marketplace
When the COVID-19 public health emergency expires, estimates suggest that nearly 15 million people could lose Medicaid eligibility, creating a risk of disruption in coverage and care. With the American Rescue Plan’s (ARP) temporary subsidy expansion in place, one-third of the adults in this group are expected to have access to subsidized marketplace plans, but many are unaware of their eligibility or face enrollment barriers. States can help consumers avoid gaps in coverage by conducting extensive outreach and adopting policies that reduce the burden of “churning” between coverage programs.
To this end, California’s marketplace will partially automate marketplace enrollment for people losing Medicaid. The new process, scheduled to take effect later this year, will enroll those eligible for marketplace subsidies into the lowest-cost silver plan (i.e., moderate costs and premiums) available. Consumers qualifying for a plan that requires them to make any premium payment will be automatically enrolled and can accept coverage through their initial premium payment or opt out of coverage by cancelling the plan or declining to make this payment. Consumers qualifying for a $0 premium plan after subsidies (a reality thanks to state-funded premium assistance) will have to consent to their marketplace plan in lieu of making a payment to effectuate coverage, or may decline by taking no action or actively cancelling their plan. An estimated 25 percent to 30 percent of Californians losing Medicaid eligibility will qualify for marketplace enrollment through the new process.
Reducing enrollment hurdles by removing the burden of nominal premiums
California is alleviating premium charges that are low in absolute terms but impose a barrier to enrolling in health insurance. Although the ARP significantly improved marketplace premium affordability by temporarily expanding federal premium subsidies, allowing many to enroll in $0 premium plans, federal law prohibits the subsidies from paying for the portion of an enrollee’s premium that’s attributable to certain abortion services. Consequently, consumers in states (like California) that require marketplace plans to cover these services can’t get free coverage; they get a bill. While this bill is small, research shows that even nominal premiums significantly reduce coverage take-up. Accordingly, California recently appropriated funds to cover this portion of premiums, allowing eligible consumers to enroll in plans without any monthly premium payment. The ARP’s subsidy expansion increased the number of individuals who qualify for $0 premiums under this new state policy, but even before the ARP this change was expected to improve enrollment among low-income individuals.
Reducing the Number of Underinsured
Reenrolling eligible consumers in more generous coverage at no additional cost
The ARP’s subsidy expansion increased access to marketplace coverage with lower cost sharing. While it remains in effect, many enrollees with bronze-level plans (i.e., products with the highest cost sharing) who previously would have had to pay higher premiums to get a silver plan with subsidized cost sharing can now enroll in such plans for a $0 premium. In California, this upgrade from a bronze plan to a silver plan with maximum cost-sharing assistance, made easier by the ARP’s subsidy enhancements, has the effect of lowering individual medical deductibles from $6,300 to $75. Yet because many marketplace enrollees do not actively shop each year, instead passively “autorenewing” their insurance, consumers may forgo plans with significantly lower cost sharing. California’s marketplace identified thousands of enrollees who qualify for more generous coverage from the same insurer at no extra cost.
But after direct outreach to encourage renewing enrollees to switch to more generous plans with lower premiums had a modest impact, the marketplace implemented a new autorenewal policy. Bronze enrollees eligible for the highest level of cost-sharing subsidies are autorenewed in a silver plan — allowing them to access cost-sharing assistance — with the same insurer and provider network for a $0 premium, if available. California’s marketplace board of directors has discussed expanding the program to other enrollees who qualify for more generous coverage at the same or a lower premium if the ARP’s subsidy expansion is made permanent. Of note, the Biden administration requested stakeholder feedback on a similar proposal for the federal marketplace to take factors like plan generosity and net premiums into account at autorenewal.
The uninsured and underinsured face various roadblocks to enrolling in and using coverage. The ARP alleviated some of the cost burden of marketplace plans, presenting the opportunity to broadcast availability of cheaper coverage and implement policies that simplify the sign-up process. While not a panacea, California’s policies provide a playbook of approaches to improve take-up of coverage and lower cost barriers to care. These policies can help inform similar efforts in the federal marketplace.