Prediction: QHP enrollment will swell by 25 percent

When I started tracking private ACA exchange enrollments two years ago, I didn’t intend on predicting how many people would do so. The point was to track how many did in real time, since no one else was doing so.

However, in late December 2013, I took a crack at predicting how many people would get in under the wire in time for January 1st coverage. I ballparked it at 2.1 million … and it turned out to be 2,137,630. I ended up being within 1 to 2 percent of the actual numbers for the rest of 2014 … but I also never tried calling my shot more than a month ahead of time.

For 2015, I decided to try something bolder: predicting the final tally before the season even opened. I settled on 12.0 million, but after a better-than-expected first month, I bumped this up to 12.5 million. The official tally, however, fell short of both of these at 11.7 million. I had overshot by 6.5 percent (which still wasn’t bad considering I was looking three months out at the time).

So. Here we are with the 2016 open enrollment period bearing down on us. The only official projection I have comes from the CBO’s March 2015 ACA Baseline.

As of March, the Congressional Budget Office was projecting that 21 million people will enroll in private healthcare policies (qualified health plans or QHPs) through the ACA exchanges for 2016 … nearly doubling their projection for this year and tripling their original 7 million call for 2014.

Before I go any further, let me say this flat out: No. Actual exchange enrollments in 2016 are not going to reach the CBO’s 21 million projection. They simply aren’t. I’d love to be proven wrong on this, but I simply don’t buy it.

Still, why are they so confident about that number … and why could that confidence be misplaced?

5 reasons to be optimistic about #OE3 enrollment

1. Technical and feature improvements: After the tech disaster at launch in 2013, most of the exchanges either overhauled, replaced or abandoned their original buggy software in favor of vastly improved versions. For 2016 – with the worst of the problems resolved – the changes aren’t as dramatic, but further enhancements should still help smooth things considerably. Hawaii has followed Oregon and Nevada in dropping their failed exchange. Some exchanges have launched mobile apps for smartphones and tablets to make the enrollment process smoother. HealthCare.gov and other exchanges have added or enhanced “total policy cost,” “decision-flow” and “in-network directory” tools to help people make better decisions about the best policy option for them. Covered California is allowing current enrollees to renew their policies already.
2. A much bigger stick: Until now, the Department of HHS, the exchanges and related groups mostly used the “carrot” approach: Stressing the benefits of healthcare coverage, the financial assistance for low- and middle-income people, peace of mind, etc. With all the low-hanging fruit now picked and the shared responsibility tax penalty ramping up from $95 apiece (or 1 percent of income) in 2014 to $325 (or 2 percent) in 2015 and $695 (or 2.5 percent) for 2016, the administration will be changing tactics, switching from the carrot to the stick to goad encourage people to #getcovered.
3. Dwindling transitional/grandfathered plan enrollees: Over 300,000 Florida residents dropped their “grandfathered” or “transitional” policies last year in favor of some other form of coverage. While not all chose exchange policies, many did. Florida still had 250,000 people in these policies as of March; while they’re still allowed to keep those policies beyond this year, the odds are that a substantial chunk will let them go … not just in Florida but other states as well.
4. Loss of employer-sponsored insurance coverage: The CBO seems to think that this is the Big One. They’re betting that an additional 5 million people will be dropped from their ESI coverage next year. It looks to me like the CBO strongly believes that most of those folks will be shifted over to the individual exchanges.
5. Improved outreach/enrollment targeting strategies by groups like Enroll America, Families USA and the like, as well as improved/streamlined methods of connecting potential enrollees with qualified, licensed brokers and navigators to help smooth the process.

… and 5 reasons NOT to be too optimistic:

1. Premiums WILL be going up for many people. Not all premium rates are increasing by much, and some are even dropping next year, but overall, it does look like full-price rates will be going up somewhere between 12 to 14 percent in 2016. Federal tax credits should also keep pace for the most part, so 85 percent or so of exchange enrollees probably won’t see too much of an increase … but the 15 percent or so above 400 percent of the Federal Poverty Line will have to pay full price.
2. High deductibles and co-pays ARE going to be an issue for others. Again, anyone under 250 percent of FPL will have a substantial chunk of the deductible burden taken off their shoulders … but only if they knew to choose a Silver plan, which many, unfortunately, probably won’t. Meanwhile, anyone above 250 percent FPL will be hit with the full deductible/co-pay rates, which are a definite problem.
3. The stick might still not be big enough: Since federal income taxes are paid the following year, that $695 tax won’t be dropped on anyone until 2017. For 2016, people are going to think the tax is “only” $325 (which is actually for 2015). In addition, for those over 400 percent FPL, eating the $695 penalty will still be less than spending a couple hundred bucks a month (at full price) for a Bronze plan. (Of course, if they actually do get seriously sick/injured, they’ll be in serious trouble …)
4. No more low-hanging fruit: Until now, the exchanges didn’t have to look too far to find enrollees – there were millions of uninsured people with pre-existing conditions or otherwise seeking out healthcare coverage who beat a path to the exchanges’ doors. That’s no longer the case. The remaining uninsured either don’t know about the exchanges; don’t understand how the tax credits and/or penalties work; know how they work but still think it’s too expensive; or deliberately refuse to get covered based on principle.
5. Competition from other forms of coverage: While the CBO thinks 5 million employees will be shifted from ESI to the exchanges, this doesn’t seem to be happening nearly as much as they figured after all. This alone could account for, say, 4 million fewer being enrolled in exchange QHPs than the CBO’s projected. In addition, starting in 2016, New York will become the second state to launch a Basic Health Plan, enabled by the Affordable Care Act. (Minnesota already had a BHP in place pre-ACA.) BHPs are sort of like “Medicaid on steroids” for people under 200 percent of the federal poverty level. Ironically, this ACA provision will likely lead to exchange enrollment being reduced substantially in New York, since about 40 percent of New York’s QHP enrollees fell below 200 percent FPL this year. (73.5 percent were subsidized, of whom 54 percent were below 200 percent FPL.) That could lop up to 200,000 off of the QHP tally.

It’s important to note that both ESI retention and  New York’s HP program are GOOD THINGS for overall health insurance coverage, even if they “harm” the ACA exchange numbers.

And the result is …

Add all of these up and what do I think is likely to happen over the next three months?

Well, let’s look at who’s eligible and/or likely to enroll. 2016 enrollment will be made up of a combination of current enrollees renewing/switching exchange policies and new enrollees joining the exchanges, either from the ranks of the uninsured or transferring from other coverage.

Last year, 6.3 million people renewed their policies vs. 8.0 million who had selected QHPs during 2014 open enrollment (78 percent). A similar ratio this year would be around 9.1 million (vs. 11.7 million). Alternately, I could also assume a 90 percent retention rate of the 9.95 million who were still enrolled as of June 30, which would give me around 8.9 million. Either way, I’m guessing around 9 million 2015 enrollees will renew for 2016.

The new additions fall into two categories: Uninsured and Currently Insured. Currently Insured mostly refers to the 2-3 million (estimate) people still enrolled in transitional policies. Most of those policies are still valid through 2017, but some are being cut off this winter, and anyone who has to drop a transitional policy for personal reasons (moving, getting married, etc.) will have to switch to something else. The same is true for those still on grandfathered policies. I’m going to assume that perhaps 500,000 make the move from grandfathered/transitional policies for 2016. In addition, I’ll assume that perhaps 1 million are shifted from their current employer-sponsored insurance over to an ACA exchange policy.

That leaves the main target this year: The Currently Uninsured. Just a few days ago, the Kaiser Family Foundation issued a new detailed report breaking out the 32.3 million still-uninsured into different categories. This is important because not everyone who’s uninsured is eligible to enroll via the ACA exchanges … and not all of those who can do so are eligible for financial assistance. You have to subtract out people in the Medicaid gap and undocumented immigrants. You also have to subtract those who are eligible for either Medicaid or CHIP since we’re only talking about private exchange policies here.

That leaves you with those eligible for federal tax credits (7.1 million); those who can enroll via the exchange but have to pay full price due to having an ESI offer from their employer (4.8 million); and those who can enroll via the exchange but have to pay full price due to their income being above 400 percent of the Federal Poverty Level (3.9 million).

Expect 14.7 million uninsured to enroll or renew

That’s around 15.8 million uninsured people who could potentially enroll specifically via the exchanges. (They could also enroll directly through the insurance companies, bypassing the exchanges, although the first group would be missing out on financial assistance if they did so.) However, that doesn’t mean that all 15.8 million will. That’s the trickiest part to project.

I’m going to be optimistic and assume that the exchanges manage to sign up half of the first group this year (around 3.5 million) and perhaps 15 percent of the latter two groups (700,000 and 400,000 million respectively).

Subtract out a couple hundred thousand more who will be moving to the Basic Health Plan in New York and the grand total would become something like:

• 9.0 million renewing exchange policies (or switching to different ones)
• +1.0 million transferring from employer-sponsored insurance
• +0.5 million transferring (from grandfathered/transitional or other current non-exchange policies)
• +3.5 million currently uninsured (receiving financial assistance)
• +0.5 million currently uninsured (have to pay full price due to ESI offer)
• +0.4 million currently uninsured (have to pay full price due to >400 percent FPL)
• -0.2 million in New York moving off of exchange policies to the new Basic Health Plan
• Total: 14.7 million QHP selections, of which
• 13.2 million would likely pay their first premium, and
• 12.2 million would likely stick it out through the end of the year.

(14.7 million would also just happen to be about a 25 percent enrollment increase over 2015, for what it’s worth).

Ok, I’ve called my shot for 2016. Again, I was off by 6.5 percent for 2015. If the 2016 tally ends up being less than 1 million higher or lower (13.7 to 15.7 million), I’ll have beaten my 2015 call.

So now, let’s sit back and see what happens …

Charles Gaba is the founder of https://acasignups.net/, which has been live-tracking Obamacare enrollments since the exchanges launched in October 2013. His work has been cited by major publications from the Washington Post and Forbes to the New York Times as being the most reliable source available for up-to-date, accurate ACA enrollment data in the country.