MAY 2014 (Update) Deciphering the Data: Final Enrollment Rates Show Federally Run Marketplaces Make Up Lost Ground at End of Open Enrollment In-Brief The ACA gave states a number of choices in how to implement the broad coverage changes it required. As such, health reform looks different from state to state, and the impact of the ACA may differ because of these state decisions. This Data Brief examines a number of choices related to the establishment and running of the new health insurance marketplaces, and their impact on enrollment rates to date. Here we update our interim March 14 findings with enrollment rates at the close of open enrollment. We look at enrollment rates by state and type of marketplace, and assess changes in enrollment rates in the final six weeks. The final enrollment figures reveal that the federally facilitated marketplaces and some of the troubled state-based ones made up some ground in the last four to six weeks of the open enrollment period. One of the linchpins of the Affordable Care Act marketplace were given the option of taking on Health insurance marketplaces were created (ACA) is the establishment of “Health Insurance only plan management functions, and seven by the ACA as a way to make health insurance Exchanges” [now called “Marketplaces”] where states chose that option. more affordable and easier to purchase for consumers can select health plans they prefer individuals. (The ACA also created marketplaces among various combinations of coverage Did marketplace type for small businesses, which is beyond the and premiums. As originally intended, these correlate with scope of this brief.) The purpose was to extend marketplaces would be state-based, with a enrollment rates? affordable coverage to the uninsured who do default federally facilitated marketplace in not qualify for Medicaid, as well as to make states that were unable or unwilling to establish Given the variability in how states have coverage more secure for those who purchase their own. The state could run its marketplace implemented this aspect of the ACA, it is insurance on the individual market. Thus, through an existing or new state agency, a quasi- reasonable to ask how these decisions have capturing enrollment success would ideally governmental organization, or a non-profit entity. affected each state’s ability to enroll its target entail capturing the degree to which the population into plans on the marketplace. marketplaces are meeting intended enrollment The law specified five core functions for the Have states of one type or another had higher goals. An overall basic enrollment objective is exchanges: determining eligibility; enrolling enrollment rates? The Data Brief looks at the for the marketplaces to enroll as many of the individuals; conducting plan management individuals who selected a marketplace plan for potentially eligible enrollees as possible. But activities (e.g., certifying health plans as the initial open enrollment period. This covers given the goals of the ACA, covering as many “qualified” to be sold, rate review, regulating October 1, 2013 through March 31, 2014. It eligible uninsured would be a more specific way marketing); assisting consumers (e.g., in-person also includes the additional Special Enrollment to capture marketplace success. However, the help, “Navigators,” websites, and call centers); Period (SEP) activity reported through April 19, enrollment numbers available do not provide and providing financial management services 2014, which includes information for people “in sufficient detail to provide a direct link to this (e.g., accounting, auditing, and reporting). line” on March 31 (as well as those enrolling measure of success. While no measure is for other reasons such as a qualifying life perfect, given the data available at this point, As it turned out, just 16 States (and DC) event). These data are provided by the Assistant we measure total enrollment as a fraction of established their own marketplaces; 27 Secretary for Planning and Evaluation (ASPE), the potential population for the marketplace in states chose, or defaulted to, a federally run Department of Health and Human Services each state, including the uninsured not eligible marketplace. Because of time constraints, two (HHS). In this brief we refer to the count of for Medicaid and people with plans on the of the state-based marketplaces (New Mexico individuals who have selected a marketplace individual market. Here we use the percentage and Idaho) are using the federal IT platform while plan as “enrollment,” but technically this of eligible people as calculated by the Kaiser they develop their own. In 2011 regulations, is “pre-effectuated enrollment” because it Family Foundation. They include legal residents states were offered the option of a federal includes those who have selected a plan with who are uninsured or purchase non-group state partnership, in which states could retain consumer assistance and plan management or without the first premium payment having coverage, have incomes above Medicaid/CHIP functions, and seven states chose that option. been received directly by the marketplace or the eligibility levels, and who do not have access In early 2013, states choosing the federally run issuer. to employer-sponsored coverage. The estimate 1 May 2014 (update) Type of Health Insurance Marketplace Exchange Type of Exchange State based exchange State partnership exchange FFE with state plan management Federally facilitated exchange (FFE) excludes uninsured individuals with incomes below the poverty facilitated marketplaces were likely affected by the extremely level who live in states that did not elect to expand the Medicaid difficult rollout of the HealthCare.gov site when it launched on Oct. program. We call this measure the enrollment rate. 1, 2013, as were the two state-based marketplaces relying on the federal site (New Mexico and Idaho). Many of the less-successful What we found state-based marketplaces, particularly Massachusetts, Minnesota, Oregon, Maryland, and Hawaii, also had documented problems Overall, more than 8.0 million people have enrolled and picked a with the rollout of their sites, which was likely reflected in their plan through the exchanges, about 28% of all potential eligibles. enrollment rates. We found that, on average, state-based marketplaces have had higher enrollment rates (32.5% of eligibles) than the federally The final enrollment figures reveal that the federally facilitated facilitated ones (26.3%) or the partnership states (26.0%). The marketplaces and some of the troubled state-based ones states retaining plan management functions within a federally made up some ground in the last four to six weeks of the open facilitated marketplace have slightly lower rates than the other enrollment period. Enrollments in the federally run marketplaces federally run ones (22.0% vs. 27.0%). rose 111%, compared to an 89% increase in the partnership states and a 60% increase in the state-based marketplaces. These averages, however, hide significant differences among Federally run marketplaces in Florida (39%) and North Carolina the states and within the types of marketplaces, especially the (33%) outperformed the state-based marketplace average. state-based marketplaces. Within the federally run marketplaces, enrollment rates vary from 11% in South Dakota to 39% in Florida. Each state choosing to run its own marketplaces decided on Enrollment rates in the state-based marketplaces vary from 12% a formal governance structure, and that decision seems to in Massachusetts to 85% in Vermont. We should note that these have made a difference in initial enrollment rates. Each option two extremes are likely outliers. Vermont’s rate might reflect had its potential advantages and disadvantages. Housing a the mandatory nature of its exchange (no individual policies are marketplace in a state agency might allow the state to use its sold outside of the exchange). And in Massachusetts, many of existing infrastructure and resources most efficiently; it might also the eligibles not enrolled in the marketplace have insurance, but overwhelm an existing agency and subject the new marketplace have not been counted due to systems and processing problems to cumbersome state rules and regulations. States choosing in transitioning people from existing state programs and platforms. to create a quasi-governmental organization, on the other hand, would have government oversight but more flexibility in In our original interim brief, we found that the “average” state- its processes, such as hiring and procurement. But this option based marketplace was doing as well in its enrollment as the also involves investing in new infrastructure, and managing new best federally run exchange. We noted that all of the federally relationships with state agencies. Creating a non-profit entity might give a state the most flexibility, and perhaps increase its 2 May 2014 (update) Federally Facilitated, State-Based and Partnership Health Insurance Marketplace Enrollment as a Percent of Potential Enrollees Michigan New Hampshire Delaware Illinois Arkansas West Virginia Iowa Vermont (*85%) California Rhode Island Idaho Connecticut Washington District of Columbia New York Kentucky Colorado Oregon Nevada New Mexico Minnesota Maryland Hawaii Massachusetts Maine Virginia Montana Kansas Ohio Nebraska South Dakota Florida North Carolina Georgia Wisconsin New Jersey Utah Indiana Pennsylvania South Carolina Tennessee Texas Missouri Arizona Alabama Louisiana Mississippi Alaska Oklahoma Wyoming North Dakota 5% 10% 15% 20% 25% 30% 35% 40% 45% 0 State partnership exchange FFE with state plan management State based exchange Federally facilitated exchange (FFE) 3 May 2014 (update) Enrollment Surge in Final Month of Open Enrollment % Change by State Categorized by Marketplace Type 0 20% 40% 60% 80% 100% 120% 140% 160% Delaware Illinois West Virginia Michigan Iowa New Hampshire Arkansas Massachusetts New Mexico Hawaii Maryland District of Columbia Idaho Oregon Nevada California Vermont New York Washington Kentucky Rhode Island Colorado Minnesota Connecticut Virginia Kansas Ohio South Dakota Maine Nebraska Montana Pennsylvania Texas Louisiana Mississippi Georgia Oklahoma South Carolina Florida New Jersey Utah Missouri Indiana Arizona North Dakota Tennessee Wisconsin Alaska North Carolina Alabama Wyoming 0 20% 40% 60% 80% 100% 120% 140% 160% State partnership exchange FFE with state plan management State based exchange Federally facilitated exchange (FFE) 4 May 2014 (update) State-Based Health Insurance Marketplace Enrollment as a Percent of Potential Enrollees by Governance Structure for Exchange Vermont *(85%) Rhode Island New York Kentucky California Idaho Connecticut Washington District of Columbia Colorado Oregon Nevada New Mexico Minnesota Maryland Massachusetts Hawaii 0 5% 10% 15% 20% 25% 30% 35% 40% 45% Gov. Agency Quasi Non-Profit consumer-friendliness; however, this non-governmental entity enrollment. This suggests that these structural decisions may might also have the most difficulty interacting with the state’s ultimately not be as important in enrollment success as more agencies and databases. process-oriented ones, such as marketing and outreach to eligible populations, and consumer assistance in navigating the Twelve states chose a quasi-governmental organization to new marketplaces. govern their exchange; four states chose an existing state agency, and only one, Hawaii, chose to create a non-profit entity There are many aspects of success our measure does not (although Arkansas will transition from a partnership to state- capture. First, as mentioned above, we do not separate based marketplace in July 2015 and has decided on non-profit enrollees who were uninsured from those who had individual governance). The four states that chose an existing state agency insurance. Second, we do not address the degree to which had higher enrollment rates in the first five months of enrollment; enrollees have high health care needs, which could affect however, by the end of open enrollment, the difference between pricing in future years. Third, our measure does not account for state agencies and quasi-governmental organizations had the variation in the number of people still purchasing individual disappeared. In the final six weeks, marketplaces based in quasi- insurance outside the exchanges. It is possible that our measure governmental organizations had an 87% increase in enrollment, may artificially understate coverage success in those states with compared to a 52% increase in state agency-based marketplaces. relatively robust individual markets, because potential enrollees may be more likely to continue to purchase individual insurance What does it mean? outside the exchange. Fourth, while the number is likely to be small, some exchange participants were previously insured in Traditionally, states have regulated their own insurance the employer-sponsored market and thus not reflected among markets. The ACA introduced what has been called a “hybrid “potential enrollees.” Fifth, some of those enrolled may fail to federalism” into the process. In effect, the ACA became a pay their premiums and therefore quickly lose their enrollment case study in the political and organizational factors affecting status. state-level implementation of a federal mandate. Because of partisan divides, legal delays, and technological glitches, the With 8 million people enrolled in private plans through the implementation of the ACA differed from state to state. It is likely exchanges, the ACA has reached initial enrollment targets. that all these factors contributed to the wide variation across But by our measure, more than 70% of the potential eligible states in enrollment success in the first five months of open population has not enrolled through the new exchanges. When enrollment. Given their traditional role in regulating insurance, it the data are available, it will be important to understand who is not surprising that state-based marketplaces had the greatest has enrolled through the exchanges, who has maintained or initial success, and that state-based marketplaces governed purchased insurance off the exchanges, and who remains by existing state agencies had the fastest start. Perhaps the uninsured. Targeting the remaining uninsured will be critical to biggest surprise was the extent of the increase in enrollments the success of the next open enrollment period, which runs from in many federally facilitated marketplaces at the end of open Nov. 15, 2014 to Feb. 15, 2015. 5 About the Authors This Data Brief was written by Daniel E. Polsky, PhD, MPP, Janet Weiner, MPH, Christopher Colameco, and Nora Becker. About The Leonard Davis Institute of Health Economics The Leonard Davis Institute of Health Economics (LDI) is the University of Pennsylvania’s center for research, policy analysis, and education on the medical, economic, and social issues that influence how health care is organized, financed, managed, and delivered. LDI, founded in 1967, is one of the first university programs to successfully cultivate collaborative multidisciplinary scholarship. It is a cooperative venture among Penn’s health professions, business, and communications schools (Medicine, Wharton, Nursing, Dental Medicine, Law School, and Annenberg School for Communication) and the Children’s Hospital of Philadelphia, with linkages to other Penn schools, including Arts & Sciences, Education, Social Policy and Practice, and Veterinary Medicine. About the Robert Wood Johnson Foundation For more than 40 years the Robert Wood Johnson Foundation has worked to improve the health and health care of all Americans. We are striving to build a national culture of health that will enable all Americans to live longer, healthier lives now and for generations to come. For more information, visit www.rwjf.org. Follow the Foundation on Twitter at www.rwjf.org/twitter or on Facebook at www.rwjf.org/facebook.