Rich Daly | April 4, 2016
Enrollees in individual plans sold by not-for-profit Blue Cross on the government-run marketplaces were sicker, higher utilizers, and costlier than enrollees in employer-sponsored coverage and those who previously had individual coverage, according the first comprehensive analysis of marketplace enrollees.
The analysis compared the health status of Blue Cross health plan enrollees before and after the Affordable Care Act (ACA) took effect and also compared such enrollees with people who have employer-based health insurance. It found that marketplace enrollees had higher rates of diabetes, depression, coronary artery disease, human immunodeficiency virus, and hepatitis C than did people who had Blue Cross individual insurance prior to the ACA. And the short existence to date of the ACA marketplaces could mean those rates are higher than current estimates, according to the report from the Blue Cross and Blue Shield Association (BCBSA).
Similarly, the ACA marketplace enrollees used more medical services across all sites of care than did those with pre-2014 individual coverage, according to the report. Specifically, ACA enrollees had 84 percent higher inpatient admissions, 48 percent higher outpatient visits, and 26 percent higher use of medical professional services. Compared to those with employer-sponsored insurance, ACA enrollees had 38 percent more inpatient admissions, 10 percent more outpatient visits, and 10 percent more use of medical professional services.
The report included data on about 4.7 million enrollees in not-for-profit Blue Cross individual plans and approximately 25 million employer-based group enrollees ages 21 through 64.
The findings followed reports of serious financial challenges faced by a growing number of insurers with respect to their ACA plans, many of which had issues stemming from an unexpectedly high number of sick enrollees. For instance, UnitedHealth Group blamed the lack of young and healthy enrollees for a $720 million loss related to its individual marketplace business.
Against Expectations
The new BCBSA findings ran counter to the expectations of some earlier researchers, such as a 2013 analysis of ACA marketplaces by the Robert Wood Johnson Foundation. That report, which came out a year before the marketplaces began operating, concluded that “health characteristics of nongroup enrollees can be expected to be quite similar to those with employer-based insurance.”
However, the new BCBSA findings appeared to echo a growing body of evidence that the marketplaces have had difficulty enrolling younger—and presumably healthier—people. Chiefly, the share of enrollees age 18 to 34, the so-called young invincibles, was 28 percent in the 2016 open enrollment period for the marketplaces, according to a recent report by the U.S. Department of Health and Human Services. That is the same share as in the previous two marketplace enrollments and far short of the 40 percent to 45 percent share such enrollees comprise in healthy insurance risk pools, noted Dan Schuyler, a senior director for Leavitt Partners.
“You need a significant number of young and healthy individuals to balance the risk that the marketplaces are going to absorb from all of the unhealthy individuals that will enroll and have enrolled, and we just haven’t seen those scales balance yet,” Schuyler said in an interview.
Another effect of the dearth of young invincibles is that older—and presumably sicker—enrollees comprise a larger-than-expected share. The Congressional Budget Office projected only 8 percent of enrollees would be over 55 but in 20016 they made up 27 percent of the marketplace population.
The challenge of enrolling younger adults has been a growing focus of many insurers, marketplaces, and advisors, including Leavitt, Schuyler noted. But there has been too little focus on the issue by the Centers for Medicare & Medicaid Services (CMS).
“CMS needs to come out and say, ‘There is a problem and we’re working on it,’ instead of saying ’28 percent is great’ and not addressing it as an issue,” Schuyler said.
Why Enrollments Lag
Marketplace sign-ups by young adults have lagged because the tax penalty is insufficient, the Internal Revenue Service is generally limited to collecting the penalty from refunds, and there are many exemptions to the individual mandate, Brian Blase, a senior research fellow at the Mercatus Center of George Mason University, said in an interview.
Additionally, the insurance sold in the marketplaces remains too expensive, as shown by the relatively small share of enrollments among those who are not heavily subsidized, Blase said. In 2016, 66 percent of enrollees earned less than 200 percent of the federal poverty level (FPL). That followed a 2015 Urban Institute report that found enrollment by 75 percent of those who were eligible and earning less than 200 percent of FPL, compared with about 30 percent of those earning between 200 percent and 300 percent of FPL and 14 percent of those earning between 300 percent and 400 percent.
Enrollees under 200 percent of FPL are eligible for the largest premium subsidies, as well as subsidies to cover much of the increasingly large deductibles.
“So it is really the healthy people above 200 percent FPL who are not signing up,” Blase said. “They may get some tax credit but it is not that large, and they don’t qualify for the cost-sharing subsidies so the ACA plans have very little value for them,” Blase said.
Finding Success
The marketplace for Washington, D.C., called DC Health Link, had the highest share of enrollees who were young invincibles: 45 percent in 2014, according to its latest data. But Schuyler noted that the success of the smallest marketplace would be hard to translate to other marketplaces because the jurisdiction includes an unusually large share of wealthy and highly educated young adults.
It was unclear whether individual insurers in other areas had more success enrolling large shares of younger and healthier people because most do not publicly release that data. Two insurers that had some of the best results—Molina and Centene—had extensive experience offering Medicaid managed care plans, Blase noted. Such plans were characterized by narrow provider networks and copays tailored to encourage the use of primary care services and discourage visits to emergency departments.
Schuyler was hopeful that plans would be able to figure out the right marketing strategies to attract sufficient shares of young and healthy enrollees. In the meantime, at least one insurer started to offer part-time, temporary insurance that could be attractive to low-to-mid-income and low-utilization young invincibles, Schuyler noted.
“Developing plans to meet those needs certainly would be a benefit,” Schuyler said.
Blase expected the overall response by marketplace plans to the ongoing dearth of young, healthy enrollees would be to continue shift toward narrow networks and increased premiums.
“You’re going to see pretty sizable premium increases again and also these plans trying to crack down on utilization—whether with high deductibles, tighter networks, or more aggressive plan management of enrollees’ expenses,” Blase said.
Source: HFMA