Kelly Fristoe operates his financial planning company in Wichita Falls, Texas, an oil-producing town about 140 miles northwest of Dallas, near the Oklahoma border.
As part of his job, Fristoe, CEO of Financial Partners, helps people in the area buy health insurance both on and off the exchanges created by the Affordable Care Act.
The oil industry, like other resource-based businesses, is fickle with people's incomes. That can directly affect how people buy and retain coverage in the individual market under the healthcare law, Fristoe said. When times are good, well-paying jobs usually follow. Insurance is easier to afford if companies don't offer it.
More recently, the price of crude oil has fallen precipitously. When that happens, employees in oil havens brace for pay cuts and layoffs. And even small changes in income can affect whether it makes sense to shop for health coverage in the Affordable Care Act's exchanges.
The exchanges were built as an outlet for people to buy more affordable health plans in one streamlined setting if their jobs didn't provide any coverage. Americans who make less than 400% of the federal poverty level receive tax credits that go toward paying premiums, and those who earn less than 250% can receive additional cost-sharing subsidies to help pay down deductibles and copayments. Exchange plan subsidies are also at the center of a major U.S. Supreme Court case to be decided next month.
But what about those at the general cutoff? An individual at 400% of poverty makes about $47,000 per year, while a family of four makes $97,000—by no means poor, but firmly in the trenches of the middle class. Do they decide to purchase health insurance through the exchanges knowing they won't receive financial assistance, or do they buy directly from health insurers and brokers?
“Right there at 400%, it could go either way,” Fristoe said. It depends on plan design, other ancillary costs and sometimes politics.
Instead of one, seamless individual market, the ACA has generated "two different marketplaces for the same kind of product,” said Katherine Hempstead, the director of health insurance research at the Robert Wood Johnson Foundation. And health insurance companies continue to sell millions of plans to people off the exchanges, a group of people often overshadowed by consumers navigating the new exchanges.
“In many ways, this is a lost population,” Kev Coleman, head of research and data at HealthPocket, said of those with off-exchange coverage.
Data for off-exchange plans are scant or incomplete because it's not really a homogeneous market, experts say. HHS said last November that 8 million to 12 million people had “individual off-marketplace coverage.” Most research suggests the actual figure is somewhere on the low end of that range, but that would still equal about half of the entire individual market.
The Kaiser Family Foundation and consulting firm Mark Farrah Associates estimate more than 8 million people had ACA-compliant, off-exchange coverage as of Dec. 31, 2014. That was more than the 7 million people who purchased health plans through state and federal exchanges at the same time. The National Association of Insurance Commissioners and the Robert Wood Johnson Foundation reported similar figures in January.
Charles Gaba, a Michigan-based blogger who tracks ACA enrollments, estimates that off-exchange plan selections are around 8.5 million. That's behind an estimated 10.7 million people who have paid for an exchange plan.
And according to a study published in Health Affairs this month, off-exchange or “nongroup” coverage totaled almost 7 million people as of February 2015. However, researchers cautioned that number could be flawed because consumers were confused by the terminology.
On- and off-exchange enrollment varies a lot by state and is mostly tied to the labor market and insurance regulations, Hempstead said. Some states, such as New Jersey, break down individual enrollment by health insurance company every quarter. Others don't provide any information at all.
Some health insurers lay out more specific details of their individual membership than others. For example, Humana reported last month it had 731,000 on-exchange plan members as of March 31, compared with a little more than 213,000 off-exchange members. That may seem like a small number for the off-exchange market, but it's actually a 62% increase from the previous three-month period that ended Dec. 31.
People who don't qualify for subsidies may decide to buy an off-exchange plan because that's what they had done previously. Off-exchange plans are more expensive than on-exchange options, mostly because subsidies don't apply. But in many places they're less likely to rely on narrow networks of providers, Coleman of HealthPocket said.
However, some low- and moderate-income people who would qualify for subsidies individually also stay away from the exchanges because of the Affordable Care Act's so-called family glitch.
The Affordable Care Act allows people to get subsidies for exchange plans if the health insurance their employer offers isn't affordable. But the law's definition of affordable (9.5% of income) only applies to individual coverage. An employee who can't afford to add coverage for a spouse and children doesn't qualify for tax credits even if the cost exceeds that threshold.
Therefore, some Americans buy off-exchange health plans that are more affordable than what they can get at work and more appealing than exchange plans without subsidies. “That's where the gaping hole exists in this law,” Fristoe said.
Estimates of the number of people affected by the family glitch have ranged from 2 million to 4 million, according to a policy brief by Tricia Brooks, a senior fellow at Georgetown University's Health Policy Institute.
Health insurers have also gained off-exchange membership in conservative states simply because people despise President Barack Obama's healthcare law.
“A lot of folks down here are not happy with the administration. They are not happy with this law,” Fristoe said. “They take a stance and say, 'We don't want none of that Obamacare stuff.' And I'm just like really, people? Gosh.”