ACA enrollment pleases HHS, but insurers have some complaints

HHS Secretary Sylvia Mathews Burwell says the tally of 12.7 million people who signed up for 2016 coverage through the insurance exchanges means the Affordable Care Act has created “a product that people want and need.”

That figure is well below the expectations set before the exchanges launched in 2014, but the plans have allowed millions of Americans to get comprehensive medical coverage and contributed to the lowest uninsured rate in the U.S. on record. Now the Obama administration has to ensure that the risk pool is evening out so that premium rates will stabilize and health insurers will remain interested in selling the plans.

Insurance executives and state officials are griping publicly about the state of the marketplaces. UnitedHealth Group fired the opening salvo in November when it said it may exit the exchanges next year because of heavy losses. UnitedHealth expects to lose approximately $1 billion on its 2015 and 2016 exchange plans. The company's criticisms include that the CMS has allowed consumers to abuse special enrollment periods, skewing the risk pools.

The preliminary enrollment numbers released last week fall within the government's previously stated expectations of 11 million to 14.1 million.

The figure will recede a bit as some consumers who signed up fail to pay premiums or switch to other forms of coverage. The administration predicts there will be 10 million paying exchange members by the end of 2016. The Congressional Budget Office recently lowered its estimate of 2016 exchange enrollment to 13 million from 21 million.

Like UnitedHealth, Aetna and Anthem have voiced concerns that their margins are running below expectations because the risk pools skew toward older, higher-cost patients.

Some not-for-profit Blue Cross and Blue Shield insurers, too, expect sizable deficits on the plans for 2015, and North Carolina's insurance commissioner has questioned whether the ACA has harmed the state's insurance markets.

But in many areas of the country, especially in Democratic-led states, the ACA's open enrollment has become routine. “People are pretty positive about it,” said Jim Moore, a Pacific University political science professor who follows the ACA in Oregon. “It's become a normal thing now.”

The same is true for smaller, regional insurers that prepared for the ACA's early hiccups. Michelle Zettergren, senior vice president of sales and marketing at ConnectiCare, said the 2016 open enrollment “went very well.”

The Connecticut health plan grew its exchange membership to approximately 52,000 people, or more than half of the state's total, according to preliminary numbers. Many switched from other plans, Zettergren said, indicating that people are shopping around to find better deals.

A vast majority of ConnectiCare's members enrolled in silver plans, Zettergren said, and most of those enrollees qualified for the ACA's cost-sharing reductions, which are available for silver-plan members who make between 100% and 250% of the federal poverty level. Most of the plan's enrollees are in their mid-40s, which the insurer expected, and it will offer plans again in 2017.

“Unlike the national players, we're focused solely on the state of Connecticut,” Zettergren said. “We had a mature marketplace prior to the ACA, and it continues to be a mature marketplace for us.”

Aetna CEO Mark Bertolini told investors last week he believes the exchanges can develop in one of two directions. They can either serve as the conduit for a “Medicaid-plus” program, serving high-risk patients who earn less than 400% of poverty, or specific changes can make the individual market more attractive to younger, healthier people. “That's yet to be decided and will be based on the kind of changes we make going forward,” Bertolini said.

Aetna and a cadre of other large insurers have pressured the Obama administration to tighten special enrollments and cast aside proposals such as standardizing health plan options. Payers argue those measures lead to adverse selection and limit how they can control their own costs.

“You can be assured: We are contributing to the dialogue to form a long-term, sustainable and affordable marketplace,” Anthem CEO Joseph Swedish said during an earnings call last week.

The CMS has already eliminated several circumstances that qualify people to enroll in an ACA plan outside of open enrollment. And the agency touted that more young adults signed up for 2016 coverage thanks in large part to more marketing around the law's stiffer tax penalty. Roughly 2.7 million people ages 18 to 34, the target demographic for many insurers, enrolled this year. “This risk pool is a better risk pool and will help in the long run,” CMS acting Administrator Andy Slavitt said last week.

But those young adults still represent only a quarter of the entire exchange population. Many have been turned off by the high deductibles and rising monthly premiums. Narrow provider networks have disgruntled others, although most people believe their choices of doctors and hospitals have been adequate.

“They're very savvy shoppers,” said Sam Gibbs, executive director of AgileHealthInsurance.com, of millennials. AgileHealthInsurance.com provides short-term medical plans, which usually last six or 12 months and don't have to follow the ACA's rules for underwriting or essential health benefits. Some young adults have chosen those short-term plans knowing they will still have to pay the penalty since they aren't ACA-compliant.

“They just do the math, and they figure it's more cost-effective for them,” Gibbs said.

Many executives believe it'll take at least another year or two before the individual marketplaces will have stable rates and broader enrollment. HealthPartners CEO Mary Brainerd told Modern Healthcare recently that, from operating both a provider and a payer, she understands some of the concerns emerging about the benefit packages prevailing in the new marketplaces.

“The exchanges have started to feature much higher deductible plans with lower levels of coverage,” Brainerd said. “Whether or not that is the level of coverage we want or hope people will have is a completely different story. I worry about the balance between affordability and coverage adequacy.”