The Continued Resiliency of the ACA Marketplaces

Five years ago, I wrote a column titled, “The Surprising Resiliency of the Affordable Care Act,” noting that despite the hostility of the Trump Administration and Republicans in Congress—especially in the House—Republicans were only able to pass their version of a replacement bill in May 2017 in the House where they had a large majority (240-194) and were unable to pass a replacement bill in the Senate where the Republican majority was small (52-48). 

Having been unable to “repeal and replace” the Affordable Care Act, as the President had repeatedly pledged to do during his 2016 campaign, his Administration issued various rules and regulations that either undermined portions of the ACA or minimized its economic burden, depending on your view of the effects of the ACA and the appropriate response to those effects. For example, the Administration encouraged states to allow insurers to offer policies that did not include the ten essential benefits required of all ACA policies. The justification for reducing the required benefits was that it would reduce their cost and the associated economic burden for those employers who did not receive substantial subsidies. The hope was that, by reducing the cost of the benefit package, some individuals who didn’t have options attractive enough for them to purchase insurance might be willing to purchase cheaper insurance—even with a “skinnier” benefit package. To advocates of the ACA, reducing the benefits would severely reduce the effectiveness of the insurance, and reducing the economic burden for those whose premiums were fully or largely subsidized was of little interest.

The Trump Administration also shortened the enrollment period from three months to six weeks, making the sign-up period comparable to enrollment periods used by both private employers and Medicare. When a person either turns 65 or stops working after the age of 65, Medicare allows individuals seven months to sign up for the program without a penalty. If the person doesn’t sign up for Medicare during that period of time and lacks comparable coverage from employer-sponsored insurance, she will pay a penalty to Medicare when she does sign up and this penalty will continue throughout her time on Medicare.

Aside from the initial enrollment period, the annual enrollment period for Medicare is only seven weeks: October 15 through December 7. The usual enrollment period for employer-sponsored insurance is two to four weeks, so while the changes made by the administration sounded like a major reduction in ACA benefits to some, they actually placed ACA enrollment on a comparable footing with other public and private insurance enrollment.

The ACA has clearly played an important role in providing coverage to many individuals who previously had been able to access individual insurance only at high premium rates. The ACA was especially important during the Covid-19 pandemic when many people who had relied on employer-sponsored insurance lost their jobs and their insurance coverage. The Commonwealth Fund estimates that, in the first half of 2020, 7.7 million workers lost jobs with employer-sponsored insurance. These individuals covered 6.9 million dependents who also lost coverage, for a total of 14.6 million people at risk as a result of the pandemic.

However, despite the significant increase in the number of people who lost jobs and insurance coverage in 2020, the overall number of uninsured people did not substantially change. This was because the loss of employer-sponsored insurance was offset by a significant expansion in Medicaid coverage. In addition, many of those who lost employer-sponsored insurance were also eligible to buy individual subsidized health insurance in the ACA marketplaces.

Several provisions of the American Rescue Plan Act (ARPA) of 2021 further lowered the price of insurance, making it easier for low- and middle-income individuals to purchase coverage, although none of the provisions actually lowered the cost of care delivered which may make the model too expensive to use again. The Administration also significantly extended the enrollment period for the ACA – extending it from February to May in 2020 to allow for more individuals to sign up for insurance.

The outsized role that Medicaid played during the pandemic was driven largely by the increased funding made available to states to expand their Medicaid programs. However, the single biggest driver of the increase in Medicaid coverage was the “continuous enrollment provision” that was in place from February 2020 to the end of March 2023. As a result of this provision, states were not allowed to disenroll individuals who no longer qualified for Medicaid coverage. This provision has been credited with increasing Medicaid enrollment by 23.3 million individuals, and it stayed in place until Congress passed the Consolidated Appropriation Act of 2023, which delinked Medicaid continuous enrollment from the Public Health Emergency.

There is concern that ending the continuous enrollment provision of Medicaid may again increase Medicaid churn—the disenrolling and reenrolling in Medicaid that has been observed in the past. Churn can happen either because an individual’s circumstances change, for example they experience changes in income because of a new job or a loss of a job, or because they don’t receive or understand notices requiring them to provide additional information to maintain their Medicaid coverage, a well-documented phenomenon. However, not reassessing eligibility for Medicaid coverage over a sustained period also means changing the nature of Medicaid to a program of coverage for otherwise uninsured, lower income individuals but not necessarily at a level required by Medicaid. This type of change, if desired, should come from Congress passing new legislation and not from a failure to enforce existing laws.

In response to concerns about how the end of continuous enrollment might adversely affect the Medicaid population, the Biden Administration launched strategies to encourage individuals to sign up for insurance during the ACA open enrollment period that began on November 1, 2023. Consumers were able to preview their insurance coverage options, and see detailed information about the plans and their prices a week ahead of the opening of the enrollment period. In addition, standardized plans that include the same deductibles and cost sharing for most benefits were included among the coverage options. These make it easier for consumers to see what’s being offered and to compare plans in selecting the one that best meets their needs.

The open enrollment period went from November 1, 2020, to January 16, 2023, for states using healthcare.gov. As of January 10, 2024, HHS reported that over 20 million people had selected health insurance coverage since November 1—a record high. Ninety percent of the people using healthcare.gov were able to choose from at least three different plans. It has helped that insurer participation has been robust, with more insurance plans entering the marketplaces than those exiting them.  A new auto enrollment policy has been put in place for people who had been enrolled in marketplace plans who did not act to renew or change their plan by December 15. It will enroll people in a silver plan offered by the same insurer they have been using and allow them to change to a different plan until the end of open enrollment.

People who end up losing their Medicaid coverage can apply to the marketplace and select a new plan until the end of July 2024. People with low incomes can sign up for marketplace coverage or change plans throughout the year.

The most recent HHS estimate (August 2023) of the uninsured reported an all-time low of 7.7 percent of the population without insurance coverage. Approximately 6.3 million gained coverage since the pandemic in 2020. These numbers indicate that, even with the challenges from the pandemic and the resulting loss in employment, focused policies can increase and maintain insurance coverage. Eliminating continuous enrollment for Medicaid so that people who no longer meet the requirements of Medicaid are not enrolled in Medicaid represents appropriate public policy. Assuring that these individuals have access to alternative sources of insurance coverage is equally important public policy. There appear to be various strategies that have been successful in the past that can help make this happen.

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