MARCH 2014 Deciphering the Data: Health Insurance Marketplace Enrollment Rates by Type of Exchange 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 or may not 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 potential impact on enrollment rates to date. We use existing data sources as well as a new database, HIX 2.0, which provides a rich array of state-level variables to provide an ongoing picture of ACA implementation. HIX 2.0, developed by researchers at the University of Pennsylvania, documents and codes state-level variation in the political setting, institutional structures, and operational decisions likely to affect outcomes on the marketplaces. One of the linchpins of the Affordable Care Act In early 2013, states choosing the federally-run coverage to the uninsured who do not qualify (ACA) is the establishment of “Health Insurance marketplace were given the option of taking on for Medicaid, as well as to make coverage more Exchanges” [now called “Marketplaces”] where only plan management functions, and seven secure for those who purchase insurance on the consumers can select health plans they prefer states chose that option. individual market. Thus, capturing enrollment among various combinations of coverage success would ideally entail capturing the degree and premiums. As originally intended, these DID MARKETPLACE TYPE to which the marketplaces are meeting intended marketplaces would be state-based, with a CORRELATE WITH enrollment goals. default federally-facilitated marketplace in ENROLLMENT RATES? states that were unable or unwilling to establish An overall basic enrollment objective is for the their own. The state could run its marketplace Given the variability in how states have marketplaces to enroll as many of the potentially through an existing or new state agency, a quasi- implemented this aspect of the ACA, it is eligible enrollees as possible. But given the goals governmental organization, or a non-profit entity. reasonable to ask how these decisions have of the ACA, covering as many eligible uninsured affected each state’s ability to enroll its target would be a more specific way to capture The law specified five core functions for the population into plans on the marketplace. marketplace success. However, the enrollment exchanges: determining eligibility; enrolling Have states of one type or another had higher numbers available do not provide sufficient individuals; conducting plan management enrollment rates? This Data Brief looks at the detail to provide a direct link to this measure activities (e.g., certifying that health plans as enrollment numbers as of the end of February, of success. While no measure is perfect, given “qualified” to be sold, rate review, regulating five months into the open enrollment period the data available at this point, we measure marketing); assisting consumers (e.g., in-person on the marketplaces, which ends March 31, total enrollment as a fraction of the potential help, “Navigators”, websites, and call centers); 2014. We use cumulative enrollment figures population for the marketplace in each state, and providing financial management services for each state from October 1, 2013 - March 1, including the uninsured not eligible for Medicaid (e.g., accounting, auditing, and reporting). 2014, provided by the Assistant Secretary for and people with plans on the individual market. Planning and Evaluation (ASPE), Department of Here we use the percentage of eligible people As it turned out, just 16 States (and DC) Health and Human Services (HHS). Enrollment as calculated by the Kaiser Family Foundation. established their own marketplaces; 27 is measured as the number of people selecting They include legal residents who are uninsured states chose, or defaulted to, a federally-run a plan, whether or not they have yet paid a or purchase non-group coverage, have incomes marketplace. Because of time constraints, two premium for it. above Medicaid/CHIP eligibility levels, and who do of the state-based marketplaces (New Mexico not have access to employer-sponsored coverage. and Idaho) are using the federal IT platform while Health insurance marketplaces were created by The estimate excludes uninsured individuals with they develop their own. In 2011 regulations, the ACA as a way to make health insurance more incomes below the poverty level who live in states states were offered the option of a federal- affordable and easier to purchase for individuals. did not elect to expand the Medicaid program. state partnership, in which states could retain (The ACA also created marketplaces for small We call this measure the enrollment rate. consumer assistance and plan management businesses, which is beyond the scope of this functions, and seven states chose that option. brief.) The purpose was to extend affordable 1 MARCH 2014 Type of Health Insurance Marketplace Exchange Type of Exchange State based exchange State partnership exchange FFE with state plan management Federally facilitated exchange (FFE) WHAT WE FOUND successful state-based marketplaces, particularly Massachusetts, Minnesota, Oregon, Maryland, and Hawaii, had documented Overall, more than 4.2 million people have enrolled and picked a problems with the rollout of their sites, which is likely reflected in plan through the exchanges, about 14.8% of all potential eligibles. their enrollment rates. The enrollment rate varies from state to state, with a high of 54% in Vermont to a low of 5% in Massachusetts. We should note that Each state choosing to run its own marketplaces decided Massachusetts had the lowest rate of uninsurance in the nation on a formal governance structure, and that decision seems since its health reform in 2006; its previous success might mean to have made a difference in enrollment rates. Each option that the remaining uninsured population could be especially had its potential advantages and disadvantages. Housing a difficult to reach. marketplace in a state agency might allow the state to use its existing infrastructure and resources most efficiently; it might also We found that, on average, state-based marketplaces have had overwhelm an existing agency and subject the new marketplace higher enrollment rates (20.3% of eligibles) than the federally- to cumbersome state rules and regulations. States choosing facilitated ones (12.4%) or the partnership states (13.9%). The to create a quasi-governmental organization, on the other states retaining plan management functions within a federally- hand, would have government oversight but more flexibility in facilitated marketplace have similar enrollment rates to the other its processes, such as hiring and procurement. But this option federally-run ones (11.4% vs. 12.6%). All of the federal-facilitated also involves investing in new infrastructure, and managing new marketplaces were likely affected by the extremely difficult rollout relationships with state agencies. Creating a non-profit entity of the HealthCare.gov site when it launched on Oct. 1, 2013, as might give a state the most flexibility, and perhaps increase its were the two state-based marketplaces relying on the federal site consumer-friendliness; however, this non-governmental entity (New Mexico and Idaho). might also have the most difficulty interacting with the state’s agencies and databases. These averages, however, hide significant differences among the types, especially among the state-based marketplaces. Within the Twelve states chose a quasi-governmental organization to govern federally-run marketplaces, enrollment rates vary from 6% in South their exchange; four states chose an existing state agency, and only Dakota to 21% in Maine. one, Hawaii, chose to create a non-profit entity (although Arkansas will transition from a partnership to state-based marketplace in July The “average” state-based marketplace is doing as well in its 2015 and has decided on non-profit governance). The four states enrollment as the best federally-run exchange. And a number that chose an existing state agency are having higher enrollment of those states are doing significantly better. Many of the less- rates, on average, than the others. 2 MARCH 2014 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 *(54%) Rhode Island Connecticut California Idaho Washington New York Kentucky District of Columbia Colorado Oregon Nevada Minnesota Maryland New Mexico Hawaii Massachusetts Maine Montana Virginia Nebraska Ohio Kansas South Dakota North Carolina Florida Wisconsin Georgia Utah Tennessee New Jersey Indiana Alabama South Carolina Missouri Arizona Texas Pennsylvania Wyoming Mississippi Louisiana Alaska Oklahoma North Dakota 5% 10% 15% 20% 25% 30% 0 State based exchange FFE with state plan management State partnership exchange Federally facilitated exchange (FFE) 3 MARCH 2014 State-Based Health Insurance Marketplace Enrollment as a Percent of Potential Enrollees by Governance Structure for Exchange Vermont *(54%) Rhode Island New York Kentucky Connecticut California Idaho Washington District of Columbia Colorado Oregon Nevada Minnesota Maryland New Mexico Massachusetts Hawaii 0 5% 10% 15% 20% 25% 30% Gov. Agency Quasi Non-Profit WHAT DOES IT MEAN? may be more likely to continue to purchase individual insurance outside the exchange. Fourth, while the number is likely to be Traditionally, states have regulated their own insurance small, some exchange participants were previously insured in markets. The ACA introduced what has been called a “hybrid the employer-sponsored market and thus not reflected among federalism” into the process. In effect, ACA became a case “potential enrollees”. Fifth, many of those enrolled may fail to study in the political and organizational factors affecting pay their premiums and therefore quickly lose their enrollment state-level implementation of a federal mandate. Because of status. partisan divides, legal delays, and technological glitches, the implementation of the ACA differed from state to state. It is likely By this measure, even the most successful states (other that all these factors contributed to the wide variation across than Vermont) have enrolled less than half of their eligible states in enrollment success in the first five months of open populations. When the data are available, it will be important enrollment. Given their traditional role in regulating insurance, to understand who has enrolled through the exchanges, who it is not surprising that state-based marketplaces are having the has maintained insurance off the exchanges, and who remains most success, and that state-based marketplaces governed by uninsured. existing state agencies are doing the best. We are in the last month of open enrollment for 2014 coverage, There are many aspects of success our measure does not and enrollments may surge as the deadline approaches. The capture. First, as mentioned above, we do not separate next open enrollment period runs from Nov. 15, 2014 to Feb. enrollees who were uninsured from those who had individual 15, 2015. Many questions remain about whether these early insurance. Second, we do not address the degree to which enrollment patterns will continue. Now that technical problems enrollees have high health care needs, which could affect with healthcare.gov are mostly fixed, will the federally-run pricing in future years. Third, our measure does not account for marketplaces catch up? Will the states still having technical the variation in the number of people still purchasing individual site problems (such as Massachusetts) solve them and will insurance outside the exchanges. It is possible that our measure enrollments in these states jump as a result? Will more states may artificially understate coverage success in those states with migrate to state-based marketplaces, as the initial opposition relatively robust individual markets, because potential enrollees (and legal challenges) to the ACA subside? 4 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.