February marks the end of open enrollment on the federal and state health insurance exchanges created by the Affordable Care Act (ACA), and while a few state-based exchanges have yet to report their final numbers, it’s clear that 2019 enrollment (around 11.5 million people) on the ACA exchanges will fall just short of 2018 results (around 11.8 million people). Of course, this difference is minor compared to the difference between the Congressional Budget Office’s original 2019 enrollment projection (made in 2010) of 24 million.
Despite a smaller market facing both headwinds and sluggish growth, health plans that remain committed to this population can take specific measures to both retain and grow membership.
Here are three of the major headwinds:
- Insufficient awareness and motivation to enroll: Decreased media coverage of open enrollment, combined with a 90% reduction in the open enrollment advertising budget, led to fewer people being aware of when to sign up for coverage. Additionally, with the repeal of the individual mandate taking effect in 2019, those who previously purchased ACA coverage to avoid paying a penalty may have elected not to re-enroll this year.
- A reduction in the eligible pool of enrollees: As the unemployment rate declined over the past few years, more Americans gained health insurance through their employer. Furthermore, as several states have expanded Medicaid eligibility, a significant portion of ACA enrollees have switched to Medicaid. This is a good outcome considering the overall objective of the ACA to increase coverage, but the side effect is a narrower-than-expected eligible population for the exchanges.
- Cost pressures and ACA alternatives: Those who remain eligible for a plan are increasingly facing higher prices in addition to considering alternative plans. ACA insurers increased premiums on silver plans (a practice known as “silver loading”) to offset the loss of cost-sharing reduction subsidies. In 2018, the Trump administration announced that more loosely regulated plans, such as short-term health plans, will be allowed for longer periods of time (from 90 days to one year). These plans are attractive to younger and healthier individuals because of their lower premiums. Though the adage of “you get what you pay for” holds true here as well, most of these plans fail to cover prescription drugs and set annual payment limits, for example.
What should health plans do in light of these headwinds? Here are three steps to take:
- Personalize member engagement and advertising. With all of the noise surrounding the ACA, plans must recognize that a “one size fits all” approach is unlikely to be successful in educating and motivating members to enroll. Plans must deeply understand member needs and perceptions of value through integrating primary and secondary data sources and assessing available plan alternatives in a geography. Doing so can yield microsegments of consumers to receive tailored messages. Carriers who double down in communicating value will be best positioned to attract new members and retain existing ones.
- Ensure local pull-through and align incentives. Investing in member engagement and marketing is not enough. The continuous flow of national and state regulation changes in areas such as ACA tax credit and Medicaid eligibility make it challenging for the average American to decipher their options and select the best plan for their needs. The role of a local navigator or insurance broker is even more vital now to educate consumers on their options. Unfortunately, the number of registered brokers has declined by 50% since 2015 due to carriers reducing (or eliminating) commissions for ACA plans. While there has been a recent uptick in commissions in some states—and other states mandating broker commissions—carriers should ensure that proper incentives are in place for local pull-through. Without incentive alignment, consumers run the risk of either not receiving appropriate guidance or being steered to a plan type that’s not in their best interest.
- Test ideas and adapt accordingly. Like any health insurance model, building experience with a pool of members and then scaling is key. Carriers such as Centene and Molina have succeeded on the ACA exchanges by using narrow networks of low-cost providers. This dedication to sticking with the exchange market, combined with a willingness to innovate for these consumers, has allowed these plans to build capabilities that serve specific and evolving needs.
Though enrollment lags behind original CBO projections considerably and many plans have exited—which the CBO predicted back in 2010—the ACA still represents a substantial business opportunity for health plans. The key is to be agile in member engagement, plan diversification and idea development.