KFF: Individual market enrollment dips 5% in Q1, but market not on verge of collapse

A signpost with the words Affordable Care Act
The enrollment in the individual market dipped by 5% in the first quarter of 2019 compared to 2018's first quarter. (Getty/kroach)

Enrollment in the individual market in the first quarter of 2019 declined 5% compared to the same period last year, providing a glimpse into how the zeroing out of the Affordable Care Act’s (ACA's) individual mandate penalty is affecting sign-ups.

The analysis from Kaiser Family Foundation (KFF) released Wednesday said that while the loss of the mandate's penalty hasn’t caused the individual market to collapse, there remain major concerns around affordability for people who don’t get ACA subsidies.

Overall, 13.7 million people signed up for coverage on the individual market in this year’s first quarter, down 5% from the 14.4 million that signed up in the first quarter of 2018.

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KFF found that 3.2 million people signed up for coverage off the ACA’s exchanges in 2019, compared to 3.8 million in 2018.

“Declining off-exchange enrollment accounts for much of the drop in individual market enrollment since 2016,” KFF’s report said. “Total individual market enrollment began to decline in 2017 and has continued to fall through the first quarter of 2019.”

A primary reason is that off-exchange customers are not eligible for subsidies that lower the cost of insurance, leaving customers open to massive premium spikes that ran rampant across the individual market over the last couple of years.

KFF found that 9.3 million people on the exchanges got subsidies in the first quarter of 2019, a slight increase from the 9.2 million subsidized population from 2018’s first quarter. The unsubsidized population on the exchanges (1.3 million in quarter 2019) did decline slightly from 1.4 million in 2018.

But a worrying trend is that the number of new consumers signing up for plans in 2019 dropped by 16% from 3.2 million to 2.7 million.

“This drop in new signups could be a result of a variety of factors, such as reductions in outreach and consumer assistance, repeal of the individual mandate penalty, or broader economic factors that may make people less likely to come into the market,” KFF said.

The analysis was based on enrollment totals from the Trump administration and from an insurer database called Health Coverage Portal.

A Centers for Medicare & Medicaid Services report released earlier this month said that the unsubsidized enrollment population on the ACA exchanges declined by 40% from 2016 to 2018.

The 2019 coverage year is the first with the individual mandate’s financial penalty reduced to zero. The Trump administration also expanded access starting this year to association and short-term health plans that are cheaper than ACA-compliant plans but offer fewer benefits, sparking a concern from experts that the cheaper plans will siphon away healthy customers on the exchanges.

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The Congressional Budget Office predicted earlier this year that the reduction of the mandate penalty, which was zeroed out as part of the tax reform law, would cause more than 7 million people to lose coverage by 2021.

KFF’s analysis said that while the penalty and new plans did cause some premiums to rise for 2019, other factors such as correcting for overpricing in previous years helped ensure that premiums for 2019 were largely the same as 2018. The analysis couldn’t say for sure the reason for changes in enrollment, because there are many factors that could drive such shifts.

While enrollment in the individual market “has declined somewhat in early 2019, there are signs that enrollment may stabilize after a couple turbulent years,” KFF said.