Obamacare insurers, flush with a record 14.5 million plan members after a successful sign-up period, are facing a new challenge: how to keep the new enrollees from dropping coverage.
Every year, roughly 10% of marketplace plan members have their coverage terminated for nonpayment or other reasons. To maintain the new bumper crop of enrollees, some insurers will use artificial intelligence, advanced analytics, and machine learning to identify members most likely to let their policies lapse. Eventually, all carriers will target their at-risk enrollees with phone calls, emails, texts, and letters.
Finding the right mix of technology and old-school outreach to retain these members—and their federal premium subsidy payments—will be a top priority for marketplace insurers moving forward. The more plan members who maintain coverage, the more who can be automatically enrolled into plans next year.
“It matters more at the end of the year, but there’s a bigger incentive, with record-high enrollment, to hold on to as many people as you can,” said Katie Keith, an associate research professor at Georgetown University’s Center on Health Insurance Reforms.
Three million of this year’s marketplace plan members weren’t enrolled in Affordable Care Act coverage last year. That makes for a 17% increase in new enrollees over the 2021 enrollment period, the Department of Health and Human Services reports.
Credit the increase to concern over Covid-19, more people helping with sign-ups, and the American Rescue Plan Act. The legislation extended subsidies to higher earners, capped premiums at 8.5% of income, and lowered out-or-pocket costs for low-income enrollees.
The subsidies, lower payments, and the pandemic helped cut the policy lapse rate at Oscar Health, which covers nearly a million marketplace enrollees in 22 states.
Some 11 to 13% of Oscar enrollees typically have their coverage terminated each year, Alessa Quane, Oscar’s chief insurance officer, said. That lapse rate fell to 8% in 2021.
“People who sought coverage during the extended special enrollment, as a result of the national emergency, wanted to retain that coverage because there was a potential fear of getting Covid and needing coverage,” Quane said. “So I think both of those things probably combined to keep that lapse rate lower.”
Outreach via App
Most member outreach and engagement is handled through Oscar’s app, she said.
“We do find that those people who are active on the app are more likely to continue making payments on their premiums, because clearly they’re more engaged with their health, more generally, and understand the importance of it,” she said.
Quane said members who’ve used their coverage in the previous year are also more likely to not lapse compared with those who haven’t.
She said Oscar utilizes these data insights to better target its enrollee outreach efforts.
Research by Softheon shows retention for plans has been higher, and fewer people are moving between plans, said Kevin Deutsch, the company’s general manager and senior vice president for its health plan cloud.
He credits the increase to Covid uncertainty, more subsidies, and more opportunities to enroll, with last year’s special enrollment period and the expanded 75-day 2022 enrollment period.
A cloud-based health insurance exchange and service provider, Softheon developed a machine learning algorithm that helps plans identify the slice of enrollees who account for about two-thirds of policy terminations in a given year, Deutsch said.
Lack of Premium Subsidies
The Softheon model was based on enrollment and payment data from more than 90 plans. It found that enrollees most at risk for terminating their coverage were those who receive no premium subsidies, those who self-pay their premiums each month, and those with single rather than family coverage, Deutsch said.
While the attrition rate was just over 8% last year for those who received premium subsidies, Softheon found it was almost 19% among those who didn’t, he said.
Likewise, those who set up automatic, recurring premium payments had an attrition rate of about 4%, compared with 13.5% for plan members who self-paid manually, he said.
And people covered individually had a 12% attrition rate compared with 8% for those enrolled in family plans. Deutsch said the lower rate for family plans was likely due to plan members’ “greater sense of responsibility” to maintain coverage for loved ones.
Gregory Fann, a consulting actuary at Axene Health Partners, said he doesn’t think most insurers will take a high-tech approach to retaining enrollees.
“I would say insurers are probably more focused on trying to understand which of their members are profitable versus which are not. And if there’s any retention strategy, it’s more focused on not losing a large segment of your profitable enrollment,” Fann said.
Not all effective enrollee retention efforts have to be data-driven. Deutsch said one of Softheon’s client health plans allows members to make premium payments at retail locations, including pharmacies.
This makes payments easier and more convenient for people who lack bank accounts, “so when you talk about retention, this is an incredibly important model,” Deutsch said.
Another client plan lets members with financial problems make partial premium payments and still maintain coverage, Deutsch said. Others aim to improve retention by offering incentives like reduced premiums for members who undergo a health-risk assessment.
Sometimes the more “human connection” works best, said Terry Burke, interim president of individual exchange business at AmeriHealth Caritas, which covers roughly 5 million Medicaid, Medicare, Children’s Health Insurance Program, and ACA marketplace enrollees.
“Let’s extend a phone call. If they’ve given us permission to text with them, let’s reach out. Let’s make sure they get a welcome kit in the mail, and access online as fast as possible so they know what they’ve bought and they become an informed consumer,” Burke said during a recent marketplace webinar. “Little touches to connect with the member and engage with them, I think, go a long way.”
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