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Want a Better Obamacare Deal? Look Beyond HealthCare.gov

Dec. 14, 2018, 10:46 AM

People who don’t qualify for help paying for Obamacare premiums may be finding better deals in the individual market outside the exchanges for 2019.

That could partly explain the lagging enrollment in Affordable Care Act plans. For people who make too much to get a government subsidy, “It’s actually better for them to go off the exchange,” Raymond Castro, director of health policy for New Jersey Policy Perspective, told Bloomberg Law. New Jersey Policy Perspective is a left-leaning advocacy group based in Trenton.

ACA supporters and Democrats have been critical of the Trump administration for falling marketplace enrollment for 2019. They cite big cuts in the ACA marketing budget and funding for people who assist consumers as contributing factors to the decline. But it isn’t clear how overall enrollment in ACA-compliant plans will end up.

Dropping Enrollment

About 4.1 million people signed up for health plans for 2019 from Nov. 1 through Dec. 8 in the 39 states that use the federal HealthCare.gov exchange, the Centers for Medicare & Medicaid Services reported. That was a nearly 12 percent drop from the equivalent period of the 2018 open enrollment. The drop continues despite declining premiums and an increase in the number of insurers selling plans in 2019.

Open enrollment for 2019 ends Dec. 15, but the CMS is extending the deadline for consumers who can’t get through to the marketplace call center.

The lag in exchange enrollment has hit states that have been supportive of the ACA.

New Jersey Gov. Phil Murphy (D) signed legislation in May instituting a penalty for not having health insurance that meets ACA criteria starting in 2019, mirroring the federal ACA penalty that was repealed. The Garden State also is implementing a program to reimburse insurers to cover high-cost claims in 2019, which should result in lower premiums.

Both actions are roundly supported by the health-care industry and ACA supporters as ways to reduce premiums and stabilize the individual markets.

In addition, the state is spending about $800,000 for outreach, Castro said.

Yet marketplace enrollment in the state was down nearly 15 percent to about 118,000 consumers through Dec. 8. Part of the reason may be that consumers who make too much money for ACA premium subsidies are buying plans in the individual market outside of the Obamacare exchanges.

Silver-Tier Subsidies

Premium subsidies are only available for moderate- and low-income people who buy plans through the ACA marketplaces.

In 2017 President Donald Trump halted payments to insurers for covering out-of-pocket expenses for low-income people. As a result, in 2018 most insurers raised rates for silver-tier plans, which cover about 70 percent of medical claims. Subsidy calculations are based on the second lowest-cost silver-tier premiums.

For 2018 New Jersey required insurers to raise rates for all silver-tier premiums, including those sold outside of the Obamacare exchange. That raised rates for people who bought plans outside the marketplace without subsidies.

But for 2019, the state is allowing insurers to reduce premiums for silver-tier plans sold outside of the exchanges.

According to the CMS, average monthly premium for a 27-year-old nonsmoker buying the second-lowest cost silver plan will be $289 in New Jersey’s exchange in 2019, down from $339 in 2018.

In contrast, the same buyer could buy a similar plan outside the Obamacare exchange for $255 a month, a savings of more than $400 a year.

That may be leading more people who don’t get subsidies to buy outside the exchange. A large share of consumers in New Jersey’s individual market’s doesn’t receive subsidies. About 137,000 of the state’s 329,000 individual market consumers didn’t get subsidies in 2018, Castro said.

The drop in enrollment also may be due to confusion among consumers, who may not be aware that New Jersey has enacted its own penalty for not having qualified coverage, Castro said.

The New Jersey Department of Banking and Insurance did not respond to requests for comment from Bloomberg Law.

‘The Best Deal’

“This year the best deal for the unsubsidized customer is off-exchange,” Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation. “That enrollment isn’t getting counted right now.”

The ACA requires insurers to pay out-of-pocket expenses for low-income people. Compared with 2018, more states for 2019 will allow insurers to include those costs in their pricing for ACA silver plans, which raises the price. That allows unsubsidized customers to buy plans in the individual market outside the exchanges at more affordable prices, she said.

“Those people are enrolling in ACA-compliant coverage,” Hempstead said. “But they’re just not touching HealthCare.gov.”

ACA-compliant plans must cover a comprehensive range of benefits and be available to people with medical problems at the same price as they are sold to healthy people.

Unsubsidized Enrollees

The drop in unsubsidized enrollees “is likely a contributing factor” to the drop in ACA enrollment, Chris Sloan, a director with Washington-based health-care policy consulting firm Avalere Health, told Bloomberg Law.

Between 2016 and 2017, marketplace enrollment of people who didn’t receive subsidies declined 20 percent, according to the CMS. And enrollment data for 2018 suggest the downward spiral among the unsubsidized may be accelerating, CMS Administrator Seema Verma said in November.

“This is still a really expensive market,” especially for people who don’t receive subsidies, Sloan said. “I would not be surprised by the end of open enrollment that the number of people who are subsidized remains relatively flat and the unsubsidized number drops.”

To contact the reporter on this story: Sara Hansard in Washington at shansard@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Brent Bierman at bbierman@bloomberglaw.com