Study Finds Lackluster Sign-Ups On State-Run Health Insurance Exchanges

Washington was one of two states nationwide in which the number of people buying health insurance through government-run exchanges went down in the second round of open enrollment, which ended in February.

The decline was a modest 2 percent, falling to roughly 160,000 participants — but the state’s goal had been to show a sizable increase.

Overall, the states that ran their own Affordable Care Act-created (ACA) exchanges grew a total of 12 percent, while those using the federal exchange grew by 61 percent, when comparing the close of enrollment in 2014 to sign-ups this year.

“We’re questioning why state-run exchanges did so much worse,” said Chris Sloan, a manager at Avalere Health, which analyzed the figures for a report in which the health-care advisory company examined 11 state-run and 34 federally run exchanges for which there were data.

But officials with Washington’s exchange, called Healthplanfinder, said the report missed a key part of the story.

The broader goal of the ACA is for nearly every American to have health insurance, whether through a private insurance company or a government program. And while Washington’s exchange has had a lackluster performance for 2015 enrollments, the state has covered impressive numbers of people through an expansion in Medicaid, exchange officials said.

Since the state made Medicaid accessible to more people at the start of 2014, more than half-a-million newly eligible adults have joined the program, raising the total enrollment to 1.7 million. As a result, the rate of uninsured residents has dropped by roughly 40 percent in Washington since major provisions of the ACA took effect.

Under the ACA, Medicaid eligibility (in states that chose to do so) was expanded to people whose income was up to 138 percent of the federal poverty level.

Avalere’s analysis of exchange enrollments year over year “was a pretty narrow parameter to define success,” said Michael Marchand, spokesman for the Washington Health Benefit Exchange, which runs Healthplanfinder.

In fact, the 10 states with the lowest growth in their exchanges all had expanded their Medicaid coverage. Conversely, seven of the 10 states with the largest growth didn’t loosen the definition for Medicaid eligibility. In states with expanded Medicaid, some potential exchange customers would have instead qualified for the free health-care program, shrinking the potential customer base.

“You can’t look at the marketplace in isolation because Medicaid was picking up a lot of lower-income people who would have been easiest to enroll,” said Larry Levitt, senior vice president of the Kaiser Family Foundation.

To encourage people to buy exchange insurance, the government offered tax subsidies that cut the cost of monthly premiums. Those making less money qualify for the largest subsidies. In Washington, 77 percent of those enrolled in the exchange received a subsidy.

But while Washington can boast a large reduction in uninsurance rates, exchange enrollments still matter. By law, all exchanges are supposed to be financially self-sustaining by Jan. 1 of this year. And the exchange’s budget is funded primarily by taxes and fees levied on plans sold through the marketplace.

The state had hoped to sign-up 213,000 people during the November to February enrollment window, but only enlisted about 160,000. Washington reopened enrollment days after it closed to give people who were unaware of the tax penalty for going without insurance a chance to get coverage. That window closes April 17, and by late March the enrollment was more than 165,000.

This was the first year that exchange customers needed to renew their coverage and there was some confusion in Washington about what the renewals required.

Public Health — Seattle & King County’s Daphne Pie manages the network of outreach organizations working to get people covered. Public Health and its partner organizations called roughly 1,600 customers who hadn’t renewed their exchange insurance. They found many didn’t understand the renewal process or hit technical snags in renewing online.

“It was a new process, and I think that’s where the state is getting the lower numbers,” Pie said.

And despite all of the publicity around the insurance exchanges and Obamacare, some people are still figuring out what it all means to them.

“For some people health-care reform is still new to them,” Pie said. “It’s not a reality until people get their taxes done and realize they need health insurance” or face a penalty.

For federal taxes being filed this year, the uninsured can expect to pay a penalty of 1 percent of their adjusted household income or $95, whichever is more. The penalties ratchet up each year.

Some people will decide that the penalty isn’t enough to compel them to get insurance, but Levitt expects that to change by 2016 when it goes up to 2.5 percent of income and $695 per adult, predicting

Categories: Insurance, Reporting Consortium, States, The Health Law, Uninsured