September 6, 2016
Steve Davis & Robert Laszewski confirm what I've been saying all along: Appx. 40% of ACA indy market is OFF EXCHANGE.
By Charles Gaba
For 2 1/2 years, dating back to around February 2014, I've been trying to hammer home the importance of the OFF-exchange individual market. Time and time again I've been stunned at the seeming blind spot that people who should know better (such as Avik Roy) have regarding the millions of people who are enrolled in fully ACA-compliant policies, but are doing so directly through the carriers themselves. There are a few reasons why people buying individual/family policies would do this, but the most obvious one is simple: If you earn more than 400% of the Federal Poverty Level (around 97,000/year for a family of 4), there's no reason to jump through the extra hoops of enrolling through HealthCare.Gov or the other various ACA exchanges...because you don't qualify for federal financial assistance anyway. For whatever reason, however, numerous reporters, pundits and even the HHS Dept. itself keep acting as though this market doesn't exist.
How many people are we talking about here? Well, back in 2014 I estimated that roughly 8 million people had signed up as of mid-April...almost exactly the same as the 8.02 million who selected QHPs on the ACA exchanges, or about 50% of the total. That 8 million included several million transitional and grandfathered policy enrollees, however, though I wasn't sure what the breakout was.
By this year, the exchange-based number had grown to around 11.1 million as of March 2016, of course...but the off-exchange number has been tougher to estimate. I've generally estimated the total off-exchange indy market at around 8-9 million, with roughly 7-8 million of that consisting of people enrolling in ACA-compliant plans at full price, and another 1-2 million or so enrolled in ACA-noncompliant "grandfathered" or "transitional" policies.
This estimate has been strongly supported by Mark Farrah Associates, which pegs the total individual market in 2016 at around 20.5 million.
Well, today, Robert Laszewski stumbled upon an excellent piece of data diving by a reporter named Steve Davis, in which Davis dug up the broken-out enrollment numbers for a whole mess of Blue Cross carriers nationwide.
The overall picture is quite clear: Roughly 48% (2.3 million) of all individual policies sold by these carriers (Blue Cross only) are subsidized, while another 48% are ACA-compliant but unsubsidized (8% on exchange, 40% off exchange). The remaining 4% or so are grandfathered/transitional enrollees.
It's important to note that in the states where there's no Grandfathered/Transitional (GR/TR) numbers listed, some chunk of the "Off Exchange Unsubsidized" tally likely belongs in the GR/TR column. Even so, the above hard data is remarkably close to my own assumptions:
9.4 million on-exchange subsidized (47%)
1.7 million on-exchange unsubsidized (8%)
7.1 million off-exchange unsubsidized (ACA-compliant) (35%)
2.0 million off-exchange unsubsidized (NON-ACA compliant) (10%)
= 20.2 million total
Comment by Don McCanne
More numbers. Moving directly to the point, HHS and others keep assuring us that the anticipated greater increase in ACA insurance premiums will not be a problem for the 85 percent of individuals who receive premium subsidies through the ACA exchanges. Well it is a problem not only for the 15 percent of individuals in the exchanges who do not receive subsidies but also for those who buy their individual plans outside of the exchanges.
Charles Gaba makes the point that the individual plans sold by the insurers both within and outside of the exchanges share a common risk pool.
So roughly 47 percent of plans sold by insurers servicing the exchanges are subsidized, but another 53 percent (10 percent of total are not ACA compliant) sold on and off the exchanges are not subsidized so the insured individual bears the full premium increase. So it is not 85 percent who do not have to worry, but rather it is closer to half of those with ACA compliant plans.
Middle-income individuals not only bear the brunt of the premium increases, but they also pay taxes that will be used to provide the subsidies for the higher premiums in the exchanges. This is one more example of why middle-income individuals have fared poorly under ACA.
Single payer would have been simpler, more equitable, and would have had better control of increases in health care spending that are contributing to higher premiums. We can still make the change.