Marketplace Enrollment Tops 12 Million For 2021; Largest-Ever Funding For Navigators

On April 21, 2021, the Centers for Medicare and Medicaid Services (CMS) released the final Marketplace open enrollment report for 2021. Consistent with prior posts that showed an increase in enrollment through HealthCare.gov, overall enrollment across all 50 states and DC increased during the 2021 open enrollment period. This increase—of about 5 percent relative to 2020—underscores the importance of the marketplaces as part of the health care safety net during the pandemic.

CMS also announced that it will fund navigators at $80 million to support outreach and education activities ahead of and during the 2022 open enrollment period and plan year. The notice of funding opportunity will be posted on June 1 with applications due on July 1 and grant awards announced on August 26. CMS appears to be soliciting applications for navigators who could serve for plan years 2022 through 2024. The $80 million investment for 2022 represents an eight-fold increase in funding relative to the Trump administration, which had invested $10 million annually in recent years.  

Separately, federal officials issued final estimates of federal pass-through funding for states with an approved Section 1332 waiver under the Affordable Care Act (ACA). All of the state-specific letters with the amounts of 2021 pass-through funding are available here, but the amounts are virtually unchanged from this summary. But in this strange year “final” will not actually be final: the agencies also agreed to states’ requests to recalculate federal pass-through funding as a result of the American Rescue Plan. This post also highlights a few new state developments on Section 1332 waivers.

Marketplace Enrollment Up By 5 Percent For 2021

Overall, about 12.0 million consumers in all 50 states and the District of Columbia selected or were automatically reenrolled in Marketplace plans during the 2021 open enrollment period. About 8.3 million consumers enrolled through the 36 states that use HealthCare.gov, and about 3.8 million consumers enrolled through the 15 states that operate their own Marketplaces. (An additional 975,337 individuals enrolled through the Basic Health Program in New York and Minnesota; this is up from 880,000 individuals in these two states in 2020.)

Overall enrollment increased by about 5 percent from the 2020 open enrollment period, when about 11.41 million consumers selected or were automatically reenrolled in Marketplace coverage. Enrollment through HealthCare.gov essentially remained steady relative to 2020 (which itself remained steady relative to 2019), while enrollment through the state-based Marketplaces increased from 3.1 million for 2020 to 3.8 million for 2021. This represents the first and only year when overall enrollment increased under the Trump administration.

Enrollment through HealthCare.gov was flat in large part because New Jersey and Pennsylvania transitioned to their own state-based Marketplaces for 2021. Enrollment through these two states previously accounted for about 7 percent of all HealthCare.gov plan selections (more than 578,000 plan selections) for 2020. This increased to more than 607,000 consumers for 2021 but is reflected in the count for state-based Marketplace enrollment, rather than HealthCare.gov enrollment. In addition, Idaho, Nebraska, and Utah—two of which use HealthCare.gov—expanded their Medicaid programs in 2020. (The individual market generally contracts after a state expands its Medicaid program, as individuals whose income is between 100 percent and 138 percent of the federal poverty level migrate from Marketplace coverage to the Medicaid program.) All of these factors could have led to declines in overall enrollment through HealthCare.gov, which instead remained steady relative to 2020.

These data confirm continued demand for comprehensive individual market coverage, but enrollment remains lower than the peak in 2016, when 9.6 million people enrolled through HealthCare.gov out of 12.7 million total Marketplace consumers. This is largely explained by low awareness, no individual mandate penalty, the Trump administration’s decision not to allow a broad special enrollment period in 2020, the expansion of non-ACA options, and continued funding cuts for navigators and advertising. But higher enrollment was expected given anticipated coverage losses from the pandemic as well as lower average premiums, higher insurer competition, more generous premium tax credits thanks to silver loading (with an estimated 4.5 million people eligible for a plan with a $0 premium), and a rising uninsured rate even prior to COVID-19.

Breaking Down The Data

Demographic enrollment data for 2021 is largely consistent with previous enrollment periods in terms of the enrollment of young adults, the number of consumers who qualified for cost-sharing reductions (CSRs), and even the gender breakdown of enrollees. Indeed, many of the percentage breakdowns are identical to 2020 enrollment data (which were identical to 2019 data). CMS also released public use files with state-, county-, and zip-code-specific data on plan selection and demographic information, such as age, gender, race, metal level, and income, where available. Enrollment continues to vary significantly by state. The highest enrollment was seen in Florida (2.1 million consumers) followed by California (1.6 million consumers) and Texas (nearly 1.3 million consumers).

New Versus Returning Enrollees

Despite overall enrollment gains, the percentage of new enrollees continues to decline. For 2021, 21 percent of consumers—about 2.5 million people—were new enrollees. This is a decrease, of about 300,000 people, relative to 2020 when new enrollees accounted for 25 percent of all enrollees. The drop in new enrollees during the open enrollment period likely reflects higher enrollment of new consumers earlier in 2020. This is because new consumers enrolled in Marketplace coverage through a special enrollment periods and then reenrolled in coverage for 2021; effectuated enrollment data from 2020 is consistent with that trend.

Even with that explanation for the decline relative to 2020, the proportion of new enrollees has fallen dramatically from its height of 4.9 million new enrollees (39 percent of all enrollees) for 2016. New enrollees are an important indicator of Marketplace stability because they tend to be younger and healthier and thus help maintain a stable risk pool. Consistent with previous years, consumers aged 18 to 34 accounted for 25 percent of enrollees through HealthCare.gov.

Most Marketplace enrollees, 79 percent, were returning consumers. Many of these returning customers—46 percent of all enrollees, or about 5.5 million enrollees—actively reenrolled in coverage by assessing their options and shopping for a plan. The remaining 3.9 million consumers (33 percent of all enrollees) were automatically reenrolled in coverage for 2021.

Subsidy Eligibility

Of the 8.3 million individuals enrolled through HealthCare.gov, more than 7.2 million (88 percent) qualified for advance premium tax credits (APTCs). APTCs covered 85 percent of consumers’ gross monthly premium, leaving an average net premium of $92 per month. These levels are virtually unchanged from last year. The average premium before APTC was down slightly, from $606 in 2020 versus $601 in 2021. Most enrollees—73 percent—had an income between 100 percent and 250 percent of the federal poverty level, making them eligible for both APTC and CSRs.

CMS also included data on the number of consumers enrolled through HealthCare.gov without APTCs, which was down slightly from 2020. For 2021, an estimated 1.02 million unsubsidized consumers enrolled in a plan through HealthCare.gov, with an average premium of $512/month (compared to 1.08 million unsubsidized consumers with an average premium of $522/month for 2020).

One new data point not included in recent prior CMS reports is the eligibility breakdown for those eligible for Marketplace coverage versus Medicaid coverage. For 2021, 93 percent of applicants were determined eligible for Marketplace coverage (up slightly from 92 percent for 2020) while 8 percent were eligible for Medicaid or CHIP (at the same level for 2020).

Metal Tiers and Deductibles

Continuing trends from prior years, enrollment in bronze plans through HealthCare.gov continued to increase—from 33 percent for 2020 to 37 percent for 2021. Enrollment in gold plans (7 percent) was the same as for 2020 even as enrollment in silver plans fell again—from 59 percent for 2020 to 56 percent for 2021. This is likely the result of continued silver loading for the 2021 plan year. Silver loading enables eligible consumers to receive more generous APTC than previous years, resulting in the ability to purchase bronze or gold plans at much lower premiums.

Even with silver loading, though, silver plans remain the most popular plans sold through HealthCare.gov. This is not a surprise since so many consumers remain eligible for both APTC and CSRs and can only get the benefit of CSRs by enrolling in a silver plan.

Similar to the 2020 report, the 2021 report compared average deductibles for HealthCare.gov plans, including by metal level. The overall average deductible of selected plans for 2021 was $2,825 which is relatively unchanged from 2020. Unlike the 2020 report, the 2021 report did not provide annual enrollment in plans that are eligible to be paired with a health savings account (HSA) on HealthCare.gov (although that data is available in the public use files).

CMS Increases Navigator Funding to $80 Million

Also on April 21, CMS announced its intent to increase funding for the navigator program to $80 million for 2022 and solicit applications for a three-year funding cycle. Navigators are organizations that must have (or can readily build) relationships with employers, employees, uninsured and underinsured consumers, or self-employed individuals who likely qualify to enroll in Marketplace coverage. The navigator program was modeled after other successful outreach efforts for public coverage programs, such as Medicaid, CHIP, and the State Health Insurance Assistance Programs (for Medicare). Historically, navigator organizations have been trusted local organizations such as United Way affiliates, universities, health systems, legal aid societies, and patient advocacy organizations.

This is the largest-ever funding award for the navigator program, which peaked at $63 million for the 2017 plan year. This latest announcement follows the extension of about $2.3 million in additional funding for 30 current navigator organizations in 28 states. These increased investments in the navigator program signal that the Biden administration understands the need for consumer assistance: survey data from the Kaiser Family Foundation shows that consumers highly value assistance and that 12 percent of target consumers tried to find help but did not get it.

The number of navigator organizations and states with a navigator program will increase with this investment of federal funds. Regular readers know that the Trump administration cut funding for the navigator program by 84 percent, investing $10 million annually beginning with the 2019 plan year. These funding cuts had a significant impact on the navigator program. For 2019, the number of navigator organizations dropped by about half—from more than 80 organizations for 2018 to only 39 grantees for 2019. Three states (Iowa, Montana, and New Hampshire) had no navigators at all, and entire areas of some states (such as Cleveland and Dallas) were not served by the navigator program. For 2020 and 2021, the Trump administration issued a two-year notice of funding opportunity  and maintained $10 million in funding for each year. This left 34 navigator grantees and only one state, Utah, without a navigator entity.

The Biden administration will also presumably roll back the restrictions that had been placed on navigators. The future notice of funding opportunity could, for instance, eliminate the request for navigators to prioritize the “left behind” population. The Trump administration defined this population as individuals who are disproportionately uninsured and unaware of Marketplace coverage as well as non-ACA-compliant plans such as association health plans and short-term plans. Other Trump-era changes to the navigator program—such as eliminating the requirement that each Marketplace have at least two navigator entities (one of which must be a community and consumer-focused nonprofit group) and that navigators maintain a physical presence in a Marketplace service area—were adopted in the 2019 payment rule and the 2020 payment rule. Changes to these policies, assuming the Biden administration wants to pursue them, would need to be addressed in future rulemaking.

States With Section 1332 Waivers Will Receive Higher Pass-Through Funding

Also on April 21, CMS and the Department of the Treasury issued guidance clarifying their intent to recalculate the amount of federal pass-through funding owed to states with approved Section 1332 waivers. As discussed here, the agencies previously informed states of estimated pass-through funding for 2021 and finalized largely the same amounts in letters to each state sent in April. However, those estimates did not account for the impact of the American Rescue Plan or the extended broad COVID-19 special enrollment period being offered through HealthCare.gov (and by many state-based Marketplaces).

The expansion of subsidies under the American Rescue Plan means that more people will qualify for premium tax credits and existing enrollees will qualify for more generous premium tax credits. States with approved reinsurance programs will therefore save the federal government even more money. Following enactment of the American Rescue Plan, 14 state insurance commissioners—every state with an approved waiver and operational reinsurance program—asked CMS and Treasury to recalculate the amount owed in federal pass-through funding.

The new guidance confirms that states will receive the benefit of greater federal savings in the form of additional pass-through funding. The agencies acknowledge that the terms and conditions of each waiver approval gives flexibility to adjust the pass-through funding amount as needed to reflect changes in federal law such as the American Rescue Plan. The agencies did not give a timeline but will inform states of the adjusted amount in final pass-through funding later this year.

Beyond this development, Virginia enacted legislation to apply for a Section 1332 waiver and establish a reinsurance program that would begin with the 2023 plan year. Oregon notified the federal government of its intent to apply for a waiver extension for an additional five years, through 2027. Oregon outlined some of the changes it has made in its rate review process to account for the reinsurance program but is otherwise asking for an extension without changes to the underlying waiver. CMS confirmed on April 7 that Oregon could proceed with its request for an extension, and state officials intend to submit an extension application by Nov. 30.

Finally, North Dakota amended its reinsurance legislation to authorize the use of pass-through funds for third-party reinsurance. This would allow North Dakota to purchase reinsurance from a private entity to help cover the state’s costs of eligible claims.