Premium Payments on ACA Health Exchanges

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA and Government >> ACA and States >> ACA Health Exchanges >> Premium Payments on ACA Health Exchanges (Last updated: 10.27.16)

Overview

There have been a variety of media and expert estimates of the overall payment rate based on consultations with health plans and state officials. As of early May 2014, there seemed to be a general consensus that the payment rate is between 80-90%, with most debate over whether it’s closer to the lower and higher end of that range and what the figure might be over the long haul.  It was reported (2.18.15) that the administration expects the payment rate for 2015 signups to be 87% “based on past experience” (suggesting this is the best available estimate of what the overall payment rate was for 2014. While there is disagreement over the gross monthly attrition rate (with estimates ranging from 2-6% range, net monthly attrition for 2014 likely was 1.5% (see below).

Imputed Paid Enrollments 

2014. Based on all available data, it appears that average monthly paid Exchange enrollment for calendar year 2014 was 5.73 million. This is based on estimated paid enrollments reported at ACAsignups for January (1,980,880), February (2,412,287), and March (3,252,582), administration estimates of effectuated (paid) enrollments for August (6,907,000) and October (6,707,000) and interpolating/extrapolating for the remaining months based on the observed net monthly attrition rate (1.5%)  observed between August and October. This is consistent with 2014 estimates of average monthly paid enrollment at ACAsignups which range from 5,274,333 to 5,901,170 depending on various assumptions made about payment rates and monthly attrition.

2015. Complete data are not yet available for 2015 but the administration reportedly expects an 87% payment rate. Paid enrollments at ACAsignups are estimated using an assumed 88% payment rate, but there is no good reason to suppose that the payment rate will be any better this year than last year especially given that at tax time, an estimated 52% who received subsidies will have to pay some of these back. ACAsignup figures on estimated paid enrollments for week 9 of open enrollment–ending 1/16–were assumed to be representative of January (8,371,088) and week 13–ending 2/12–were assumed to be representative of February (10,389,172).  Given that signups have been extended through April 30 for certain individuals, there is no certain way of knowing how many more will sign up during the extended open enrollment period.  The chart at ACAsignups clearly shows a leveling out of paid enrollments over the past few weeks, so it was generously assumed an additional 250,000 enrollees per month would be added in March and  April. Enrollment for the remaining months was calculated using the net monthly attrition rate for 2014 (1.5%). Using these assumptions, the average monthly paid enrollment figure for 2015 should be 10.045 million.

2016. Charles Gaba, an ACA proponent who tracks enrollment at acasignups.net, estimated (10.15.15) that for 2016, 14.7 million would select an ACA plan, 13.2 million would pay their first premiums, and 12.2 million would still be enrolled by the end of the year. This reflects a retention rate of 83 percent.

Administration Estimates of Effectuated Enrollments

Administration officials have used the term “effectuated” to refer to paid enrollments.

2016 Estimates

• The January enrollment report (1.7.16) stated “This report does not include data on effectuated enrollment. The Centers for Medicare & Medicaid Services (CMS) will be publishing data on effectuated enrollment for the 2016 coverage year separately.” (footnote 2).
• On June 30, 2016, CMS released its first quarter effectuated enrollment report for 2016. As of March 31, about 11.1 million consumers had paid their first-month premium and had retained active effectuated coverage. About 8.4 million were enrolled through the 38 states served by the federally facilitated marketplace (FFM) and 2.7 million were enrolled through the remaining state-based marketplaces. March effectuated enrollment equaled 87 percent of total Open Enrollment plan selections.

2015 Estimates

• ACASignups Graph. Charles Gaba has codified the periodic CMS estimates of effectuated coverage during 2015: 7.8 m. (Jan.), 8.4 m. (Feb.), 10.18 m. (March), 9.95 m. (June) and 9.7 m. (December).
• CMS. March 31, 2015 Effectuated Enrollment Snapshot (6.2.15). As of March 31, 10.2 million (10,187,197) consumers had effectuated Health Insurance Marketplace coverage.
• CMS. June 30, 2015 Effectuated Enrollment Snapshot. As of June 30, 9.95 million (9,949,079) consumers had effectuated Health Insurance Marketplace coverage.
• CMS. September 30, 2015 Effectuated Enrollment Snapshot (12.22.15). On September 30, 2015, about 9.3 million (9,313,323) consumers had effectuated Health Insurance Marketplace coverage.
• CMS. December 31, 2015 Effectuated Enrollment Snapshot. This report is not expected to be released until sometime in March 2016. Based on the net attrition in effectuated enrollments between June and September, this figure might be as low as 8.7 million. The net attrition rate during the last quarter of 2014 was 5.5% (calculated from paid enrollment figures shown below) which would imply a 12.31.15 paid enrollment figure of 8.8 million.  However, the administration had stated in the September report (released on 12.22.15) that “HHS’s effectuated enrollment projection continues to be 9.1 million people for the end of 2015.”  So this discrepancy will not be resolved until the final 2015 figures are released.

2014 Estimates

• August 15, 2014 Paid Enrollments. On 9.18.14 CMS reported that there were 7.3 million with paid Exchange coverage as of mid-August, implying that 700,000 (8.8%) of the 8 million who had reportedly enrolled by mid-April had either never paid their first month’s premium or subsequently had dropped coverage.  However, this did not entirely resolve the issue of the payment rate since it is unclear how many of the 7.3 million are people who became eligible after mid-April due to a qualifying event.  But it subsequently was announced that the administration had inadvertently inflated the figures by including 393,000 dental plan subscribers. So actual paid enrollment as of August 15 was 6.907 million.
• October 15, 2014 Paid Enrollments. On 11.10.14, Secretary Burwell reported paid enrollments at 7.1 million as of October 15, but after deducting the 393,000 in dental plan subscribers just described, net paid medical plan enrollments were only 6.707 million.
• December 31, 2014 Effectuated Enrollments. These were reported in a table at the end of the March 31, 2015 effectuated enrollments report cited above: 6,337,860 (Table 4).
• 87% Payment Rate Expected for 2015. Bruce Albert at the Times-Picayune (New Orleans) reported (2.18.15): “Based on past experience, the Obama administration expects 87 percent to pay the required premiums to begin using their health insurance. The sign up numbers reflect enrollment through the Feb. 15 deadline.”

Historical Estimates of Payment Rates

The following are various estimates during 2014 regarding payment rates.

• 53-86%. A McKinsey survey conducted in February and released in March showed that 53% of previously uninsured enrollees had paid their first month’s premium, compared to 86% of those with previous coverage (this survey covers both on- and off-Exchange enrollments). When the sample is properly weighted, uninsured enrollees account for 49% of sign-ups, so the weighted average of these two figures is 69.8%. This was superseded by an April survey showing the payment rate had risen to 83-89% (see below).
• 67%. The House Energy and Commerce Committee (4.30.14) reported: “data provided to the committee by every insurance provider in the health care law’s Federally Facilitated Marketplace (FFM) shows that, as of April 15, 2014, only 67 percent of individuals and families that had selected a health plan in the federally facilitated marketplace had paid their first month’s premium and therefore completed the enrollment process.”   The committee provided a state-by-state breakdown showing that payment rates range from a low of 41% in Texas to a high of 88% in Arkansas. The committee plans to ask the insurers in the federally facilitated marketplace to provide an enrollment update by May 20, 2014. 
• 70-80%. The National Journal (2.19.14) estimates “about 20 to 30 percent of people who selected a plan did not make their first payment, according to anecdotal estimates from individual insurance companies.”
• 80%. The New York Times reported (5.6.14): “Most of the people choosing health plans under the Affordable Care Act — about 80 percent — are paying their initial premiums as required for coverage to take effect, several large insurers said Tuesday on the eve of a House hearing about the law.” The New York Times had earlier reported (2.14.14) that “in interviews and in the quarterly reports on their financial performance, insurers provided data indicating that four-fifths of applicants had met payment deadlines.” The NYT report further noted: “Obama administration officials said they did not know how many people signing up for coverage had paid their premiums because the government had not finished building the ‘back end’ of the computer systems needed to pay insurers.”
• 80%. Similarly, health insurance industry expert Bob Laszewski estimates that around 20% of enrollees will fail to pay for their coverage; however, in early March 2014, he also reported that “carriers are telling me that another 2% to 5% of those January enrollments never paid their second month’s premium.”
• 80-85%. CNBC reported 3.14.14 that “insurance experts estimate that nationwide, anywhere between 15 percent and 20 percent of Obamacare enrollees haven’t paid.”
• 83-89%. A McKinsey survey conducted April 7-April 16 found that 83% of those previously uninsured and 89% of those previously insured had paid their first month’s premium for new coverage. The payment rate was lower for those age 18-29 (78%) than for those 30-49 (89%) or 50-64% (90%) (Exhibit 4).
• 80-90%. ASPE‘s most recent marketplace enrollment report asserts: “some issuers have made public statements indicating that 80 percent to 90 percent of the people who have selected a Marketplace plan have made premium payments.”
• 80-85%. Forbes contributor Bruce Japsen reported (4.2.14): “The Blue Cross and Blue Shield Association, which represents the nation’s Blue Cross and Blue Shield plans, says “80-85″ percent of newly enrolled individuals buying plans under the Affordable Care Act are paying their premiums.” Japsen said this figure had been confirmed by Forbes and represented payment status as of February 1. He further added: “The Blue Cross and Blue Shield Association, which represents the nation’s Blue Cross and Blue Shield plans, says “80-85″ percent of newly enrolled individuals buying plans under the Affordable Care Act are paying their premiums.”
• 88%. Charles Gaba, who runs ACASignups.net concluded 10.16.14 that based on all available evidence, 88% was a reasonable payment rate figure for 2014. His earlier estimates were as follows:
  • 93%. In early April, he estimated (4.5.14) about 85% had paid and that 8% more eventually would pay.
  • 88.4%. In late May, he estimated (5.27.14) that among states that have reported paid percentages, the unweighted average is 88.4% (ranging from 71% to 100%). This figure includes MA and WA at 100%, which artificially inflates the average for reasons explained below under Massachusetts.
  • 90%. In late July, he estimated (7.31.14) that 90% is a plausible payment rate in light of all the available evidence he has reviewed; part of the reason the reported payment rate is lower is that it blends people who should have paid their first month’s premium with recently signed up individuals who may not owe their first month’s premium for 4-6 weeks; he offers trend data from Vermont to make this point.
• Long Run: 90-95%. Avalere president Dan Mendelson “said that once the open enrollment period closes, he expects that between 5 percent and 10 percent of Obamacare enrollments will end up being unpaid. Before the launch of Obamacare, the industry standard was a 10 percent unpaid rate for people who enrolled in individual insurance plans, Mendelson said.”

Monthly Attrition

Gross Monthly Attrition. An important issue concerns monthly attrition among those who pay premiums initially. Experts and data indicate that a gross attrition rate of 2-3% monthly attrition appears to have occurred in 2014. However, the most recent data from Florida suggest attrition suggests that at least in some states, it may be higher than 6%.

Net Monthly Attrition. Based on official data on effectuated enrollments on October 15 compared to August 15 (see above), the net  monthly attrition rate was 1.5%. No solid data has been reported on the number of monthly enrollments due to special circumstances that occurred beyond the end of the official open enrollment period for 2014. However, Charles Gaba at ACASignups estimates that 270,000 enrollees per month seems reasonable based on the evidence he has reviewed from various states.  This would translate into a rate of 3.7% (using April enrollment) to 4.1% (using December enrollment). Thus, a net attrition rate of 1.5% is consistent with a gross attrition rate of 5.2 to 5.6%.

Expert Estimates

• Robert Laszewski. Noted insurance expert and ACA opponent Robert Laszewski reported in early March 2014 that 2 to 5 percent who paid their first month’s premium on the ACA Exchanges didn’t paid the second month’s premium. On April 22, he reported “Every month, an individual health insurance block loses 2% to 3% of its members. Generally, the “change of life” adds about offset the deletes. But in this case, while people can buy coverage if they have a qualifying event, the general market cannot buy coverage until the next open enrollment period. The upshot is that this first Obamacare block is likely to lose lots of people on a net basis as the people who simply let their coverage lapse can’t be offset by those who later simply become interested in being insured before the next enrollment.”  Investor’s Business Daily quoted Laszewski (7.8.14): “generally, carriers are saying that 85% paid the first month and that enrollment deteriorates after that at a rate of 2% to 3% per month.”
• Charles Gaba. ACA supporter Charles Gaba, who runs ACASignups.net,  likewise had concluded (7.9.14) that 2-3% attrition appears reasonable given the available evidence.
  • 2014 Attrition Rate. His final estimates for 2014 are based on 3% monthly attrition for the months February-September, 4% in October and 5% in November and December (a monthly average of 3.5%.
  • 2015 Attrition Rate. His final estimates for 2015 are based on 2% monthly attrition for the months February-December.

Insurer Evidence

• Aetna. According to IBD (8.11.14), “The nation’s third-largest health insurer had 720,000 people sign up for exchange coverage as of May 20, a spokesman confirmed to IBD. At the end of June, it had fewer than 600,000 paying customers. Aetna expects that to fall to “just over 500,000″ by the end of the year.”  IBD notes: “as one of ObamaCare’s largest players, participating in exchanges in 16 states plus D.C., Aetna’s experience provides a pretty good window into what is happening across the country.”
  • The May to June decline represents a monthly attrition rate of 12.5% (although it is unclear how much of the drop represented initial enrollments who never paid their first month’s premium. Later in the story, IBD clarified that “The gap between the high watermark of sign-ups and the number of current premium-paying customers reflects both those who never sent in a first payment and those who stopped paying for any number of reasons.”).
  • A decline from 720,000 on 5.20.14 to 500,000 by year’s end would represent monthly attrition of 4.9%;
  • A decline from 600,000 on 6.30.14 to 500,000 implies monthly attrition of 3%.
• Cigna.  IBD reported  (8.11.14) that “Cigna (NYSE:CI) said that it expects its individual market customers, including more than 100,000 in the exchanges, to “move from 300,000 down to 280,000 in that range,” Cigna CEO David Cordani said in a conference call.” Assuming the 300,000 figure was for 7.31.14 and 280,000 was a reference to projected year-end enrollment, this implies a monthly attrition 1.1%.

State Evidence

• CT. Gaba reports (8.7.14) that Connecticut has experienced a 2.5% monthly decline in Exchange enrollments since March.
• FL. Daily Caller (8.29.14) reports that in the last official DHHS report issued in early May, Exchange enrollment as of April 19 was reportedly 983,775 but by June 2014 (date unspecified), the number reported by the FL Office of Insurance Regulation was 762,723, or 22.5% lower.  “Insurance department spokesman Harvey Bennett told the South Florida Business Journal that the enrollment numbers are lower than the Obama administrations because some sign-ups never paid their first premiums and others may have dropped out afterwards. A portion of the federal tally could also have been duplicate enrollments, Bennett said.” According to Gaba (8.30.14), if the payment rate was 90%, this implies an actual decline in enrollments of 12.5% or 6.3% monthly.
• MD. Gaba reports (8.29.14) that net enrollment (total enrollments minus cancellations) grew from 66,203 on April 14 to 72,207 on May 31 to 78,930 on July 26 and a slight decline to 78,666 by August 23; this slight decline represents a 0.33% decline in net enrollments.
• RI. Gaba reports (8.7.14) that Rhode Island has experienced a 2.0% monthly decline in Exchange enrollments during May, June and July.
• WA. Washington State’s Basic Health Plan (which is similar to the Exchanges in serving a largely subsidized non-elderly adult population) experienced a monthly attrition rate of 2.9% (p. 6). 2.9% monthly attrition implies a 30% reduction in enrollments over a year’s time.

Data from State-Run Exchanges 

Daily Caller, (2.11.14) reports that only five of the 15 state-run exchanges clearly differentiate between paid enrollments and selected plans or completed applications. The remaining 36 states operating under HealthCare.gov make no distinction between paid and unpaid enrollments. However, an examination of the links provided by Daily Caller shows that New York does not report any information about the number who have paid premiums. Payment rates for the remaining four states–which account for 26% of total Exchange enrollments nationwide as of February 1–range from 75 to 100% (weighted average=78%):

• Alabama. ACASignups.net reports 82% payment rate as of 5.8.14.
• Arkansas. ACASignups.net reports 90% payment rate as of 5.8.14.
• California. “About three-quarters” of enrollees had paid premiums as of late January. The exact number who could still pay and obtain January 1 coverage is unknown since some, but not all, plans had extended their payment deadlines to the end of January  (California Healthline 1.22.14). CNBC reported 3.14.14 that 85% of the state’s 923,832 enrollees had paid. ACASignups.net reports 85% payment rate as of 4.21.14.
• Connecticut. CNBC reported 3.14.14 that 92% of its 57,465 ACA enrollees had paid. ACASignups.net reports 100% payment rate as of 5.22.14.
• District of Columbia. CNBC reported 3.14.14 that 75% of its 6,516 ACA enrollees had paid.
• Maine. ACASignups.net reports 90% payment rate as of 5.8.14.
• Maryland. CNBC reported 3.14.14 that 54% of its ACA enrollees had paid as of March 1.
• Massachusetts. ACASignups.net reported 5.27.14 that Massachusetts only reports enrollees to DHHS if they have paid, so the payment rate is 100%. But Washington state reportedly follows the same policy. Note below that Washington state’s actual payment rate is much lower than 100%, so 100% is appropriate to use when adjusting officially-reported enrollment figures to derive a paid enrollment estimate. But it is not an accurate indicator of actual payment experience–that is 100% of those who sign up at the Exchange do not pay their first month’s premium.
• Michigan. ACASignups.net reports 90% payment rate as of 7.14.14.
• Minnesota. CNBC reported 3.14.14 that 90% of its 33,722 ACA enrollees had paid. ACASignups.net reports 95% payment rate as of 8.5.14.
• Nevada. As of February 1, 14,999 (66%) of 22,597 confirmed enrollments had paid premiums (Nevada Health Link, 2.6.14). CNBC reported 3.14.14 that 70% of its 30,015 ACA enrollees had paid. ACASignups.net reports 80% payment rate as of 8.1.14.
• North Carolina. ACASignups.net reports 85% payment rate as of 5.10.14.
• North Dakota. ACASignups.net reports 94% payment rate as of 7.29.14.
• Oregon. ACASignups.net reports 85% payment rate as of 8.6.14.
• Rhode Island. As of February 8, 14,086 (85%) out of 16,512 had paid their premiums (HealthSourceRI, 2.11.14). CNBC reported 3.14.14 that 90% of its 19,690 ACA enrollees had paid. ACASignups.net reported 8.7.14 that as of 3/31, payment rate was 92%; as of 8.2.14, the rate had increased to 97%.
• South Carolina. ACASignups.net reports 71% payment rate as of 5.7.14.
• Vermont. CNBC reported 3.14.14 that 59% of its 24,326 ACA enrollees had paid. ACASignups.net reports 87% payment rate as of 7.30.14.
• Washington. As of February 6, 90, 723 were enrolled while an additional 85,372 applicants still needed to pay premiums before their enrollments could become effective, yielding a payment rate of 52% (Washington Health Benefit Exchange 2.11.14); however, only the first group has been reported as enrolled in the official federal Health exchange estimates of enrollment, in which case the payment rate is100%. CNBC reported 3.14.14 that 57% of its 191,081 ACA enrollees had paid. ACASignups.net reports 100% payment rate as of 5.27.14.
• West Virginia. ACASignups.net reports 74% payment rate as of 7.13.14.
• Wyoming. ACASignups.net reports 92% payment rate as of 5.20.14.

Data from Individual Health Insurers

The following plans account for 1,401,075 enrollees, accounting for 42% of total Exchange enrollments nationwide as of February 1. The payment rate ranges from 70-95% (weighted average=77%). Note there is some overlap between the figures below and the state-level figures reported above.

• Aetna. According to WSJ (5.1.14), Aetna is participating in the health-law exchanges in 16 states and the District of Columbia, the most of any insurer. WSJ reported: “Aetna Inc., AET  in its earnings call last week, said it generally was seeing about an 80% payment rate among those enrolled.” NYT (5.6.14) reported: “Paul Wingle, the executive director of exchange operations and strategy at Aetna, said: “As of the third week of April, Aetna had over 600,000 members who had enrolled and roughly 500,000 members who had paid. For those who had reached their payment due date, the payment rate, though dynamic, has been in the low- to mid-80 percent range.”
• Blue Cross and Blue Shield Plans. According to Bruce Japsen at Forbes: “The Blue Cross and Blue Shield Association, which represents the nation’s Blue Cross and Blue Shield plans, says “80-85″ percent of newly enrolled individuals buying plans under the Affordable Care Act are paying their premiums. The figure was confirmed by Forbes this morning and is slated to be announced later today by the Chicago-based trade association for the nation’s Blue Cross and Blue Shield plans. The results, which confirm from a survey of most Blue Cross participating on exchanges, are as of Feb. 1.”
  • Blue Shield of California. 80% of those who signed up for its plans had paid by the due date, Jan. 15. Blue Shield has about 30 percent of the exchange market in the state (New York Times 2.15.14).
  • Blue Cross and Blue Shield of Minnesota. 95% of people who signed up for coverage starting on Jan. 1 had paid premiums by the deadline of Jan. 10 because the company made aggressive efforts to contact consumers and remind them that they needed to pay. This was feasible due to very low enrollment on the MN exchange (30,000) of which BCBSMN has about one quarter (New York Times 2.15.14).
  • Blue Cross and Blue Shield of North Carolina. 6,400 applicants failed to make their payments by the extended Jan. 24 deadline for coverage taking effect on Jan. 1. U.S. DHHS figures show 161,161 enrolled in the health exchange through January, although the article did not specify how many of these were BCBCNC enrollees (which is available statewide) or members of Coventry Health Care plans (offered in 39 mostly urban counties) (Raleigh News and Observer 2.15.14). If BCBSNC accounts for 75% of Exchange enrollments, this would imply 95% of enrollees had paid their premiums.
  • Health Care Service Corporation (HCSC, offers BC/BS plans in IL, MT, NM, OK and TX). In testimony to House Energy and Commerce Committee (5.7.14), J. Darren Rodgers, the chief marketing officer for HCSC, reported that HCSC had received 600,000 applications through the Exchanges and 230,000 off Exchange (these applications represent just over 1.2 million members). According to data provided in testimony, payment rates for coverage effects on the first of each month were as follows:
    • January 2014: 85% on Exchange, 90% off Exchange
    • February 2014: 87% on Exchange, 92% off Exchange
    • March 2014: 88% on Exchange, 93% off Exchange
    • April 2014: 83% on Exchange, 90% off Exchange
    • May 2014: 68% on Exchange, 63% off Exchange (data are incomplete since payment deadlines for some of these policies have not yet passed).
  • Independence Blue Cross. 84% of the 27,528 people who enrolled through the federal marketplace have paid premiums for coverage effective Jan. 1. This success was attributed to the company’s having extendeded the payment deadline to Jan. 28, then extended it again to Feb. 15 and made many phone calls urging people to pay (New York Times 2.15.14).
  • Wellpoint. On 4.30.14, WellPoint Inc. Chief Executive Joseph R. Swedish said during an earnings call that around 90% of those who have enrolled in health-law marketplace plans have been paying their premiums. However, Dennis Matheis, the executive in charge of exchange strategy for WellPoint, offered somewhat different figures to the New York Times (5.6.14): “For people who signed up from Oct. 1 to April 15, Mr. Matheis said, about 70 percent have paid their premiums. For people who have passed the payment deadline, he said, the proportion is higher, “ranging up to 90 percent, depending on the state.”
• Coventry Health Care. Coventry is owned by Aetna Health Inc. ”Company spokesman Walt Cherniak said 135,000 have enrolled nationwide and more than 70 percent have paid their premiums”  (Raleigh News and Observer 2.15.14).
• Humana. 75% of 200,000 who filed applications for insurance through the exchanges had paid premiums by the Jan. 31 to pay for coverage that took effect on Jan. 1 (New York Times 2.15.14).

Aetna CEO Mark Bertolini stated in early February 2014: “I think people are enrolling in multiple places,” he said in a conference call. “They are shopping. And what happens is that they never really get back on HealthCare.gov to disenroll from plans they prior enrolled in.”  Younger people are far more likely than older people to be delinquent on their payments.