The individual health insurance market – where people go to buy their own coverage both through the exchange Marketplaces and off-exchange directly from insurers or brokers – grew rapidly following implementation of the Affordable Care Act’s (ACA) subsidies and prohibition of discrimination based on pre-existing conditions. However, these enrollment gains were partially offset by subsequent declines, particularly among people not receiving subsidies amid steep premium increases. Most recently, the ACA’s individual mandate penalty was effectively repealed going into 2019, raising questions over whether enrollment would continue to drop.
In this analysis, we use publicly-available federal enrollment data and administrative data insurers report to the National Association of Insurance Commissioners (as compiled by Mark Farrah Associates) to measure changes in enrollment in the individual market before and after the ACA’s coverage expansions and market rules went into effect in 2014 through the first quarter of 2019. Key findings include:
- Total individual market enrollment, measured on an average monthly basis, increased from 10.6 million in 2013 to a peak of 17.4 million in 2015, before declining to 13.8 million in 2018.
- Much of this decline was concentrated in the off-exchange market, where enrollees are not eligible for federal premium subsidies and therefore were not cushioned from the significant premium increases in 2017 and 2018.
- Enrollment has continued to fall somewhat in early 2019, though may show signs of stabilizing, so long as premium growth continues to level off: First quarter enrollment has declined by 5% in 2019 compared to the first quarter of 2018.1 This is a smaller decline than had been seen in past years (11% in 2018 and 12% in 2017) amid steep premium increases.
- There are 13.7 million people enrolled as of the first quarter of 2019, compared to 10.6 million people in 2013, before the ACA went into effect.
Annual Changes in Individual Market Enrollment through 2018
The individual market comprises coverage purchased by individuals and families through the ACA’s exchanges (Marketplaces) as well as coverage purchased off-exchange, which includes both plans complying with the ACA’s rules and non-compliant coverage (e.g., grandfathered policies purchased before the ACA went into effect and short-term plans). The individual market (sometimes also called the nongroup market) is relatively small as a share of the U.S. population, with about 10.6 million people enrolled in 2013 before the ACA went fully into effect2.
As the ACA market rules and premium subsidies were implemented in 2014, there was significant growth in enrollment on the individual market. For the first time in nearly all states, people with pre-existing conditions could purchase coverage on an open marketplace and low-income people were eligible for tax credits to help pay their premiums and reductions in their cost sharing. In addition, many people who went without insurance coverage had to pay a tax penalty. As of 2014, health plans had to follow new rules that standardized benefits and guaranteed coverage for those with pre-existing conditions when selling coverage to new customers (known as “ACA-compliant” plans). Following these changes, individual market enrollment increased substantially, expanding from 10.6 million members on average per month in 2013 to 17.4 million members in 2015 (Figure 1)3. This included an estimated 3 million people in non-ACA compliant plans including some short-term plans, grandfathered plans, and plans purchased before October 2013 that were allowed to continue under a federal transition policy at the discretion of states and insurers.
Date: September 04, 2019