11 million enrollments and a successful second open enrollment later, the Obama administration should be happy. Enrollment numbers are higher than initial projections, and the signs of a working health reform are omnipresent in the system. Health insurance carriers are adapting to the new marketplace scenario, and are offering better plans at better prices to marketplace shoppers. In addition, citizens are embracing the health insurance marketplace. Collectively, both the providers and shoppers are maturing with the system, and all of this is fueling the success of the ACA.
Out of the shoppers this year, about 4.2 million are returning customers who have revisited the improved marketplace to check their existing plan, weigh available benefits, and upgrade their plans for better benefits. A noteworthy aspect of these shopping trends is the underlying shopper aggression for utilizing market competition to find better health plans with cheaper premiums. Let’s take a look at the behavior of returning and new shoppers, and how they interacted with the marketplace to find the plan that fits their requirements.
The first segment of people is returning customers who automatically reenrolled with their previous plan. Roughly 2 million people chose to stay with their existing plan, and none of them revisited the exchange to weigh available options. Of the remaining shoppers in the 4.2 million returning customers, a little more than half went for new insurance plan this year, while the other segment continued with their existing plan. Nearly 1.2 million people enrolled with a different plan in the second enrollment. While this might not seem like a big number in comparison to the enrolled 11 million, past health insurance industry trends say that this is a pretty big number.
According to CMS, a lot of insured are actively and aggressively seeking better insurance options, and this high number of active consumers is surprising for the health insurance industry. At a preliminary stage, there are two possible reasons why revisiting shoppers looked for new health insurance. The primary reason is cost. Owing to entry of new insurers in the market and adjustment of last year’s premium prices on the basis of available data, a lot of insurance plans offered cheaper health insurance with nearly similar coverage. Another factor that boosted plan switching on cost basis was the subsidy averaging, which considers the cheapest plan available in a consumer’s area while issuing premium tax credits to consumers. So, people who had the option to retain their older plan were likely to be subject to a higher cost as a cheaper plan was available in the region, and the subsidies were to be calculated accordingly. Naturally, a lot of people decided to switch.
The second probable reason for shopping is coverage quality. To retain profitability and market edge, a lot of insurance plans have limited their physician networks. A lot of plans have also included high out of pocket costs. It is possible that a lot of people changed their plans because they wanted access to a wider network or limited burden of deductibles, co-payments and the works. Add the remaining number of 4 million plus people who were using the exchanges for the first time, and you will have considerable shopper movement across the marketplace.
While it is still early to stay exactly what factors contributed to this aggressive shopping surge on the health insurance marketplace, one thing is certain – as the insurers and shoppers mature in the ACA model, a lot of streamlining will automatically happen in terms of coverage options, competitive pricing, and physician networks. Both these forces are still moving to a state of equilibrium, and in the next couple of years, the nature of shoppers will change to reflect that stability. For now, health insurance shoppers are working to make sense of the marketplace and aggressively switching health plans for arriving at their desired combination of price, coverage, and network.