Exchanges Struggle to Enroll Consumers as Income Increases

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New analysis from Avalere finds that while exchanges have succeeded in enrolling very low-income individuals, they continue to struggle to attract middle and higher income enrollees.
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Specifically, as of the close of the 2015 open enrollment period, exchanges using had enrolled 76 percent of eligible individuals with incomes between 100 and 150 percent of the federal poverty level (FPL) or $11,770 to $17,655. However, participation rates declined dramatically as incomes increase and subsidies decrease. For instance, only 16 percent of those earning 301 to 400 percent FPL picked coverage through an exchange, even though they may be eligible for premium subsidies.

“People receiving more generous subsidies are expected to enroll in the exchanges at higher rates. However, participation levels decline as incomes increase, even among individuals who would be eligible for both premium subsidies and cost-sharing reductions,” said Elizabeth Carpenter, director at Avalere.

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According to data released earlier in March by the Department of Health and Human Services, approximately 83 percent of 2015 exchange enrollees earn less than $29,425 a year for an individual, or 250 percent of FPL and lower. These consumers have the greatest incentive to enroll in coverage, since they benefit from higher subsidies and more generous coverage-the “carrots”. As subsidies decline, the individual mandate penalties-the “stick”-become more important to encourage uninsured consumers to enroll.

“Exchanges will need to attract higher income consumers to ensure enrollment continues to grow over time,” said Caroline Pearson, senior vice president at Avalere. “So far, tax credits do not appear to be enough to entice participation, so greater emphasis on individual mandate penalties may be needed to help increase enrollment among low- and middle-income individuals.”

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Analysis includes Department of Health and Human Services reported income distribution for the 2015 exchange population in states using (37 states). To determine the percentage of available individuals enrolled, Avalere compared exchange enrollment by income bracket to the number of uninsured and non-group market enrollees in states using, based on American Community Survey (ACS) 2013 data, prior to the implementation of the Affordable Care Act’s (ACA) coverage expansions.

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