Membership Growth

With open enrollment for Affordable Care Act exchange plans now less than a month away, a clearer picture is beginning to emerge regarding which factors are weighing the heaviest on health insurers’ minds when formulating their 2024 premium rates — as well as how much those rates are set to rise.

Based on insurers’ 2024 rate requests and their actuarial justifications, it appears that inflation is one of the biggest drivers of proposed rate increases, which states are now in the process of finalizing. However, due to expanded subsidies that have been in place since pandemic relief legislation passed, most exchange customers won’t feel the effects of rising premiums. And researchers who study the ACA exchanges tell AIS Health, a division of MMIT, that generally the individual insurance marketplace remains on solid ground — a far cry from years like 2017 and 2018 that featured significant regulatory uncertainty and major insurer exits.

Four health insurance industry trade groups, in a letter to HHS Sec. Xavier Becerra, said technical issues that led to reports of patients having to pay out-of-pocket for their updated COVID-19 vaccines “have been largely, if not completely, resolved.” The letter, penned by the Alliance of Community Health Plans, Association for Community Affiliated Plans, AHIP, and Blue Cross Blue Shield Association, stated that “health insurers are fully covering the new COVID-19 shots, as required, with no cost sharing when consumers access them from a network provider or receive them through an out-of-network provider when in-network options are unavailable.” In addition to publishing the letter, executives from AHIP, Elevance Health, Inc.’s Anthem, Cigna Healthcare, Humana Inc., and Aetna parent company CVS Health Corp. met with Becerra on Sept. 27 to assure Becerra that they worked quickly to resolve any coding errors that may have prevented vaccines from being fully covered, multiple news outlets reported.

Beneficiary switching from fee-for-service (FFS) Medicare to Medicare Advantage more than tripled between 2006 and 2022, contributing to the MA enrollment boom that’s taken shape over the past two decades, according to a study published this month in Health Affairs. MA enrollment has been “accelerating” since 2019, researchers said, and switchers from FFS to MA were the biggest driving force behind this trend.

The study authors broke down beneficiaries from CMS’s enrollment database into five categories: stayers, switchers to MA, switchers to FFS, beneficiaries who newly gained eligibility, and beneficiaries who lost eligibility (largely those who died during the year). While new enrollments among those who had recently turned 65 also contributed to MA enrollment growth, it was at a smaller scale than growth caused by switching activity among existing beneficiaries, researchers observed.

Medicare Advantage insurers can’t share the juicy details of their new plan offerings until Oct. 1, but they are taking steps to prime the market and help boost enrollment during the 2024 Annual Election Period (AEP) with “preheat” strategies. Such efforts are often used to create or reinforce brand awareness in the month or two leading up to the AEP, and some insurers are shifting more dollars to this channel as consumer switching is expected to rise again this year, marketing experts tell AIS Health, a division of MMIT. (Warning: The following article contains an abnormal amount of marketing lingo.)

“Before AEP starts, ‘market warming’ with mail and DRTV [direct response television] continues to pay off. In fact, many say that if a plan misses pre-AEP market outreach, they’ve missed most of the available leads for the period. For some plans, these early leads represent over half of all AEP volume,” says Lindsay Resnick, executive vice president with Wunderman Thompson Health. However, such efforts are successful only if the plans’ “sales funnel” and call center are prepared to handle high call volumes and if they have a “lead nurturing” process in place to optimize the value of these leads, he advises. For example, “responder non-converters” (i.e., those who have responded in the past but did not become members) tend to convert at higher rates, he notes.

As Medicare Advantage attracts a greater share of Medicare-eligible enrollees, switching from fee-for-service Medicare to MA has been on the rise since 2010 and peaked at 7.8% in 2021, according to new research published in Health Affairs. Researchers used data from the CMS Medicare Enrollment Database and the Risk Adjustment Processing System, and their primary objective was to understand where the bulk of new MA membership is coming from (i.e., FFS Medicare vs. new-to-Medicare) and those individuals' health profiles. After 2010, switching from MA to FFS Medicare consistently declined while switching in the other direction increased, with the greatest difference in rates occurring in 2021, when just 1.2% of individuals left MA for FFS Medicare, according to the analysis. (The switching rate was defined as the percentage of switchers out of the total number of switchers and stayers in either FFS Medicare or MA.) Between December 2021 and December 2022, the overall switching rate from FFS to MA averaged 7.4%, and men had a higher switching rate than women, researchers observed. During that time, the switch rate from FFS to MA was highest for Black beneficiaries (15.6%), closely followed by Hispanic beneficiaries (15.0%), and the lowest rate was among white enrollees (6.4%). Researchers noted their analysis was descriptive in nature and that they were not able to discern the underlying factors driving the observed switching patterns, such as aggressive marketing or attractive plan benefits. Moreover, the analysis did not differentiate between voluntary and involuntary switching. As the MA program continues to grow, however, “understanding reasons for switching will become important,” they observed.

When the Biden administration celebrated the one-year anniversary of the Inflation Reduction Act on Aug. 16, the focus — from a health care perspective — was largely on the IRA’s unprecedented drug pricing reforms. While those provisions are important to the health insurance industry, the sector has also seen an overwhelmingly positive impact from the law’s extension of beefed-up subsidies for Affordable Care Act exchange enrollees.

“We at ACHP and all of our members worked incredibly hard to get the health care provisions of the Inflation Reduction Act passed,” Alliance of Community Health Plans (ACHP) President and CEO Ceci Connolly tells AIS Health, a division of MMIT. “Potentially the most significant health care provision in that act was the extension of the enhanced subsidies for working Americans to buy coverage and care on the individual exchange.”

As Medicaid managed care organizations look to assist states with ensuring enrollees maintain coverage throughout the redetermination process, text messaging is often seen an effective way to reach members whose only method of communication may be a smartphone. During an Aug. 9 webinar hosted by Medicaid Health Plans of America, mPulse Mobile Chief Marketing Officer Brendan McClure said the technology company has reached out to more than 7 million members this year on behalf of its Medicaid plan clients.

The engagement solutions provider divides its phone-based outreach efforts into two main categories:

Effective April 1, states were allowed to begin disenrolling people from Medicaid who no longer qualify after a multiyear pause during the COVID-19 public health emergency (PHE). Yet data from the federal government suggests many people are losing coverage for procedural reasons, and surveys show a concerning lack of awareness regarding the redetermination process. Medicaid managed care organizations say they are working to supplement outreach efforts from state and federal agencies and are trying a variety of tactics to activate impacted members, including text messaging and notifications at the pharmacy. Since the start of redeterminations, CMS has clarified that states may rely on MCOs to assist enrollees with completing and submitting renewal forms and even pay them for this type of work.

KFF estimates that at least 4.77 million Medicaid beneficiaries have been disenrolled as of Aug. 15, with three quarters of disenrollments occurring for procedural reasons. HHS had previously estimated that 8.2 million people will no longer qualify for Medicaid once redeterminations resumed and find other coverage, while 6.8 million Medicaid enrollees could lose coverage despite still being eligible.

After a handful of publicly traded insurers last month reported second-quarter 2023 earnings that reflected the impact of increasing utilization, additional insurers reporting results in August said they witnessed a similar phenomenon, particularly among the Medicare Advantage population. But the insurers indicated that they were able to factor those trends into their bids for the coming plan year, while analysts were reassured that the issue was largely confined to MA and not the commercial sector.

UnitedHealth Group first disclosed the uptick in outpatient care utilization in June, sparking an insurer-stock selloff. Shortly after, Humana Inc. revealed in an 8-K filing with the U.S. Securities and Exchange Commission that it was also seeing elevated medical costs due to an increased use of services. Humana in that filing projected its insurance medical loss ratio (MLR) for the full year would settle in the higher (worse) end of its previously stated 86.3% to 87.3% range. “This expectation is primarily driven by the emergence of higher than anticipated non-inpatient utilization trends, predominantly in the categories of emergency room, outpatient surgeries, and dental services, as well as inpatient trends that have been stronger than anticipated in recent weeks, diverging from historical seasonality patterns,” the MA-focused insurer stated. The company also explained that it was seeing strong growth in its MA membership, including a “higher-than-expected proportion of age-ins” during the three-month Open Enrollment Period that ran from January to March, and such members tend to have an above-average MLR when compared to more established customers.

Although health insurers have been vocal about their desire to transition people into Affordable Care Act marketplace plans if they lose Medicaid during the resumed redetermination process, a new “secret shopper” survey suggests those customers will encounter a thicket of aggressive marketing for limited-benefit plans that could ultimately leave them on the hook for massive medical bills.

Researchers at Georgetown University Center on Health Insurance Reforms (CHIR) conducted their survey between June 9 and June 30, 2023, creating two profiles for hypothetical Texas residents who were informed they’d be losing Medicaid due to income ineligibility. “Terri” is 22 years old with no pre-existing conditions, and “Lorraine” is 36 with high cholesterol. Both live in a two-person household and have an annual income of $25,000 — qualifying them for the maximum premium and cost-sharing subsidies the ACA marketplace can offer. That means they can access, theoretically, silver plans with a $0 monthly premium that cover an average of 94% of the cost of covered benefits.