4 characteristics of non-group health insurance enrollees
Based on what we know about existing individual-market shoppers, will the expanded ACA subsidies have a major impact on enrollment?
The Biden administration recently announced that it would be extending the special open enrollment period for health insurance coverage on the federal exchanges through August. As of early March, more than 200,000 people had taken advantage of the extended opportunity to purchase health insurance, and legislators hoped to entice even more with expanded subsidies included in the American Rescue Plan.
Most Americans obtain health coverage from their employer or a public program such as Medicare or Medicaid. However, one in 10 get coverage elsewhere, either through or outside the marketplaces established by the Affordable Care Act.
Related: Better ACA subsidies: The key to more marketplace sign-ups?
The USC-Brookings Schaeffer Initiative for Health Policy recently looked at the data to learn more about this segment of the market. It reported four key findings:
1. Only half of potential subsidy recipients were enrolled in nongroup minimum essential coverage (MEC).
Fifty-two percent of those with incomes below 400% of the federal poverty level (FPL), which is the income limit for the ACA’s Marketplace subsidies as of 2019, were enrolled in nongroup policies that constitute MEC. This implies that the recently enacted American Rescue Plan Act, which both made subsidies more generous for people already eligible and extended them above 400% of the FPL, has the potential to increase MEC enrollment across the income distribution.
2. The large majority of potential subsidy recipients who lacked MEC had incomes below 400% of the FPL.
Not only is there an opportunity to increase enrollment in nongroup MEC among people who were already eligible for subsidies, but most of the opportunity to increase overall take-up is in this group.
3. At lower income levels, potential subsidy recipients who lacked MEC were typically uninsured.
At higher incomes, many held non-MEC nongroup policies. This suggests that efforts to increase MEC enrollment may do less to improve financial protection at higher income levels. However, those improvements still may be substantial, because non-MEC policies often offer much less robust coverage. It also suggests that efforts to restrict the availability of non-MEC policies would have their largest effects at higher income levels.
4. Lower-income potential subsidy recipients with MEC overwhelmingly held Marketplace coverage.
Higher-income people generally held off-Marketplace MEC. One implication is that research that focuses only on Marketplace enrollees can paint a misleading picture of nongroup enrollment as a whole. Because subsidies were available below 400% of the FPL, it is notable that anyone at these income levels opted for off-Marketplace plans. This could indicate that awareness of subsidized coverage is incomplete.
Researchers recommend that the U.S. Treasury Department routinely publish tabulations of insurance coverage by income group based on tax data and that policymakers collect better data on enrollment in non-MEC nongroup policies.
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