Fewer people buying off-Marketplace coverage, study finds

The upcoming open enrollment period could be busy following record-high Marketplace enrollment early this year, according to a new report from KFF.

“A key takeaway from this analysis is that as Marketplace enrollment has reached record highs with enhanced premium assistance, fewer people are buying coverage off-Marketplace, but the overall individual market is nonetheless growing,” the report said.

As of early 2023, an estimated 18.2 million people had individual market coverage, the highest since 2016. With passage of enhanced subsidies in the American Rescue Plan Act, increased outreach and an extended enrollment period, 2021 marked the first year since 2015 when there was an increase in individual market enrollment. The subsidies didn’t simply bring people from off-Marketplace plans to the Marketplace but also helped drive overall individual market enrollment higher in early 2023, an increase of about 29% from early 2020.

Now, with enhanced subsidies in place, the vast majority of people buying individual market coverage are subsidized. The Inflation Reduction Act continues the ARPA subsidies without interruption for another three years through 2025. Overall, about 80% of individual market enrollees are now subsidized, the highest share since the ACA was implemented, and some of those who aren’t receiving a subsidy might find they are eligible if they moved onto the Marketplace.

“Heading into 2024 open enrollment, we estimate there are still about 2.5 million people buying unsubsidized coverage off-Marketplace, including some in non-ACA-compliant plans,” the report said. “Early 2023 off-Marketplace enrollment decreased by 20% compared to early 2022. Despite Trump administration efforts to promote non-compliant coverage, the number of people in non-compliant plans has fallen each year.”

However, although enrollment in non-ACA-compliant plans is at a record low, a substantial number of people continue enrolling in these plans. Although complete 2023 data is not available, it’s likely ACA-compliant enrollment (both on- and off-Marketplace) currently is at a record high and that non-compliant enrollment is at a record low.

“Heading into 2024, we may see unsubsidized premiums rise, pushed up by rising health care prices and utilization,” the report concluded. “However, unlike when premiums rose in past years, the IRA’s enhanced subsidies could shield the vast majority of individual market enrollees from increases, even those with higher incomes.

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“In fact, some people who aren’t subsidized in 2023 may find premium increases in 2024 make them newly eligible for subsidies if their benchmark premium rises above 8.5% of their income. But to take advantage of subsidies, they would need to shop on the Marketplace during open enrollment.”