Skip to main content

Increased stability in the Affordable Care Act (ACA) has many health plans and states re-evaluating their approach to government-sponsored markets.

Over the past 13 years, the ACA has provided millions with new ways to access health insurance, transformed the healthcare industry, and became a cornerstone of healthcare policy.

With the anniversary upon us, it’s important to take a moment to reflect on the significant milestones and achievements of the ACA, as well as to consider its outlook going forward.

Enrollment Numbers Continue to Grow, Forecasting ACA Stability

ACA enrollments have been on the rise since 2020. Ongoing political support and advancing technology largely contributed to the recent staggering growth.

According to healthcare analyst Charles Gaba, there are currently over 15 million ACA Marketplace enrollees nationwide, with even more people enrolled outside of the law’s exchanges. When combined with the Medicaid expansion program in states that adopted it, Gaba calculates the total number of people with ACA-enabled healthcare coverage may be somewhere around 41 million nationally.

Since the launch of HealthCare.gov in 2014, enrollment on that platform has doubled from 8 million to more than 16 million.

Enrollment rates have been increasing year-over-year. 1.8 million more consumers signed up for coverage during the 2023 open enrollment (OE) compared to 2022, a 13% increase. Rapid growth has been the trend; nearly 4.4 million more consumers signed up during 2023 compared to the 2021 OE, a 36% increase.

Technologies such as Enhanced Direct Enrollment (EDE) and increased support from health plans have enabled this enrollment growth. Here are four factors currently impacting the state of the ACA.

  1. Expanded subsidies provide savings for enrollees while expanding eligibility

Expansions to eligibility caused enrollment gains for those who previously experienced coverage gaps.

The American Rescue Plan (ARP) expanded subsidies for individuals by lowering the maximum percentage of income that individuals are required to pay for premiums. Increased financial assistance became available for many Americans who could now afford ACA coverage.

In addition, the ARP expanded eligibility for subsidies to individuals with incomes above 400% of the federal poverty level, who previously had not been eligible for financial assistance.

The effect of the ARP was twofold. Americans with ACA coverage saw an overall reduction in premiums, and many could enroll in a better plan at a lower price. Coupled with expanded subsidy eligibility, lower premiums attracted a wave of new members to the healthcare exchanges.

The Inflation Reduction Act (IRA) extended these temporary subsidies through the end of 2024.

  1. Medicaid expansion states see reductions in uninsured rates

As more states adopt Medicaid expansion, coverage gaps continue to shrink. Much of the ACA’s success can be attributed to expansion efforts.

North Carolina’s recent enactment of Medicaid expansion means that 600,000 more people will soon be eligible for low- or no-cost coverage, which will significantly reduce the uninsured rate in that state. In November 2022, South Dakota also expanded Medicaid through a ballot initiative. Implementation of that state’s expansion is expected to provide health coverage to an additional 45,000 residents.

For states like Massachusetts, Medicaid and Marketplace success is closely linked due to the “single door” approach to government-sponsored coverage. Having a unified shopping, eligibility, and enrollment platform simplifies coverage uptake and reduces gaps in care.

  1. Transitions to SBMs allow for a personalized approach to coverage

Establishing an SBM is becoming more realistic for many due to advancing technology and lessons learned from the 18 states that already made the transition.

Georgia announced that it intends to leave HealthCare.gov and adopt a full SBM by OE 2024. Transitioning to an SBM allows for more control over the implementation and administration of ACA and Medicaid coverage within the state, while potentially reducing the uninsured rate.

States that transition to a SBM platform may be able to see:

  • Tailored outreach and enrollment efforts
  • Improved coordination between the Exchange and Medicaid
  • Lower pricing compared to HealthCare.gov
  • The flexibility to address state-specific healthcare needs

Similarly, legislators in Texas, Alabama, and Illinois have expressed interest in passing legislation to adopt SBMs in their states. These states could increase access to coverage and improve affordability, which is especially important given ongoing economic challenges, price sensitivity due to inflation, and rising healthcare costs.

  1. Section 1332 Waivers: Building SBMs with the flexibility to meet residents’ needs

States with SBMs have the option to pursue more robust 1332 waivers to redesign or modify their exchange platforms. For example, 1332 waivers provide states with flexibility to redesign subsidies to better align with the healthcare needs of their populations.

By pursuing 1332 waivers, states can develop programs that are tailored to the unique needs of their residents, rather than relying on a one-size-fits-all approach through HealthCare.gov.

With a 1332 wavier, a state could implement account-based subsidies or state-specific premium assistance programs. This can lead to increased affordability and greater access to healthcare services, all of which are critical for ensuring the health and well-being of individuals and communities across the country.

Challenges Ahead: Preparing for the end of the Continuous Coverage Requirement

The ACA is expected to see an increase in enrollments starting in April.

Medicaid redeterminations and disenrollments have been paused since early 2020. Most consumers who received Medicaid or Children’s Health Insurance Program (CHIP) kept that coverage indefinitely. However, this is about to change as states begin to “unwind” their Medicaid and CHIP populations.

As states resume the process of redetermining and reassessing Medicaid and CHIP eligibility, many enrollees will disenroll over the next 12-14 months. Disenrollments can be due to changes in income or household composition and the failure to complete necessary paperwork. While some enrollees will be able to re-enroll in Medicaid or obtain coverage through an employer-sponsored plan, many are expected to move to exchanges. The improved eligibility and lower payments through the ARP and IRA are expected to help ease the transition to the Marketplace.

This is a crucial time for the ACA to offer new coverage paths for those at risk of disenrollment. Whether it’s changes to Medicaid programs or SBM adoption, states will continue working to maintain and expand coverage options for Americans, and the ACA continues to play a vital role in achieving this goal.

For help evaluating technology options to address shifting healthcare markets, email Softheon’s Senior Policy Analyst at jschultz@softheon.com to schedule a call.