New Enrollment Numbers Temper Fears of Individual Insurance Market Crash

The headlines in November 2013 told a scary story about health care reform in California, with roughly one million individual market enrollees getting cancellation letters from insurers.

“More Than 1M Californians Having Insurance Cancelled Due To ACA” was the CBS Sacramento television message. On the Breitbart blog, it was scarier: “900,000 Californians To Lose Insurance: Worse Than Conservatives Thought.”

It turns out the sky hasn’t really fallen on the individual health insurance market.   

The Department of Managed Health Care last month released individual market enrollment numbers through May 1, 2014, showing growth in the market.

Enrollment in the individual market rose from 1.5 million policies in 2013 to 1.9 million as of May 1, 2014. And that’s only with numbers from one of the two state agencies that govern the individual market. The California Department of Insurance has not yet processed 2014 enrollment numbers for the policies it oversees in the individual market. The spike in enrollees likely will be much higher when those numbers are added.

At DMHC alone, the increase was dramatic in the first four months of 2014, the agency’s Director Shelley Rouillard said.

“This data clearly illustrates significant growth in California’s individual health coverage market with a threefold increase in individuals covered in DMHC-regulated plans,” Rouillard said.

The conclusion people can draw is pretty simple, according to Rouillard: “Californians are interested in comprehensive, high-quality health coverage.”

Far Reach of Covered California

“These numbers are really important,” said Richard Figueroa, director of the health and human services department at the California Endowment.

“They show that, even with just one regulator reporting, the individual market is doing really well,” he said. “Many people were afraid the numbers in the individual market would decline significantly because so many would have to be dropped and have to switch plans to meet ACA standards. But it turns out those earlier fears were unfounded.”

More important to Figueroa, though, is the numbers show him that the health benefit exchange is not only working, but affecting the rest of the market outside of the exchange.

“The other important thing is, this shows the dramatic effect of Covered California on the marketplace,” Figueroa said, “because a great majority of people in the individual market are either enrolled in Covered California’s qualified health plans or in plans that mirror those.”

According to the DMHC numbers, along with almost 300,000 grandfathered plans, there were more than one million individual-market enrollees in the qualified health plans at Covered California as of May 1, and more than 400,000 more in mirrored, standardized off-exchange plans.

“Of the 1.9 million covered in the individual market [under DMHC’s purview], the vast majority are in the exchange, or have to offer the same rates,” Figueroa said. “That shows that Covered California has a huge effect even beyond the people they enroll.”

Overall, he said, the reason for the one million cancellation letters was to raise the quality of health care coverage in the individual market, and that was done with no drop in the number of enrollees.

“Clearly, there was a variety of products of differing value on the market, and now it’s much more consistent and more focused on preventive care,” Figueroa said. “I don’t know what’s happening with the CDI data that would give us the total numbers, but the numbers just released by DMHC are very encouraging for the future vibrancy of the individual market.”

What About CDI Numbers?

According to Janice Rocco, deputy commissioner at CDI, enrollment numbers aren’t usually released mid-year.

“Under the new state law, enrollment numbers are submitted by each carrier to us by March 31 for the enrollment figures the prior Dec. 31,” Rocco said in an email. “We have the Dec. 31 figures on our website.”

But Rocco said the department is planning to launch a data call to get information for 2014 enrollment earlier than it would normally be filed with CDI.

“We will be doing a data call soon,” Rocco said. “Receiving and compiling the information will take a while, so I wouldn’t expect to have something to release before sometime in October.”

Once those numbers come in, we’ll have a more complete picture of the individual market — but the partial picture of the market is pretty powerful already, said Anthony Wright, executive director of Health Access California.

“These numbers show that the health improvements in the ACA are more than just Medi-Cal and Covered California,” Wright said.

“California reduced its uninsured rate by half not just through enrollment in Covered California and Medi-Cal,” he said, “but because the individual insurance market was opened up by new rules, most notably banning denials for pre-existing conditions.”

The higher standards of benefits required by the ACA have been a significant driver to the increase in individual market enrollment, he said.  

“California’s efforts, including standardizing benefit designs, made it easier to get on coverage, even if it isn’t through Covered California,” Wright said.

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