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Exchange enrollments fall short

More employers than expected keeping workers in health plans

Exchange enrollments fall short

Enrollment in public health insurance exchanges this year will fall far short of earlier government predictions largely because employers are retaining their group health plans at a higher rate than once forecast.

In its annual budget and economic outlook released last week, the Congressional Budget Office estimated that 13 million people will get coverage through public exchanges this year, including 11 million who will receive federal subsidies to pay part or all of their premiums.

Last year, the CBO projected exchange enrollment would hit 21 million this year, with 15 million people getting subsidies established by the health care reform law.

Though the CBO did not fully explain the sharp drop in its estimates, a footnote said most people who are not getting the subsidy have obtained coverage directly from insurers rather than through the public exchanges.

Outside observers, though, attribute the dramatic reduction to far more employers keeping their group plans and not shifting employees to the exchanges.

“The big change is that fewer employers decided to end or curtail plans and shift employees to exchanges,” said Katherine Hempstead, director of the coverage team at the Robert Wood Johnson Foundation in Princeton, New Jersey.

For example, a Mercer L.L.C. survey last year found that 7% of employers with 50 to 499 employees said they're likely to stop offering coverage, down from 21% in 2013.

The employer decision whether to continue offering coverage, some say, comes down to economics.

Paying the Patient Protection and Affordable Care Act penalty for not offering coverage, plus increasing salaries to partially offset employees premiums in an exchange would cost many employers more than their group plans, said Tracy Watts, a Mercer senior partner in Washington.

Effective this year, employers with at least 50 employees face a penalty of $2,160 per employee if they do not offer coverage to at least 95% of their full-time employees.

“The math just does not work,” Ms. Watts said.

In other situations, employers are waiting to see how well public exchanges hold down costs and what medical providers are part of those networks before making the change, Ms. Watts said.

In addition, with public exchange plan premiums escalating, some employers feel they cannot rely on exchanges to replace their own programs, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.

Still, exchange enrollment may be lagging for unrelated reasons.

Despite a massive government outreach program, millions of uninsured U.S. residents still are not aware of the availability and size of premium subsidies to the lower-income uninsured, Mr. Wojcik said.

For example, individuals who received subsidies paid, on average, $113 a month for coverage purchased through the federal health insurance exchange, the Department of Health and Human Services said last month.

Without those subsidies — available to uninsured individuals with incomes between 100% and 400% of the federal poverty level up to $47,080 — the average monthly premium would have been $408.