One of the Affordable Care Act (ACA)’s major provisions for expanding access to affordable health coverage was the creation of health insurance marketplaces, along with subsidies to promote affordable coverage. Open enrollment for marketplace coverage for 2024 begins on November 1, 2023 in most of the country. This is the first open enrollment since the end of the pandemic-related Medicaid continuous coverage provision, where Medicaid enrollees retained their coverage without needing to reapply or demonstrate ongoing eligibility for the program. States are now in the process of redetermining and disenrolling people for the first time since early 2020, and more than 7.4 million people have been disenrolled since April, many of whom are likely still eligible but have been procedurally disenrolled. This commentary highlights three things to know about open enrollment, after which it discusses three policy changes that would make affordable coverage easier to access.
Three Things to Know About Marketplace Open Enrollment
1. Marketplace coverage is much more affordable for many people now.
One of the ways that the ACA sought to expand access to affordable coverage through the marketplaces was to offer premium subsidies for coverage purchased in the marketplaces to people in households with incomes between 138 and 400 percent of the federal poverty level (FPL). To make marketplace coverage even more affordable as health care costs continued to rise, Congress enhanced these subsidies and also expanded the number of people eligible for them, first as part of the American Rescue Plan Act (ARPA) in 2021 and then as continued expansions through 2025 under the Inflation Reduction Act (IRA).
These provisions made marketplace coverage significantly more affordable for many people, and now the vast majority of people buying coverage in the marketplaces are eligible for subsidized coverage. The average premium, after subsidies, dropped from $143 per month in 2021 to only $102 per month in 2023. This increased affordability has driven higher enrollment, especially among marginalized groups. Nearly 16.4 million people enrolled in marketplace coverage during the 2022–2023 open enrollment period, including 3.7 million new consumers. This jump in enrollment was partially driven by increases in enrollment among people of color: 21 percent of enrollees in 2023 identified as Hispanic/Latino, up from 19 percent for 2022.
The vast majority of people buying coverage in the marketplaces are eligible for subsidized coverage.
The Biden administration has built on these new subsidies, creating a new special enrollment period for the people who benefit most from them. Special enrollment periods (SEPs) are opportunities to enroll in marketplace coverage outside of open enrollment each fall, and people become eligible for them in a only few ways:
- a qualifying life event, such as having a baby, getting married, or losing coverage;
- facing a natural disaster; or
- becoming newly eligible for marketplace subsidies.
The Biden administration also created a new, income-based SEP for the federally facilitated marketplace to ensure that anyone who is eligible for a $0 premium plan under the enhanced subsidies can access that coverage. As a result, anyone whose income is less than or equal to 150 percent FPL ($21,870 for a single person, or $37,290 for a family of three) can enroll in marketplace coverage at any time if their state uses the federal marketplace for coverage. State-based marketplaces are also able to offer this income-based SEP.
As a result, anyone whose income is less than or equal to 150 percent FPL ($21,870 for a single person, or $37,290 for a family of three) can enroll in marketplace coverage at any time if their state uses the federal marketplace for coverage.
2. Accessing affordable coverage can be difficult regardless of eligibility.
Despite this improved affordability of marketplace coverage, it is still harder than it should be for people to access coverage for which they are eligible. One major challenge is that consumers can be flooded with inaccurate, misleading information about their choices and expected costs. A recent study by experts at Georgetown University’s Center on Health Insurance Reforms found that brokers of non-ACA compliant insurance products often give people incorrect or incomplete information about coverage. For example, a secret shopper in the study was told by sales representatives that a plan they were pushing covered pregnancy-related care, but only when pressed did the broker reveal that the plan would not cover the cost of labor and delivery. Similarly, none of the representatives mentioned to the shoppers that they qualified for $0 premium marketplace plans.
This same research found that even neutral sources of information, like a web search, often prioritized non-ACA compliant plans. When searching for terms like “cheap health insurance,” the federal marketplace, healthcare.gov, was the sixth result. Even when directly searching for “healthcare.gov”, the site was only the fourth result. The Biden administration has proposed a rule to more tightly regulate these non-ACA compliant plans, which, if implemented, would hopefully cut down on confusion for consumers and encourage them to look to more tightly regulated marketplace plans.
A second challenge is the siloed nature of coverage systems. While the ACA required a “no wrong door” policy for eligibility determinations—that people should be able to have access to a simple, streamlined application process for Marketplace coverage, together with Medicaid and CHIP (Children’s Health Insurance Program)—this policy remains more aspiration than reality. For the states that use the federally facilitated marketplace (healthcare.gov) and also for some states that manage their own marketplace, the system relies on transfer of account information and for consumers to apply for new coverage in a different system, rather than using a single, streamlined eligibility assessment.
This clunky process makes it much harder for people who have been disenrolled in Medicaid to make their way to a subsidized marketplace plan, even if they are eligible, because, for example, there may be different documentation requirements for both programs. In 2018, only 3 percent of beneficiaries enrolled in a marketplace plan within twelve months after being disenrolled from Medicaid or CHIP. While this was before the enhanced subsidies under ARPA, the lack of communication between coverage sources likely still played a role. Especially now, with the massive Medicaid redetermination process underway, it would be much easier for people to get access to affordable coverage if there truly was no wrong door.
3. Serious gaps in insurance access still exist.
Beyond affordability and access to coverage that one is eligible for, however, another major problem still remains. Many people still remain ineligible for any form of affordable health coverage. Most undocumented immigrants are ineligible for federally funded health programs, including marketplace coverage. As a result, around half of undocumented immigrants (more than 4 million people) are uninsured, as shown in Figure 1. The Biden administration has proposed allowing DACA recipients to enroll in federally funded health programs similar to other deferred action immigrants, but most undocumented immigrants are not DACA recipients, limiting this proposal’s impact.
Around half of undocumented immigrants (more than 4 million people) are uninsured.
In addition, approximately 1.9 million people have incomes above their states’ Medicaid eligibility limits but lower than minimum eligibility levels for marketplace subsidies. In particular, childless adults are ineligible for Medicaid even at 0 percent FPL in every state that has not expanded Medicaid except Wisconsin, and even parents must have extremely low incomes to be eligible. For example, in Florida, childless adults are not eligible for Medicaid, and parents of one child (family of three) must earn less than 30 percent of FPL—only $6,909 a year—to qualify for Medicaid. On average, non-elderly adults in the coverage gap are significantly more likely to be people of color as compared to all non-elderly adults in the general population and also when compared to all non-elderly adults in non-expansion states, as shown in Figure 2.
Three Ways to Make Coverage Easier to Access
1. Permanently extend the new level of subsidies.
The enhanced subsidies and eligibility for Marketplace coverage that were first passed as part of ARPA and continued in the IRA are set to expire in 2025. Congress should permanently extend these subsidies in order to avoid a massive spike in premiums for marketplace coverage. In particular, failing to extend them would hurt lower-income consumers, who would go from paying between 0 and 2 percent of their income on premiums to as much as 6.5 percent, adding another cost onto budgets already strained by high inflation.
Failing to extend the enhanced subsidies would also revive the “subsidy cliff” for higher earners. Prior to ARPA’s changes, consumers with incomes above 400 percent FPL had no limit on what insurers could charge in premiums, resulting in significantly higher costs based on even a slightly higher income.
Without an extension of these enhanced subsidies, premiums at nearly every level of income would become significantly higher, and this spike in costs would likely result in many people choosing to go without coverage. This is especially true because we can anticipate that, just as in previous years, premiums would also increase. As a result, people who were no longer eligible for the subsidy would need to pay the difference between the subsidized cost and the market rate plus any increase in the market premium rate that had occurred. Without this permanent extension, we can expect the uninsured rate to increase, and much of this coverage loss would likely fall on those who have disproportionately benefited from the new subsidies: lower-income people and people of color.
Without this permanent extension, we can expect the uninsured rate to increase, and much of this coverage loss would likely fall on those who have disproportionately benefited from the new subsidies: lower-income people and people of color.
2. Make it easier for people to enroll in the coverage that’s most affordable to them.
There are several ways that states can increase opportunities for people to access affordable coverage. First, states can make it simpler for people no longer eligible for Medicaid to transition to marketplace coverage. This includes offering a single application, integrated databases, and greater communication and coordination between relevant agencies. Second, states should regulate limited benefit products more stringently. While the Biden administration proposed rule limiting duration of short-term plans should help, if there were fewer alternatives available for people to choose from outside the marketplace, they would be even less likely to be steered toward less affordable, less comprehensive coverage. Third, states should increase investment in neutral consumer assistance that can help people to get access to affordable coverage. States might even consider professionalizing call centers to provide streamlined assistance including increasing wages, changing the compensation structure from hourly wage to fixed salary, rebranding the job description, and providing advancement opportunities. This should also include availability of assistance in multiple languages and using flexible hours that work for people with varying needs.
In addition to these state efforts, the federal government should expand special enrollment periods for marketplace coverage. Under the Biden administration’s new SEP, people with incomes up to 150 percent FPL are able to enroll in marketplace coverage at any time. However, less than 40 percent of marketplace enrollees with known incomes fall between 100 and 150 percent FPL, severely limiting the reach of this SEP. By expanding eligibility up to 200 percent FPL, nearly 60 percent of consumers would be eligible, and by expanding eligibility up to 300 percent, around 70 percent of consumers would be eligible for this SEP. Figure 3 shows how these small increases in income threshold would allow many more consumers to take advantage of this SEP.
Less than 40 percent of marketplace enrollees with known incomes fall between 100 and 150 percent FPL, severely limiting the reach of this SEP.
These households still make relatively low incomes: 300 percent FPL is only around $43,000 for a single adult, and less than $75,000 for a family of three. Massachusetts has taken this approach for several years, boosting enrollment throughout the year without any evidence of adverse selection (people waiting until they become sick to enroll).
3. Close the coverage gap.
Finally, action needs to be taken to close the coverage gap. States have several ways to go about doing so. First, they should expand Medicaid under the ACA. Doing so will allow millions of people to enroll in affordable coverage, and it would enable the state to receive federal funds for 90 percent of the cost of this new population. Expanding Medicaid would also entitle the state to a 5-percentage-point increase in their federal funds for traditional Medicaid, thanks to a provision in the American Rescue Plan Act. This would likely offset any additional spending required due to expansion, given that the traditional population tends to have much higher costs.
Second, states should change their Medicaid and CHIP eligibility policies to allow undocumented immigrants to enroll. While federal law generally prohibits federal funds from paying for these immigrants, states are permitted to use state funds to do so. Five states and the District of Columbia have expanded their Medicaid programs to all income-eligible adults, regardless of their immigration status, and many others have expanded their programs to undocumented children.
The federal government also has an opportunity to address the coverage gap. Eliminating the federal prohibition on undocumented immigrants enrolling in federally funded health programs would make a significant impact on their ability to access coverage, including through health insurance marketplaces. Rather than having a patchwork of rules, there would be one federal standard for eligibility. Similarly, creating a federal stopgap for states that have refused to expand Medicaid would make major strides toward closing the coverage gap.
One way to go about this was included in the Build Back Better Act as passed by the House in 2021. Under this approach, people in non-expansion states with incomes below 138 percent FPL would be eligible for marketplace subsidies for a plan with minimal cost-sharing. While this is less beneficial than expanding Medicaid, as Medicaid programs are often tailored to states’ low-income residents’ needs, this would still significantly expand coverage and reduce uninsurance.
Improving Access to Marketplace Coverage Will Promote Health Equity
As open enrollment begins for 2024, marketplace coverage is significantly more affordable than it has been in the past. The enhanced subsidies under the American Rescue Plan Act and Inflation Reduction Act mean that many of the lowest-income Americans can get coverage for little to no premium cost, and people with higher incomes no longer face a subsidy cliff. Extending these subsidies is essential to ensuring that coverage is affordable, especially for the most marginalized communities. Maintaining affordable marketplace coverage is essential as states continue their Medicaid unwinding processes.
Significant barriers to coverage still exist, but these barriers have solutions. Nearly 2 million people are in the coverage gap, and undocumented immigrants are barred from enrolling in federally funded health programs in most states. Even among people who can access coverage, misinformation and a complex, siloed health system make accessing coverage more complicated. State and federal governments should both act to close these gaps, expanding eligibility and promoting easy access to coverage. This open enrollment period provides a perfect time to address these goals.