9 Trends Driving Historic ACA Enrollment Growth
Editor’s note: This is the third in a series of articles analyzing the future of the Affordable Care Act. The first article provided an overview of five key trends that will reshape the market. The second article examined the promise of Individual Coverage Health Reimbursement Accounts.
This year’s record number of Affordable Care Act signups shouldn’t have come as a surprise. Marketplace enrollment has risen each of the past four years, climbing from 11.4 million in 2020 to 21.3 million for 2024. That’s a 78% increase across four years. Enrollment rose 30% between 2023 and 2024 alone.
But the national numbers only tell part of the story. The state-level data paint an interesting picture:
• Five states accounted for 55% of total 2024 enrollment — Florida (4.2 million), Texas (3.5 million), California (1.7 million), Georgia (1.3 million), and North Carolina (1.0 million). California is a State-Based Marketplace (SBM); the other four are federally-facilitated Marketplaces.
• The top five states with the most year-over-year enrollment for 2024 were Texas (+1.1 million), Florida (+986,000), Georgia (+426,000), North Carolina (+227,000), and Tennessee (+207,000). These five states represent 59% of the 5 million in total enrollment growth between 2023 and 2024. All five are FFMs.
• The top five states with the highest percentage increase in enrollment were West Virginia (+80%), Louisiana (+76%), Ohio (+62%), Indiana (+60%), and Tennessee (+59%). All five are FFMs.
• Two Exchanges experienced slight enrollment declines: Maine and Washington, D.C. Both are SBMs.
• About 5 million consumers — 24% of the total —are new to the Marketplaces for 2024, and 16.3 million consumers — 76% of the total — renewed coverage from 2023.
9 factors driving historic enrollment numbers
What’s driving the record number of ACA signups? From 2020 to 2024, our analysis points to a convergence of several economic, public health, and health policy adjustments contributing to enrollment growth.
1. Impact of COVID-19: During the height of the pandemic, all but one state-based marketplace announced an emergency Special Enrollment Period for uninsured individuals and families that lost health insurance coverage due to a COVID-related job loss. SEP enrollment increased by 28% in 2020 compared to 2019.
President Joe Biden in January 2021 issued an executive order allowing FFM states to use Heathcare.gov to hold a special enrollment period due to the public health emergency. In total, the COVID-related special enrollment periods resulted in 2.8 million new ACA members. The majority of those enrollees renewed coverage in 2022 and beyond.
2. Impact of the American Rescue Plan Act: Most people enrolled on the Exchanges receive a premium subsidy or more formally, an Advanced Premium Tax Credit, to allow coverage to be more affordable. These APTCs are based on a sliding scale of income as a percentage of the Federal Poverty Level with subsidies capped at 400%.
To ensure coverage continuity during the pandemic, ARPA enhanced the tax credits in two ways: extending subsidy eligibility to people over 400% FPL and increasing the premium subsidy amount for people at lower incomes who were already eligible under the ACA. By removing the so-called subsidy cliff, ARPA resulted in a 20% increase in the number of people eligible for subsidized Marketplace coverage. Also, for people currently enrolled on the Exchanges in 2022, the average savings was about $70 per month, or 25% of current premiums after subsidies.
3. Impact of the Inflation Reduction Act: The enhanced tax credits included in the ARPA were only slated to last two years — 2021 and 2022. The IRA, which was signed into law in August 2022, extended them through 2025. This is estimated to prevent 2 million people from losing coverage and help millions of others avoid premium increases. These impacts are clear and current drivers of the 2024 enrollment surge.
4. Impact of family glitch fix: The so-called family glitch resulted from the affordability of an employer-sponsored plan being based on the cost for the employee, excluding spouse and dependents. Under the ACA, the affordability threshold was 9.12% of household income in 2023. To access coverage, families would either pay more for employer family coverage or pay full price with premium subsidies on the exchange.
The Internal Revenue Service fixed the glitch before the 2023 open enrollment period, allowing family members who do not have access to affordable job-based coverage to buy on the Exchanges and qualify for premium tax credits. It is unclear how many families took advantage of marketplace subsidies during 2023 or 2024 enrollment, likely due to a lack of awareness. Closing this enrollee awareness gap regarding the glitch fix is a tremendous opportunity for payers to educate families on their options now as attention turns to preparing for 2025.
5. Impact of standardized plans: The number of carriers on the Exchanges soared by 77% between 2019 and 2024, from 181 to 320. The emerging trend in the last few years has been more carriers offering more plan choices in more counties, driving more enrollment. In 2023, exchange consumers were looking at an average of 114 plan options. Even within the same metal tier, consumers see a wide difference in copays, deductibles, and coverage options, making the comparison and enrollment process confusing. To help improve the shopping experience, the Centers for Medicare and Medicaid Services now require payers to offer standardized plan options alongside their existing non-standardized offerings. Standardized plans have set deductibles and cost-sharing for certain benefits making the comparison process more customer-friendly.
CMS limits the number of non-standardized plans each payer can offer on FFMs and SBEs to four in 2024 and two in 2025. Limited optionality is a growth driver that is difficult to quantify but helps simplify the shopping experience and is likely having an impact on consumers completing the enrollment process.
6. Impact of increased navigator spending: CMS invested about $100 million in the 2024 navigator and assister programs. Navigators are unbiased experts who help consumers, especially those in underserved communities, understand their benefits and rights, review plan options, and enroll in Marketplace coverage. The program is augmented by more than 3,900 additional assisters. For the 2024 open enrollment period, navigators, enrollment assistance personnel, and certified application counselors were permitted to conduct door-to-door enrollment assistance to increase consumer engagement and advance health equity. The approach provides a positive foundation for those entering the Marketplace for the first time as evidenced by the 5 million new-to-the-exchange enrollees.
7. Impact of an improved customer experience and advertising campaign: CMS has continued to improve the consumer experience on HealthCare.gov, refreshing the site design and making it easier to navigate. The site now has a more consistent look and feel and is beginning to rival an online retail shopping experience. Many SBM exchanges have also continued to improve experience.
CMS is also continuing an extensive outreach effort which includes a national campaign with traditional broadcast advertising and targeted digital efforts. CMS partnered with cultural marketing experts to deliver strong campaigns to African Americans, Spanish and English-speaking Latinos, and Asian American and Pacific Islander communities in multiple languages. This omni-channel campaign is another driver of the significant enrollment growth for the 2024 coverage year.
8. Impact of ICHRAs: Created under the Trump administration and first made available in 2020, Individual Consumer Health Reimbursement Arrangements allow employers to reimburse employees a set amount of monthly tax-free money for health insurance premiums and other qualified medical expenses, without the need to administer a traditional group health insurance plan. Several Exchange carriers are beginning to incorporate ICHRAs into their offerings, most notably Centene and Oscar. The momentum around ICHRA enrollment is beginning and we estimate that they will become a growing driver to Marketplace enrollment year over year.
9. Impact of Medicaid redetermination: During the COVID-19 pandemic, states were granted the authority to provide continuous Medicaid coverage. But when the public health emergency ended last April, states were forced to resume eligibility reviews. It is estimated that about 15 million have been disenrolled from Medicaid so far. As a result, CMS temporarily suspended redeterminations to facilitate Exchange enrollment.
This drove individual market growth outside of the open enrollment window. From early April 2023 to the end of September 2023, Exchange enrollment grew about 5.7% (roughly 1 million members). Much of this carried over and renewed into the 2024 coverage year.
Additionally, of the 5 million new Exchange enrollees for 2024, we estimate that between 2 million and 3 million are individuals and families who will no longer be receiving Medicaid coverage in 2024.
The ACA Marketplace has evolved through stages of volatility, uncertainty, complexity, and contraction, and now has seen four years of unprecedented growth. Despite the constantly evolving regulations and competitive landscape, the Marketplace seems to be here to stay. Health payers that stay agile and adaptive to these changing dynamics will continue to experience growth and sustainability in the expanding Marketplace.
For more information about Oliver Wyman's Exchange platform, contact Travis Kistler, Partner, Health and Life Sciences, and Shyam Vichare, Partner, Health and Life Sciences.