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ACA sign-ups dip slightly YOY amid strong labor market, regulatory changes

Low unemployment, new regulations and still-high premium prices have triggered a 4% drop in enrollments on federal Affordable Care Act exchanges.

A number of health insurance executives, regulators and industry observers attributed the decline in enrollments to regulatory changes the Trump administration has made this year. But online health insurance broker eHealth Inc. CEO Scott Flanders said a strong labor market the unemployment rate has held steady at 3.7% since August is likely the main driver. Because most employers offer health insurance benefits in order to be competitive in the job market, fewer individuals are seeking to purchase policies on the exchange, Flanders said in an interview.

"The best coverage for people who need insurance is corporate insurance," he said. "The 10 million people who have insurance through the ACA are still better off getting covered through an employer."

Eliminating the individual mandate has likely had a negligible effect on overall enrollment, according to Flanders, as individuals who need comprehensive coverage the most are still shopping for plans on the exchanges.

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While many of its peers have pulled back from the ACA market in the last several years, Centene Corp. has bucked the trend. In 2017, when it seemed there might be areas of the country without an insurer offering plans, Centene filled in gaps when other insurers withdrew.

Centene announced at a recent investor day that it expects the company's ACA enrollment will jump by a range of 150,000 to 200,000 enrollees. The federal exchange's enrollment window opened Nov. 1 and closed Dec. 15. Several states that run their own exchanges have a longer open enrollment period.

According to an S&P Global Market Intelligence analysis of insurer participation on the exchanges, just five states had only one insurer offering coverage for the 2019 plan year, down from eight in 2018.

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The Trump administration earlier this year loosened rules for short-term health plans. They are now allowed to last a full year, rather than just 90 days, and can be renewed for two additional years. Flanders decried the actions by the White House as a "siege" to a health reform law that has provided insurance to millions of people.

"One thing the president has been successful in doing is creating a perception among some that ACA is dead and it's clearly not," he said.

Senior administration officials told reporters on a November conference call that their intention was not to "split the risk pool," though they were concerned that their policies might do just that. They said the new plans were targeted to individuals who are not buying coverage in the exchanges because they do not qualify for subsidies and have to pay the full sticker price.

"Our expectation and our modeling work is not that there will be turnover from the ACA-compliant market, but that we're capturing an unmet need out there," one official said.

Iowa Insurance Commissioner Doug Ommen told S&P Global Market Intelligence that his department would allow the sale of short-term plans in the state, but with caps on annual out-of-pocket costs and lower deductibles.

"I think what has happened is that the Affordable Care Act has solved some circumstances, but a lot of Iowans that traditionally did have coverage now are in a position where they're not able to access coverage," Ommen said in an interview.

Regulators in other states like California and New York, however, have either placed heavy restrictions on the plans or even banned them altogether.

Short-term plans have a place in the market, according to Ann Frohman, Nebraska's former insurance regulator, but they have to be properly designed.

"They have to be narrowly tailored, there shouldn't be a circumvention of the commercial market at all," Frohman said in an interview.