Experience With Marketplace Insurance Renewals in Second Year of the ACA

While growing marketplace enrollment in state-based exchanges is important, retaining enrollees is equally so, and a new report from the Robert Wood Johnson Foundation and the Urban Institute analyzed the renewal process for 6 states: California, Colorado, Kentucky, Maryland, Rhode Island, and Washington.

These states took 2 different approaches to insurance renewal: California, Colorado, Kentucky, and Washington all offered passive, automatic renewals; and Maryland and Rhode Island offered active renewal, which required enrollees return to the marketplace to maintain their coverage.

“Overall, the state-based marketplaces were successful in retaining a substantial majority of their eligible first-year enrollees,” the researchers wrote. “This was a key test for the renewal process.”

The states studied retained at least two-thirds of their 2014 enrollees; however, retention rates were difficult to compare because states had differing definitions and timing for estimates. California and Kentucky both reported more than 90% of enrollees renewed, while Rhode Island reported a retention rate of 82%, Washington retained 80%, and Colorado re-enrolled 67%. Maryland’s rate was unavailable.

In 5 of the 6 states studied, re-enrollments accounted for the majority of overall enrollment in the second year of enrollment. In California, market enrollment only grew by 1%, because the state experience high enrollment numbers in the first year. However, Maryland increased its overall enrollment by 77%.

One of the concerns with an automatic renewal option is that consumers receiving tax credits may be better off looking for new coverage. The report determined that even with automatic renewals, enrollees were more likely to engage in plan or insurer switching. In Rhode Island, 62% of enrollees changed plans. Although only 6% of California re-enrollees switched insurers, 57% of re-enrollees were active in their enrollment even though they could have done so automatically.

According to the report, California, Colorado, Maryland, Rhode Island, and Washington have all indicated they will likely offer an automatic renewal process for the 2016 open enrollment period. Kentucky is considering switching to an active renewal process that would require consumers return to the marketplace to better ensure enrollees are not surprised by unexpected premium changes.

“As the number of uninsured declines, marketplaces by necessity must shift their focus from enrolling new consumers to maintaining enrollment through a renewal process that balances enrollee convenience with enrollees’ desire to maximize the value of available financial assistance,” the authors concluded.