Who’s Dropping Out of Marketplace Coverage? Risk Factors for Early Dis-enrollment under the Affordable Care Act

While numerous studies demonstrate that the Affordable Care Act (ACA) has led to major increases in coverage, less is known about continuity of coverage over time. In the individual health insurance Marketplaces established by the ACA, mid-year disenrollment can lead to gaps in insurance coverage and disrupt health insurance market stability. However, there is limited evidence to guide policymakers about the prevalence and predictors of early disenrollment in these markets.

In this paper, we assessed the relationships between insurance plan generosity, individual and area-level demographics, and early disenrollment from Marketplace coverage. Marketplace enrollees were followed longitudinally from their first enrollment date using a time-to-event analytical approach. The primary outcome was early disenrollment from Marketplace coverage, defined as plan exit before 12 months of coverage elapsed. We used the actuarial values of Marketplace plans to identify metallic tier (bronze, 60% actuarial value; silver, 70% actuarial value; gold, 80% actuarial value) and whether enrollees received cost-sharing reductions. For those eligible for cost-sharing reductions, the actuarial value of a standard silver plan is raised to 72%, 87%, and 94% for those with incomes 200-250% FPL, 150-200% FPL, and 100-150% FPL, respectively. Data were drawn from the Colorado all payer claims database from 2014-2016.

Using enrollment data for 307,937 Connect for Health Colorado individual market enrollees, we estimated adjusted Cox proportional hazard models to measure the associations between plan actuarial value and duration of Marketplace enrollment. We also identified demographic and area-level risk factors associated with early disenrollment using age and sex information from claims data and ZIP-Code level race/ethnicity and education variables from the American Community Survey.

We found that on average, 24.1 percent of Marketplace beneficiaries disenrolled early, before 12 months had elapsed since their coverage start date. The dropout rate was highest among bronze enrollees (26.3%) and lowest among silver enrollees who received cost-sharing reductions (18.6%). Compared to enrollees in silver plans who were not receiving cost-sharing subsidies, the hazard of disenrollment was 32% lower among silver enrollees eligible for the most generous cost-sharing reductions, 21% lower for those enrolled in gold plans, and 7% higher for those enrolled in bronze plans. Young adults had a 70% increased hazard of disenrollment compared to older adults. Among those who disenrolled from Marketplace coverage prior to the end of the year, 72.6% of enrollees were lost to follow up, 10.4% transitioned from Marketplace to Medicaid, and 17.0% transitioned to commercial coverage.

Enrollment attrition is a concern in state insurance Marketplaces that has implications for population health and Marketplace risk pools. These results suggest that reduced exposure to out-of-pocket costs is associated with longer durations of continuous Marketplace enrollment. Thus, lowering out-of-pocket costs for Marketplace consumers may reduce dropout rates, promote continuity of coverage, and improve the age-related risk pool in these markets.