How Has the Individual Market Evolved in 2015?

In 2014, the story of the evolving individual insurance market was that many consumers who had purchased individual coverage without subsidies readily moved to government marketplaces to take advantage of lower prices and subsidies. About two-thirds of last year’s marketplace enrollees had unsubsidized health insurance in 2013. This year, the big story is that consumers who are new to the Individual market (“New Purchasers”) came from a variety of previous insurance situations, most strikingly, from employer-sponsored group plans.

WHERE DID “NEW PURCHASERS” COME FROM?

Of consumers currently insured in the Individual Market, 41% are New Purchasers. And, of these New Purchasers, 25% were previously uninsured, 52% came from employer-sponsored group plans, 14% from Medicaid, 15% from a parent’s plan, and 13% from Tricare. (Note: respondents could select more than one type of previous coverage, so totals may exceed 100%)

HOW DID THEY SHOP?

New purchasers have distinctive shopping patterns. Insurers whose outreach strategies involved employer benefit specialists, government navigators, and third-party community resources had a strong impact on these consumers. This group was also among the most likely to meet with an insurance representative face-to-face, attend seminars, and visit retail stores. They supplemented the traditional personal assistance provided by agents and representatives with these additional resources.

WHAT TYPE OF COVERAGE DID THEY CHOSE?

New Purchasers chose richer coverage. They were the group most likely to choose Platinum and Gold insurance packages in 2015. They accounted for half of all Platinum and Gold packages sold between November and February.

Part of the explanation is the large number who came from employer-sponsored plans. With their history, it would be natural to use an employer’s past coverage options as a reference. So, many New Purchasers may have been thinking in terms of fairly large formularies, typically larger networks, and dental, vision, and fitness benefits. Their recent employment status signals a history of earning. This combined with affordable marketplace premiums may have been a catalyst for their decisions.

HOW WILL THIS IMPACT INSURERS?

The implication for health insurers is that the full range of metal level packages will remain in play. Because the individual market’s “New Purchasers” have experience with health insurance, their expectations expand the set of health plan attributes that determine which plan gets which market share. Comparisons between individual and group-based insurance are being made.These comparisons will put pressure on health plans to deliver ancillary benefits and services consumers expect.

While the prime objective of the Affordable Care Act (ACA) is to get everybody insured, the impact on previously existing insurance markets continues to unfold. More of the uninsured are getting coverage, but in both of the ACA’s first two years, the story has been about previously insured groups who have found the new market for individual insurance attractive.

All findings come from our Consumer Shopping and Switching During the ACA’s Open Enrollment Period report published in March of 2015.

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