On August 31, 2017, the Centers for Medicare and Medicaid Services (CMS) announced that it intends to cut Affordable Care Act advertising from the $100 million spent by the Obama administration in 2016 for the 2017 open enrollment period by 90 percent to about $10 million this year for the 2018 open enrollment. CMS also announced that it intends to cut navigator grants from $62.5 million in 2016 by about 40 percent to $36.8 million for 2017. It also intends to tie grants to navigator programs for 2017 to their having met enrollment goals during 2016.
The administration’s announcement must be understood in context. The Affordable Care Act created “American Health Benefit Exchanges” which were intended to certify qualified health plans to participate in the individual and small group markets, determine eligibility for financial assistance for individuals and small employers, provide a platform for comparison shopping among health plans to promote insurer competition and consumer choice, and enroll individuals and small groups in health plans in coverage.
The ACA assumed that exchanges (sometimes called marketplaces) would be operated by the states, but in the event that a state declined to operate an exchange, assigned the task of operating the exchanges to the Department of Health and Human Services. At this time, the federal exchange platform, HealthCare.gov serves 39 states, including five states that have state exchanges. An additional 12 states fully operate their own exchanges.
One of the statutorily required functions of exchanges is to “facilitate the purchase of qualified health plans.” Exchanges must also operate call centers and websites for providing comparative information on health plans, as well as assist with eligibility determinations and enrollment. Federal regulations provide specifically that:
The Exchange must conduct outreach and education activities . . . to educate consumers about the Exchange and insurance affordability programs to encourage participation
Finally, the ACA also requires exchanges to establish navigator programs, which, among other things, must:
(A) conduct public education activities to raise awareness of the availability of qualified health plans;
(B) distribute fair and impartial information concerning enrollment in qualified health plans, and the availability of premium tax credits under section 36B of the Internal Revenue Code of 1986 and cost-sharing reductions under section 1402;
(C) facilitate enrollment in qualified health plans; and,
(E) provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Exchange or Exchanges.
Federal regulations governing the navigator program largely mirror these statutory requirements.
Of course, nowhere do the statutes or regulations specify how much must be spent on outreach or advertising, or the navigator program. The Trump administration contends that the Obama administration spent too much. It argues that between 2015 and 2016, advertising expenditures nearly doubled, but new enrollments fell by 42 percent and effectuated enrollments dropped by 500,000. It contends that only $9.7 million in federal advertising dollars are spent on the Medicare Advantage and Medicare Part D programs, which enroll 41.3 and 19.1 million enrollees respectively.
The administration states that it intends to spend $10 million in 2017 on educational activities to meet the needs of new and returning enrollees for 2018. For contrast, the California exchange intends to spend $111 million itself for the 2018 open enrollment period, which is twice as long as the federal period. CMS will target its advertising and outreach on informing consumers of the dates of the new open enrollment period (which is half as long as last year and ends a month and a half earlier) and focus on digital messages, email, and text messages. Outreach will be focused on specific demographic groups and geographic areas.
The Medicare Advantage and Medicare Part D program are, of course, completely different from the ACA exchange program, as are the populations they insure. Medicare Advantage and Part D are heavily subsidized by the federal government and are a more profitable line of business for insurers than are exchange plans, at least at this time. Insurers are thus more highly motivated to market their Medicare products themselves. Moreover, Medicare enrollees are assisted by an army of employee benefits advisors, who help retirees enroll in the Medicare program. Most new Medicare enrollees are already familiar with insurance and the need for it.
A Look At The Exchange Landscape Going Forward
The remaining uninsured who are eligible for exchange coverage but have not signed up are, by contrast, a predominantly low-income population. Many do not speak English as their native language. Many have not had previous experience with insurance. Many need to be informed of the availability of coverage and convinced of its value. Many are not aware of the availability of subsidies to purchase coverage.
The uninsured who have high health care needs are highly motivated to obtain coverage. But the healthy, and in particularly the young, must be sold coverage. The experience of the Trump administration, which curtailed advertising in the last week of open enrollment for 2017 and saw enrollment, which had until then been running ahead of the previous year, stall, demonstrates the need for marketing exchange products.
The exchanges are funded in large part by user fees. These are collected by the exchange from insurers in consideration of the services the exchange provides them. These services include outreach and education. The 2018 Benefit and Payment Parameters rule committed HHS to spend 3 percent of the user fees it collects from insurers on outreach and education. This would amount to about $50 million. If the administration spends only one fifth of this amount, insurers are being short-changed.
Navigators are funded through a federal grant program. 2018 is the final year of a three-year grant cycle. Navigators received $62.5 million during 2016. The original funding opportunity announcement projected that the program would be funded in the amount of $201 million over three years, although it did firmly commit this amount. Presumably navigator programs have planned their programs for the 2018 open enrollment period, which must be up and running in two months, with trained and certified navigators based on an expectation of approximately the same level of funding they received last year.
CMS asserts that 78 percent of navigator programs failed to meet their enrollment goals for 2017. Navigators, HHS asserts, enrolled only 81,426 people for 2017, less than 1 percent of total enrollees. HHS intends to make funding for 2017 completely dependent on the percentage of enrollment goals a navigator program met for 2016. Thus a program that only reached 30 percent of its goal would only receive 30 percent of its 2016 funding level. Navigators are supposed to focus for 2017 on assisting enrollees with plan selections, particularly in areas where insures have reduced or eliminated plan offerings. They are also supposed to focus on informing people about the reduced 2018 open enrollment period.
The navigator funding opportunity announcement did state that continuing funding for navigator grantees would depend on performance metrics, along with other factors. But the navigator program serves functions other than simply enrollment. Navigators are responsible for education and outreach, in particular outreach to hard to reach populations. Navigators were apparently not told until August 31 that their future funding would depend totally on only one of their functions — enrollment. Moreover, it will depend on how their enrollment for 2016 compared to their own projected targets, so those who set ambitious goals will be penalized.
The HHS announcement fails to acknowledge that over half of ACA enrollees are auto-enrolled in coverage, as one would expect from a program in its fifth year. How many of the reenrollees were originally enrolled by navigators, and will they get credit for them? Will navigators get credit for enrollees who signed up themselves or were directly enrolled or enrolled by an agent or broker after having had contact with a navigator?
The exchanges open for business in two months. They open amidst considerable confusion as to whether health insurers will be paid for cost-sharing reductions, whether the individual responsibility requirement will be enforced, and the level of support the administration will offer the ACA in general. Now would not seem to be the time to let up with outreach and consumer assistance.
To be fair, the administration has indicated that it will proceed with auto-enrollment for 2018, and new direct enrollment procedures may simplify enrollment for agents and brokers and insurers. These factors will bolster enrollment. But it is more likely than not that enrollment for 2018 will be down from 2017, and it will be clear who bears a large part of the responsibility for this.