Affordability of Marketplace Coverage: Challenges to Enrollment and State Options to Lower Consumer Costs

Open enrollment in 2014 exceeded expectations for consumer participation. Even at this early stage, the Patient Protection and Affordable Care Act (ACA) has significantly reduced the number of uninsured. Nevertheless, many consumers remain without coverage despite eligibility for Medicaid or subsidies to lower the cost of qualified health plans (QHPs) offered in health insurance marketplaces. One serious obstacle to enrollment is many consumers' belief that QHP coverage, even with federal subsidies, is not affordable. In early June 2014, this was by far the most frequent reason that uninsured adults who visited a health insurance marketplace gave for not enrolling in marketplace coverage. According to the Urban Institute's Health Reform Monitoring Survey (HRMS), 58 percent of these adults cited their inability to afford coverage as a reason for failing to enroll, compared with 29 percent and 20 percent who mentioned ineligibility for financial assistance and technical or time barriers to participation, respectively—the second and third most frequently cited reasons. These findings are consistent with our interviews with application assisters from multiple states, who reported that even with subsidies, many uninsured found coverage too expensive to purchase. Most uninsured adults who visited a marketplace (64 percent) reported hearing " some or a lot " about subsidies. On the other hand, some concerns about affordability may reflect a lack of information. Most uninsured consumers who did not visit a marketplace (72 percent) heard " little or nothing " about subsidies. Altogether, 68 percent of the consumers who remained uninsured after open enrollment in 2014 had not visited a marketplace. It may therefore be important for states to address not just the actual affordability of coverage, but also public education about available subsidies. The latter topic is not explored here, but it is addressed as part of another paper in this series. To improve QHP affordability for low-and moderate-income consumers, several states appeared to achieve success taking two distinct approaches: • Minnesota uses a Medicaid waiver to provide more affordable coverage outside the marketplace to consumers with incomes up to 200 percent of the federal poverty level (FPL). An adult with income at 170 percent of FPL, for example, pays $33 a month for MinnesotaCare (MNCare), compared with $80 that would be charged for subsidized QHP coverage. Based on several projections, MNCare has achieved more than two or three times the level of enrollment, relative to its target population (eligible consumers with incomes under …