Member Turnover Challenges Public Exchange Markets

By Jose Diaz
Express Scripts, December 20, 2016

In the current discussions about the advantages and disadvantages of the Affordable Care Act (ACA), one important challenge that goes unnoticed is the topic of member turnover. For every 10 Americans who enroll in the public exchanges, only six will re-enroll during annual open enrollment. The remaining 40% fall into member “churn,” meaning that they will enroll in Medicaid, Medicare or employer-sponsored coverage, or perhaps forgo health insurance altogether. This does not include members who stay within the public exchanges but switch to a new plan – another factor that exacerbates the issue of member turnover for health plans.

With some health plans leaving the public exchange market and an incoming administration looking to repeal the ACA, high member turnover is expected to continue into the 2017 enrollment period. Health plans, yet again, potentially face a membership churn of higher than 40%, leading to member care disruption and limiting a health plan’s ability to recoup costs over a patient’s tenure.

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Each year forty percent of enrollees leave the insurance exchanges established by the Affordable Care Act, and this does not even include the numbers who move to different plans within the exchanges during the open enrollment period. This churning is yet one more of a multitude of design flaws resulting from the fact that our legislators decided to build on our highly dysfunctional, fragmented health care financing infrastructure instead of replacing it with one that is far more effective in meeting reform goals.

Churning has serious consequences. Because health plans do not use the same provider networks, enrollees often lose their choices of their health care professionals and sometimes their hospitals. Networks tend to have even fewer choices of specialists, depriving patients of affordable access to specialized care that may be more appropriate for their circumstances. The practice locations of the network providers may be inconvenient, adding transportation issues to the complexity of obtaining care within our system. Drugs that are commonly used by patients with more serious, chronic conditions are frequently placed in tiers with very high coinsurance, often making those drugs unaffordable, not to mention discouraging those patients from enrolling in the plans in the first place.

Another problem is that insurers have less incentive to cover programs that will improve the long term health of their enrollees since a forty percent churn rate means that very few of the current enrollees will be there in even three years.

It is also more difficult for patients to select the best plan since they have to weigh the differences in plan premiums, the size of the deductible, the differences in copayments and coinisurance, the composition of the provider networks, the geographic accessibility of the physicians and hospitals, and perhaps splitting up integrated primary care for the family when some are covered by other plans. Churning is also compounded by “life events” which force a change in coverage outside of the open enrollment period.

This instability was built into the ACA reform model knowing that patients would not fare as well in such a system, but it was designed to ensure that private insurers would have a viable market for their plans. As it turns out, the model does not work well for insurers either, as we see them increase their premiums, further limit their networks, reduce benefits, and many are pulling out of the markets because it is simply not a good deal for them.

What is really curious is that we are not seeing more of a demand to eliminate this dysfunctional market of private plans and replace it with a model that prevents or corrects these many defects – a well designed, single payer national health program – an improved Medicare for all. Do people just not understand the magnitude of the benefits of making the change?