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The CHCF Blog

California Health Insurers Hold Onto Previous ACA Gains

Katherine Wilson, Wilson Analytics
Katherine Wilson
Katherine Wilson

California health insurance enrollment across all market segments at the end of 2016 remained mostly unchanged from a year earlier. After strong growth rates in 2014 and 2015 due to Medi-Cal expansion under the Affordable Care Act (ACA), the 2016 Medi-Cal managed care plans again accounted for more enrollees (10.5 million) than large private group plans (9.6 million). In addition, about 2.3 million Californians purchased coverage on the individual market through Covered California or directly from insurers.

The data featured here represent the latest reporting by California's two health insurance regulators, the Department of Managed Health Care (Financial Summary Data) and the California Department of Insurance (Health Insurance Covered Lives Report), and Covered California (Data & Research), the state's ACA health insurance marketplace for subsidy-eligible coverage. The 2016 figures mark the fifth year of mandatory California enrollment reporting and constitute the state's primary health insurance enrollment data sources. This analysis is the first step in the California Health Care Foundation's annual enrollment review and offers a detailed overview of changes by market.

California Health Insurer Enrollment, 2015 vs. 2016

Health insurance enrollment was stable in 2016, a sign of maturity and equilibrium after the sweeping changes brought about by the ACA in the two previous years. In 2016, overall commercial enrollment remained virtually flat (up 0.2%) and public managed care enrollment expanded by 1.9%. These modest changes stand in sharp contrast with the extraordinary growth of the 2014-2015 period, when individual coverage and Medi-Cal managed care each grew by more than 50%.

California Health Insurance Enrollment Detail, 2013-2016

In 2016, individual enrollment declined slightly, by 40,000 (down 1.7%) to 2.31 million as fewer people purchased unsubsidized coverage outside of Covered California. People without a premium subsidy may enroll either off-exchange or through Covered California. Nearly half (49%) of individual enrollees received a premium subsidy. Overall, 55% of individual purchasers enrolled through Covered California.

Change in the Individual Market, 2016

Covered California enrollment — both subsidized and unsubsidized — increased in 2016, suggesting its role as an effective purchasing channel has taken root in public awareness. Coming after enrollment grew by 858,000 in the 2014-2015 period (up 58%), the 2016 results suggest that individual enrollment may have peaked. That trend could worsen if premiums increase rapidly or policymakers reduce future availability of subsidies.

Small group and large group combined enrollment grew in 2016 for the first time since statewide figures became available in 2012. The 2016 increase (up 0.5%, or 64,000 enrollees) can be attributed to rising employment levels (up 1.6% in 2016) rather than to higher coverage rates for people with employer-sponsored health plans. Small group membership rose and large group enrollment declined, partly due to an expansion of the "small group" definition. Effective January 1, 2016, the definition of "small group" increased from up to 50 eligible full-time employees to up to 100.

Public managed care. California's health insurers cover many public program enrollees through managed care arrangements — about 80% of beneficiaries in Medi-Cal and 40% in Medicare. (The remainder of California Medi-Cal and Medicare beneficiaries receive care under fee-for-service arrangements and are not included in the current analysis.) Managed care enrollment numbers reported by insurers are as follows:

  • Medi-Cal and other public managed care enrollment rose by 157,000 (1.5%) to 10.5 million, a modest growth rate compared to the 52% increase in the 2014-2015 period, when California opted to expand Medi-Cal eligibility under the ACA.
  • Medicare managed care enrollment increased by 86,000 (3.8%) to 2.4 million, a pace consistent with Medicare population growth.

Administrative services only (ASO), a category that tracks health coverage provided by self-insured employers, appeared to decline by nearly one million enrollees, an effect attributed to technical reporting changes by a single insurer. Under ASO arrangements, employers directly fund health benefits and assume all risk but rely on insurers to provide administrative services such as claims processing and provider network management.

Shifting Regulatory Landscape

In recent years DMHC has regulated an increasing share of insured enrollment. This trend continued in 2016, with greater concentration under DMHC in the individual, small group, and large group market sectors. At year end, DMHC regulated 92% of commercial enrollment and CDI regulated 8%. The shift has been most visible in the individual market, where DMHC-regulated products covered 30% of enrollment in 2013 and 91% in 2016. See the data in these excel files.

Final Thoughts

While 2016 represented stable enrollment following the much bigger changes during the ACA rollout, federal policy uncertainties in 2017 raise many questions about future enrollment levels.

California Health Insurance Enrollment by Sector, 2013-2016

See an expanded Excel version of this table.

Watch for additional enrollment data later this year, including an updated edition of CHCF's California Health Insurance Enrollment Database, which includes detail by insurance company. Get an overview of California's health insurance market.

About Katherine

Katherine Wilson is an independent consultant specializing in health insurance markets and health care costs. She is the author of numerous publications and reports, including CHCF's series of reports on California Health Insurers.
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