California health insurance enrollment grew modestly in most categories in 2017, according to the state Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI). Public managed care coverage through Medicare and Medi-Cal, California’s Medicaid program, grew by 4.6% and 2.3% respectively. Overall commercial enrollment was flat, with losses in the individual market (-3.8%) offset by membership gains in the small-group (1.8%) and large-group (0.6%) markets. Enrollment in administrative services only (ASO) arrangements provided to self-insured employers grew 1.1%. At 10.7 million enrollees, Medi-Cal managed care was once again the largest sector of the health insurance market, followed by the 9.6 million members of large-group commercial plans.
Troubling Trends in the Individual Market
Total enrollment in the individual market in 2017 declined by more than 87,000 enrollees, or 3.8%, from the year before, marking a second straight year of losses. In 2016, individual enrollment fell 1.7%. In each year, losses were driven primarily by shrinking numbers of people purchasing coverage directly from insurers (off-exchange) instead of through the Covered California insurance exchange, which provides premium assistance to financially eligible individuals. In 2017, off-exchange individual enrollment fell by 72,813, or 7%. Covered California posted an enrollment decline of 14,710, or 1%.
The individual market losses are not huge and enrollment, at well over 2 million, remains far above pre-Affordable Care Act levels. However, the downward trend among price-sensitive consumers of health plans purchased off the exchange is a warning sign. Some of the individual market declines could be attributed to people moving from the individual market to employer-sponsored insurance (ESI). But the concentration of losses in the off-exchange (all unsubsidized) market suggests that some of the decline may simply be driven by affordability challenges.
Uptick in Employment Increases Group and ASO Enrollment
In 2017, strong employment growth contributed to rising enrollment in the group and ASO markets. California’s employed population rose 1.9%, or about 350,000 jobs. On a combined basis, group and ASO enrollment rose by more than 150,000, or 0.9%, to 17.6 million. Enrollment in group plans increased by 94,516, or 0.8%, to 11.9 million. This included growth of 41,414, or 1.8%, in small groups and 53,102, or 0.6%, in large groups. In addition, self-insured employers increased ASO enrollment by 62,287, or 1.1%.
Affordability, especially in the individual market, and federal actions related to the individual mandate and insurance coverage standards are likely to shape enrollment dynamics going forward. The state’s response will also influence events.
Administrative Services Only (ASO): While this category includes most self-insured coverage, ASO figures might not capture those covered through labor trusts, third-party administrators, and multiple employer welfare arrangements (MEWAs).
Public Enrollment: These figures reflect managed care only. Fee-for-service (FFS) enrollment in Medicare and Medi-Cal is not regulated by CDI and DMHC. Medi-Cal managed care figures in these tables include the other public managed care categories, Medi-Cal Access Program (MCAP, formerly known as AIM), and Healthy Families, which completed their transitions to Medi-Cal in 2012–13 and 2017 respectively.
Short-Term Health Insurance: Enrollment figures do not include short-term major medical insurance, which CDI records put at about 5,000 enrollees.
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.