Data from the Department of Managed Health Care and the California Department of Insurance show that total health insurance enrollment in 2021, the second pandemic year, increased by 1.4% (474,000) to 34.3 million enrollees.1 This compared to 3.3% growth in 2020.
The 2021 enrollment gains were driven mainly by strong growth in Medi-Cal managed care, with help from the individual market. Gains were partly offset by enrollment declines in large groups and to a lesser extent administrative services only (ASO) arrangements (provided to self-insured employers). (See Figure 1.)
A data file for the enrollment measures explored in this piece is available below for download. Explore the full 2021 enrollment data set and quick reference guide at 2022 Edition — California Health Insurance Enrollment.
A Second Year of Strong Medi-Cal Managed Care Growth as Public Health Emergency Extended and Redeterminations Remained on Hold
Medi-Cal managed care grew by 7.2% (795,000) in 2021, reaching 11.8 million enrollees. This followed growth of 9.2% (900,000) in 2020. The current period of growth in Medi-Cal managed care enrollment began in April 2020, according to DHCS records, and coincided with the federal continuous coverage requirement linked to the COVID-19 public health emergency (PHE). With Medi-Cal redeterminations halted, enrollment has risen steadily.
Declines in Large Group Enrollment Led Reductions in Employer-Sponsored Insurance
The large group market in 2021 experienced its biggest enrollment decline since mandatory enrollment reporting began in 2012. Despite strong job gains (6.0%), large group enrollment fell by 4.6% (459,000) to 9.5 million enrollees. (See Figure 2.) This compared to a 1.4% decline in 2020. Possible explanations for the 2021 large group decline could include the end of health benefits to furloughed workers and Paycheck Protection Program loans. Also, some people may have chosen not to enroll in employer-sponsored coverage, retaining their Medi-Cal coverage instead during the COVID-19 PHE. Finally, the mix of jobs in the economy could be shifting; of the jobs added in 2021, for example, 44% were in the leisure and hospitality industry, known to have lower rates of job-based health insurance.
In other employer-sponsored insurance (ESI) markets, enrollment in ASO arrangements for self-insured employers decreased 1.7% (94,000) to 5.5 million enrollees. By contrast, small group enrollment grew by 1.2% (27,000). Taken as a whole, enrollment in ESI markets declined 3.0% (527,000) in 2021. (See Figure 3.) (ESI markets were defined as large group, small group, and ASO.)
Individual Market Saw a Second Year of Strong Growth, Buoyed by Enhanced Federal Premium Subsidies
The individual market ended 2021 with a near-record 2.3 million enrollees. Enrollment in 2021 increased by 6.7% (147,000), slowing a bit from its 9.7% increase (195,000) in 2020. Covered California, where eligible enrollees may obtain premium subsidies, drove individual market growth once again, increasing 12.6% (186,810) in 2021. (See Figure 4.) The growth coincided with expanded federal premium assistance in 2021, enacted in the American Rescue Plan Act of 2021 (ARPA). Specifically, ARPA enhanced subsidies for people with lower incomes and eliminated the “subsidy cliff” (by capping what people with higher incomes pay at 8.5% of their income).2 In addition, the, state-funded premium subsidies introduced in 2020 for both lower- (100%–400% of poverty) and middle-income enrollees (400%–600% of poverty) remained in effect in 2021.
Covered California attributed 2021 growth to the increased affordability and access that ARPA’s enhanced premium assistance provided. Over 70% of California’s individual market was enrolled through Covered California in 2021. Of Covered California enrollees, 90% received premium subsidies.3 For those receiving subsidies, the average premium paid by a member in 2021 was $67 per month, as compared to $127 in 2020. The 2021 median premium paid by members receiving a subsidy was $2 per month. This compares to the total average premium for these members of $579 per month in 2021.4
Individual market enrollment outside Covered California, or “off exchange” enrollment, continued its multiyear decline, decreasing by 5.6% (41,000) in 2021 to 677,000 enrollees. These enrollees purchase coverage directly from insurers, without federal or state premium assistance. Coverage can be in either legacy plans (see below) or plans meeting Affordable Care Act (ACA) standards.
Legacy Plan Enrollment Continued to Decrease
Enrollment in plans in force before passage of the ACA, called “legacy” (formerly referred to as “grandfathered”) plans, continued to dwindle. (See Figure 5.) At the end of 2021, roughly 1 million commercial enrollees, or 7.2% of the commercial market, remained in legacy plans. This compared to 1.3 million legacy enrollees (9.1%) in 2020 and 4.4 million (31.5%) in 2012. The share of enrollees in legacy plans in 2021 ranged from a low of 4.5% in the individual market to a high of 8.0% in the large group market.
Medicare Managed Care Growth Slowed
Medicare managed care enrollment grew 2.1% in 2021, a slower pace than its 6.3% increase in 2020. The slowdown was consistent with a broader state and national trend, in which 2021 growth in the total number of people eligible for Medicare decelerated.5
In Summary, Enrollment in 2021
The year 2021 finished with nearly half a million more California health insurance enrollees than 2020. Growth in Medi-Cal managed care, and to a much lesser extent, the individual, small group, and Medicare managed care markets, drove the growth. Historic declines in large group enrollment and modest declines in ASO enrollment partially offset the gains.
Looking Ahead: End of the PHE Will Slowly Reduce Medi-Cal Enrollment. Recent Extension of Federal Subsidies in the Individual Market Could Ease Transitions.
The public health emergency is currently extended into January 2023. Once the PHE ends, states have 14 months to conduct eligibility redeterminations. California’s Unwinding Plan (PDF) will guide this process, which the Department of Health Care Services estimates could lead to two to three million Medi-Cal disenrollments.
In the individual market, the extension of enhanced federal premium subsidies through the Inflation Reduction Act of 2022 (IRA) will help keep premiums affordable for low- and middle-income Californians. Through federal administrative rules (PDF), the “family glitch” will also be fixed in 2023, allowing families to qualify for premium subsidies if ESI offerings are not affordable. Given the coverage transitions on the horizon, Covered California options in the individual market will be key for many in retaining or acquiring coverage.
The large group market should be closely watched for further signs of weakness or changes in dynamics.
Authors & Contributors
Katherine Wilson
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.
Notes
- Total health insurance enrollment is defined as the sum of six markets: individual, small group, large group, Medicare managed care, Medi-Cal managed care, and administrative services only (ASO). ↩︎
- Daniel McDermott, Cynthia Cox, and Krutika Amin, “Impact of Key Provisions of the American Rescue Plan Act of 2021 COVID-19 Relief on Marketplace Premiums,” KFF, March 15, 2021. The subsidy cliff, in which eligibility for premium subsidies ended as soon as an enrollee’s income reached a certain level, was eliminated by capping what enrollees pay for a silver plan at 8.5% of their income. ↩︎
- “Data & Research: Active Member Profiles” (2021 December), Covered California. ↩︎
- 2021 December, Covered California. ↩︎
- Medicare Advantage State/County Penetration, Dec 2020 and Dec 2021, Centers for Medicare and Medicaid Services. ↩︎
