By Leslie Small

Between plan years 2016 to 2019, unsubsidized enrollment both on and off the Affordable Care Act exchanges declined by 2.8 million people, representing a 45% drop nationally, according to a recent report from CMS. That data, the Trump administration said, demonstrates that “people who do not qualify for subsidies continue to be priced out of the market.”

Indeed, as the CMS report shows, in 2014, 2015 and 2016 “premiums were reasonably flattish, then there’s a huge premium shock in ’17 and ’18 for the unsubsidized population,” says David Anderson, a research associate at the Duke-Margolis Center for Health Policy. “And when things are more expensive, people buy less of them.”

Anderson explains that from 2014 to 2016 there were a series “training wheels for the marketplace” — most crucially a three-year federal reinsurance program that paid for a significant chunk of insurers’ high-cost claims. That support disappeared, as the ACA dictated, starting in the 2017 plan year. Also in 2017, insurers that initially priced their plans far too low either started “pricing correctly or leaving the market because they went bankrupt,” Anderson says. And those market exits led to more insurer monopolies.

While subsidized enrollees were largely insulated from that the resulting price hikes, since advanced premium tax credit subsidies rise with premiums, unsubsidized enrollees saw their premium rates rise by hundreds of dollars a month in 2017.

For the 2018 plan year, similar dynamics remained at play, Anderson says, with the added complication of significant policy uncertainty tied to Republicans’ efforts to repeal and replace the ACA in 2017. Insurers responded by either exiting or pricing their products higher, driving even more unsubsidized enrollees from the individual market.

The story changed yet again in 2019. Although unsubsidized enrollment continued to decline that year, the rate of decline was substantially lower than the 24% drop in 2018 and the 20% decrease in 2017, CMS said in its report.

“The market stabilized at a new, lower enrollment, higher premium equilibrium,” Anderson says. Average monthly premiums for both 2019 and 2020 have been flat to slightly declining relative to 2018, he says, and more states have used reinsurance waivers to increase affordability for unsubsidized enrollees. And finally, competition among insurers has ramped back up in recent years, helping push down premiums.