UPDATE: HHS's legal residency detection system vastly improved!

The official tally of QHP selections nationally during the 2015 Open Enrollment Period (from 11/15/14 - 2/22/15) was 11,688,074 people.

The actual number of people still enrolled in effectuated plans (i.e., active) as of March 31, 2015, according to the HHS Dept., was 10,187,197 people. That's a net reduction of exactly 1,500,877.

On the surface, that may look bad, but bear in mind that with a 90% payment rate (which I suspect is actually pretty close to the non-ACA industry standard, and which is about 2 points better than last year), that means only about 10.5 million of the original enrollees would have been expected to actually be enrolled in March anyway. That leaves another 332,000 people who presumably paid up for January, February and/or March, but had dropped their policies by the end of March.

(Note: None of this takes into account the additional 214,000 people who selected QHPs during the #ACATaxTime special enrollment period, since they wouldn't have their policies go into effect until May or June anyway).

Until now I've operated on the assumption that the other 332K consisted primarily of normal attrition--people dropping their exchange policies due to regular life changes (marrying someone with other coverage, getting a job with health benefits, aging into Medicare, falling on hard times and moving to Medicaid, etc etc), and for some of them, that's no doubt the case.

However, according to a new Wall St. Journal story about fraud concerns at Healthcare.Gov, it looks like most of those 332K people may have simply been people dropped from their policies due to legal residency issues:

The marketplace has a multi-layer verification process, including checking an application filer’s identity and eligibility in real-time, according to Health and Human Services, the parent agency of CMS.

Enrollment was discontinued for about 226,000 consumers who failed to produce sufficient documentation of their citizenship or immigration status at the end of March 2015.

“Over the last year, we have made continuous improvements to our processes and communications for those with a data matching issue as we work to bolster the integrity of the process,” said Meaghan Smith, a HHS spokeswoman. “We look forward to working with the GAO as we continue to make additional improvements.”

Now, I've already started to ask around to confirm/clarify three important points about this number: (see important update below!)

(It's important to note that there's nothing wrong or unusual with HHS having to "purge" unqualified individuals from the rolls; with millions of people signing up, there's always going to be some percentage who have documentation issues to deal with. HHS has stated that this will happen from time to time.)

The last one is obviously pretty important, and it's a reasonable question since the actual wording of the press release with the 10.2M figure was:

"On March 31, 2015, about 10.2 million consumers had “effectuated” coverage which means those individuals paid for Marketplace coverage and still have an active policy in the applicable month."

Since the WSJ story says that enrollment was "discontinued" for 226K people "at the end of March 2015", this could be read either way.

IF they were already subtracted from the 10.2M figure, that just means that over 2/3 of the net attrition by the end of March was due to purging the "legal residency issue" crowd from the tally. This would actually be great news, in a sense, because it should be a one-time (or at least mostly one-time) issue, meaning that "normal" attrition is actually far lower than I expected (ie, instead of 2.8% dropping their policies voluntarily in the 1st quarter, only about 0.9% did).

HOWEVER, if these 226K people are part of the 10.2 million "effectuated as of 3/31" figure, then that means that the actual currently effectuated number is far lower than reported: Just 9.96 million people.

As I said, I've already asked around. If the latter is the case, then I'll be pretty disappointed with the HHS Dept. Don't get me wrong, this wouldn't be quite as bad as the "DentalGate" debacle last October, but it would still be a bit on the misleading side (especially since the 10.2 million report wasn't released until June, well after the 226K people were kicked off their policies).

I mean, officially, it sounds like these folks were still "enrolled in effectuated policies" right up until midnight on 3/31/15, so I suppose HHS could be technically accurate in including them in the 3/31 total even if they were dropped 24 hours later...but gimme a break.

Anyway, I'm hoping that I'm wrong here, and that the 10.2 million 3/31 figure already takes this group into account. I'll post an update once I receive clarification one way or the other.

UPDATE: OK, in the words of Emily Litella, "never mind"!

I've confirmed that the 226K figure does include both the 112,000 dropped last September and the 90,000 dropped as of February. That means that only about 24,000 more had to be purged in March, which is pretty reasonable. In other words, the 10.2 million "end of March" figure should still be solid (and again, is likely more like 10.3 - 10.4 million at the moment due to the extra tax season SEP enrollees).

OK, on the one hand, this is still a little disappointing in a way, because it means that the vast majority of those who dropped their policies as of 3/31 did do so voluntarily (ie, via life changes): Around 308K of the 332K total.

On the other hand, this is actually a testament to the improvements at Healthcare.Gov in tracking/verifying enrollees who aren't able to provide proper documentation of legal residency:

  • 2014: 112K people out of 8.0 million total (1.4%) have to be kicked off, and it took 9 months to do so.
  • 2015: 114K people out of 11.7 million total (1.0%) have to be kicked off, and it only took 3 months to do so.

Presumably as time passes, technology improves and the process is streamlined, by next year they'll be able to get it down to, say, half a percent and stop those within a month or so of enrolling.

UPDATE: I really should note that the WSJ article itself is about a "sting" operation by the General Accounting Office which created a dozen fake HC.gov accounts last year and was able to successfully enroll 11 of them in ACA exchange policies without being detected; worse yet, they were able to re-enroll them this year as well. Obviously HHS/CMS/HC.gov needs to tighten down the hatches a bit better.