Connecticut: Why on earth is AccessHealthCT upset about a 92.5% payment rate??

Thanks to Richard Mayhew for bringing this to my attention (and Arielle Levin Becker for the story):

About 8,000 CT exchange customers didn’t pay first bill

About 8,000 people who signed up for coverage through the Connecticut’s health insurance exchange missed the deadline for their first payment and lost coverage, exchange CEO Jim Wadleigh said Monday.

“This number is bigger than we were anticipating,” Wadleigh said. Just over 116,000 people signed up for private insurance through Access Health CT, the state’s exchange, during the open enrollment period that ended Jan. 31. “The fact that all these customers have not made their first payment was kind of a shock to even us.”

The thing is, when you do the math, it's not bad at all. 8,000 / 116,000 is just 6.9% of the total who didn't pay up. Now, it's actually a bit worse than that, because anyone who signed up between 1/16 - 1/31 doesn't have their policy start until March 1st, and as the article notes, they have 30 days from the day they receive the bill to make their payment. Some carriers might send them out immediately after the person signs up, but my guess is that the first invoice isn't even sent out to many people until a week or so later.

According to AccessHealthCT's earlier reports, they had 104.4K as of January 5th, and 108.8K as of January 20th. That means that their 1/15/16 total was around 107,000...which means that it's actually more like 8K / 107K, or 7.5%. That's 92.5% who did pay their first premium.

Here's the thing, though...that's still better than the 88-90% payment rate which exchange enrollees averaged nationally in both 2014 and 2015. Wadleigh shouldn't be upset about an 7.5% deadbeat rate, so why is he?

Wadleigh said it’s possible that a similar number of people failed to make their first payment last year, but the exchange didn’t have the data to know.

Ah. Well, now you know: You can expect around 10-12% of enrollees not to pay up...which, from various industry sources I've spoken with over the past couple of years, appears to be pretty typical of the individual insurance market to begin with.

So, how does this compare nationally? Well...

  • Last year around 11.7 million people selected QHPs, plus another 200K who were auto-renewed but immediately cancelled their policies.
  • Of those, around 10.2 million were still actually effectuated as of 3/31/15. That's a reduction of either 1.5 million or 1.7 million, depending on your POV.
  • Percentage-wise, that's around 13-15% of the total who were still enrolled as of the end of March.
  • Of those, roughly 1.2 million never paid their first month's premium, and another 300K either paid for January/February and then dropped their policies, or were kicked off for legal residency verification issues, etc. (even though they had paid their first 1-2 premiums).
  • In other words, around 10-12% don't pay the first premium, and another 3-5% were dropped/cancelled shortly after that.

I have no idea whether the non-payment and/or subsequent attrition/drop-off rate will be similar to last year, but assuming it is, here's what we can expect:

  • Around 13.0 million people selected QHPs nationally (12.7 million + 300K who were "pre-purged" for nonpayment of their January invoice)
  • However, it's actually higher, since I've already confirmed that more people had already been "pre-purged" besides the 300K which CMS has confirmed. I don't know how many more, but I'm guessing perhaps 100K at most.
  • Assuming a similar 13-15% drop off/get cancelled by 3/31, that should mean roughly 11.1 - 11.4 million will still be enrolled as of the end of March.

Anything below 11 million still effectuated as of 3/31 will mean a worse retention rate than last year; anything above 11.4 million will mean a better retention rate.

If Connecticut's 7.5% proves to be representative nationally, that would be a good 400K more people who did pay their first premium this year than expected, but I highly doubt that. I know, for instance, that North Dakota is already down to 79% of their official OE3 tally (17K still effectuated out of 21.6K); obviously the numbers will vary from state to state and carrier to carrier. On the other hand, Rhode Island is reporting a 93% payment rate so far, similar to Connecticut's...except that they had also "pre-purged" 5,500 autorenewals who never paid for January. Whether or not those folks should be "counted" or not depends on your POV, really; since they were auto-renewed, the odds are that most of them never intended on renewing in the first place, but also never bothered to actively cancel their policies, so in my view they're really in the same boat as those extra 200K from last year.