While the individual health insurance market has faced challenges over the years, first quarter 2024 enrollment has reached new and unprecedented heights, according to a recent brief from Mark Farrah Associates (MFA) providing insight into overall enrollment and financial trends for the individual health insurance segment.
According to financial statements filed by insurers, and with estimates by Mark Farrah Associates (MFA), enrollment in individual medical plans, both on and off the exchange, totaled approximately 24.3 million as of March 31, 2024. That’s a gain of 4.9 million enrollees from March 31, 2023.
Health insurance individual market trends
The MFA brief notes that the individual market has seen many changes in the last 15 years, including the passage of major regulatory reforms with the 2010 signing and 2014 final implementation of the Affordable Care Act (ACA), to the recent public health emergency (PHE) due to the Covid-19 pandemic. Enrollment greatly increased in the early years of the ACA; however, after numerous court challenges, particularly around the individual mandate, enrollment began dropping in 2016, remaining relatively stagnate in the years leading up to Covid-19 and the PHE.
From the end of 2020, individual enrollment has grown each year, and continued to grow after the Covid-19 PHE officially ended on May 11, 2023.
The surge of membership, during the early years of the ACA, may have looked good for insurers to the casual observer. However, the accompanying growth in medical spending, which by the end of 2015 had greatly outpaced premiums growth, led to segment losses for most health plans. The poor financial results created an exodus of large national carriers from the individual market, triggering premium hikes for those that remained. Overall, the segment has been profitable for health plans since 2017.
Since 2021, however, premium growth has, once again, been outpaced by medical expenses, leading to medical loss ratios (MLRs) above the ACA requirement that health insurers in the individual and small group markets to spend at least 80% of their premium revenues on clinical care and quality improvements.
From year-end 2021 to March 31, 2024, a dozen insurance carriers have completely exited the individual marketplace and many more have made strategic decision to exit some markets and expand in others based on many factors including the ability to offer value at an affordable price.
Currently, it appears those strategic decisions and perhaps lessons learned during the early years, are helping to stabilize the market with premium growth staying slightly ahead of claims increases.
As of 1Q24, plans are reporting an average aggregated traditional MLR of 78.8%, down from 79.3% in first quarter of 2023. Premiums per member per month (PMPM) for 1Q24 of $542 are up 2.7%, from $528 PMPM, as of 1Q23 and claims for 1Q24 of $427 PMPM are up 1.9%, from $419 PMPM, as of 1Q23.
More changes ahead
Even with the market changes identified above, the total individual market increased by 4.9 million members, or 25%, from 1Q23 to 1Q24. This may be due in part to people enrolling into subsidized individual plans who are no longer qualified to receive Medicaid benefits.
Another source of growth for the individual marketplaces may be from individual coverage health reimbursement arrangements (ICHRAs) offered by employers. ICHRAs allows organizations to provide employees with a tax-free allowance to purchase coverage through federal and state-based exchanges. Anecdotal data suggests that interest in and usage of ICHRAs are increasing.
What we do know is that Medicaid medical insurance enrollment has declined by 11.5 million covered lives between 1Q23 and 1Q24 and employer group risk-based medical insurance is down 1.5 million covered lives for the same period.
About U.S. individual health coverage
For this analysis, individual enrollment includes consumers purchasing coverage for themselves and/or family members directly or through marketplace exchanges, not through a government program (such as Medicaid or Medicare) or from an employer or union. Individual enrollment is typically higher in the first quarter of the year, while medical expenses are typically lower, compared to year-end.
Data in this analysis is based on statutory financial statements filed with state regulators, the NAIC (National Association of Insurance Commissioners), and the CA DMHC (California Department of Managed Health Care). It is important to note that Mark Farrah Associates (MFA) applied estimated enrollment figures for select carriers not required to report health enrollment on a quarterly basis and made other adjustments based on market analysis.
Individual enrollment may include Medicaid programs, such as CHIP, as some states include subsidized lines in the individual segment. These factors may have resulted in nominal understatement or overstatement of enrollment.
Mark Farrah Associates is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry.
