Yesterday, the federal government announced that 700,000 people nationwide had submitted applications for coverage in the new health insurance exchanges. Using Medicare Part D as a historical benchmark, only 10 percent of voluntary Part D enrollees in stand-alone plans had enrolled in coverage as of December 2005, a month before drug coverage first became effective. If the Part D enrollment experience is applied to exchanges, fewer than 700,000 people would be expected to enroll in exchange coverage by November 15, 2013. One unknown factor is what portion of the 700,000 applicants announced yesterday will complete their purchase and enroll in a plan.
“People are slow to purchase coverage when new programs begin, and if past programs are any guide, we expect most exchange participants will wait until after January 2014 to enroll,” said Caroline Pearson, vice president at Avalere Health. “This suggests that if early website problems are resolved before the end of the year, they should not meaningfully decrease the size of these new exchange markets.”
Avalere’s analysis found that two-thirds of Medicare beneficiaries who voluntarily enrolled in a stand-alone Part D plan during the initial enrollment period signed up after coverage began on January 1, 2006. Twenty-two percent of Part D enrollees signed up in the final month of the open enrollment period, suggesting that nearly 1.6 million people could wait until March to enroll in an exchange plan.
“The fact that exchange applications are coming in more rapidly than Part D, despite technical glitches, might be explained by differences in the two programs,” said Matt Eyles, executive vice president of Avalere Health. “Many people excluded from the market historically, and those who are being heavily subsidized, have every incentive to sign up early for exchange plans. Medicare beneficiaries already had health insurance and were only looking to add drug coverage.”
Methodology: Avalere Health reviewed monthly enrollment numbers for individuals who voluntarily enrolled in Medicare stand-alone prescription drug plans (PDPs) and aligned the milestones of the Part D initial open enrollment period with those of the initial open enrollment period for exchanges. We then applied the trajectory of voluntary enrollment in Part D to the May 2013 Congressional Budget Office (CBO) estimate of 7 million total exchange enrollees for 2014. Medicare Part D open enrollment ran from November 15, 2005 to May 15, 2006. Exchange open enrollment runs from October 1, 2013 to March 31, 2014.