While several reasons have been suggested for a plateau effect in public exchange enrollment, it may all come down to dollars and cents, as well as carrots and sticks.

The HIX marketplace isn’t drawing enough middle and higher income individuals, finds a new Avalere analysis. Just 16% of those earning 301% to 400% of the federal poverty level signed up for an exchange plan for 2015, even though they may be eligible for monthly premium subsidies.

In stark contrast, HealthCare.gov enrolled 76% of residents in 37 states with incomes between 100% and 150% of FPL, which translates into $11,770 to $17,655. About 83% of 2015 HIX enrollees earn less than $29,425 a year, or 250% of FPL and lower, according to the U.S. Department of Health and Human Services. These points come courtesy of Caroline Pearson, an Avalere senior vice president, in a recent explanation of the company’s analysis.

Also see: Private exchange enrollment doubles for plan year 2015

“People receiving more generous subsidies are expected to enroll in the exchanges at higher rates,” says Elizabeth Carpenter, a director at Avalere. “However, participation levels decline as incomes increase, even among individuals who would be eligible for both premium subsidies and cost-sharing reductions.” 

Avalere highlighted the use of carrot-and-stick incentives as a key to unlocking the future, with federal subsidies serving as an enticement for lower-income earners to climb aboard the HIX bandwagon and individual mandate penalties seen as forcing the hand of uninsured consumers with higher incomes.

Any enrollment growth will surely be tied to attracting higher-income earners, Pearson believes. “So far, tax credits do not appear to be enough to entice participation,” she wrote, “so greater emphasis on individual mandate penalties may be needed to help increase enrollment among low- and middle-income individuals.”

Also see: Should states step in if subsidies ruled illegal?

In its analysis, Avalere included HHS’ reported income distribution for HealthCare.gov enrollees alongside an income-bracket comparison between uninsured and nongroup market enrollees based on 2013 data from the American Community Survey. 

Bruce Shutan is a Los Angeles-based freelance writer.

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