Commercial Health Plan Trends Reveal High Turnover, Reenrollment Rates

Around 20 percent of commercial health plan members disenrolled from their plans each year, but a third of those members returned to the plan within five years, suggesting that payers may benefit from prioritizing long-term health outcomes for members, according to a study published in JAMA Network Open.

The commercial health insurance market provides healthcare coverage for employers and individuals and is subject to high turnover rates. Turnover may be the result of individual members switching plans, individuals getting a new employer, or employers changing contracted health plans.

When a member disenrolls from a health plan, the plan’s affordability may take a hit as payers bolster resources to increase enrollment numbers. High turnover rates also tend to reduce payer incentives to invest in long-term health benefits, such as preventive care, which members accrue over time.

To document the turnover rate within a commercial health plan and to understand how often members returned to the plan after disenrolling, researchers analyzed administrative data from Anthem, one of the largest private payers in the country.

The researchers gathered medical and pharmacy claims and enrollment data from members enrolled in group or individual coverage through an Anthem commercial health plan between January 1, 2006, and August 31, 2018.

Out of 3 million members, 92 percent were enrolled in the payer’s group plans, while 8 percent were enrolled in individual plans. Three out of four members were in preferred provider organizations, 14 percent were enrolled in health maintenance organizations, and 10 percent were in consumer-directed health plans.

The majority of members (80 percent) disenrolled from their health plans at least once during the study period.

Some members received Anthem coverage for just one month while others received coverage for more than 12 years. Members were enrolled in a plan for an average of four years, though their coverage was not always continuous. Nearly 30 percent of members enrolled in a plan more than once.

Around 2 percent of the members experienced turnover each month and 21 percent experienced turnover each year, the researchers found. Individual health insurance plans had higher monthly turnover rates (3.4 percent) than group health insurance plans (2.1 percent). This was consistent across all age groups and time spans.

Throughout the entire study period, turnover was the highest during December, with an average rate of 13.8 percent for the individual health insurance market and 6.9 percent for the group health insurance market.

A quarter of group health insurance market disenrollment was attributed to employers switching health plans, and the remaining 75 percent occurred because individual members switched health plans or changed employers. 

Although Anthem saw substantial turnover rates, a handful of members ended up reenrolling in the health plan at some point after disenrollment.

Among members who left an individual health insurance plan, 14 percent reenrolled after one year and 34 percent returned after five years, according to the study. For group health insurance plan members who disenrolled, 12 percent returned after one year and 32 percent returned after five. Among all members, 47 percent reenrolled after ten years.

Only 25 percent of individuals received continuous coverage from Anthem for five years. However, after accounting for members who disenrolled and then reenrolled, 35 percent received coverage for five years with momentary gaps. According to the researchers, payers use retention rates to determine in which member benefits they will invest.

Specific member populations experienced higher turnover than others, the study found. For example, 25-year-old individuals had a higher overall turnover, and members 64 years or older had a higher turnover in the individual health insurance market. Reenrollment rates were also lower for members 64 years and older.

Additionally, reenrollment rates were higher in high market-power states. Although the industry has expressed concerns about payer consolidation leading to increased market power and higher premiums, the researchers suggested that consolidation may help promote greater coverage continuity.

The study results suggested that payers should consider reenrollment probability when investing in long-term health benefits.

“When upfront investment costs are low relative to eventual cost-savings, an insurer may find it in their best interest to cover a service at an earlier time so long as a sufficiently large share of members are expected to be covered at the time when savings will be realized,” the researchers wrote.

“A higher rate of reenrollment upon disenrollment may reduce the leakage of the cost-saving benefits of preventive care investments by the insurer, thus better incentivizing the insurer to offer such benefits.”