How Large Is the Market for Unsubsidized Health Insurance?
InfoStat | 03-17-16

Millions in Unsubsidized Health Insurance Market Face Uncertain 2017

2017 Unsubsidized Health Insurance Market

Next year represents considerable uncertainty for the millions of consumers who comprise the market for unsubsidized health insurance. Several factors have the potential to increase 2017 premiums among Affordable Care Act (ACA) health plans substantially and, as a result, affect the status of health coverage within this population.

First and foremost of these factors is the cost of medical claims associated with some of the insurers offering ACA plans. A spate of well-known insurers within the ACA market have announced considerable losses. UnitedHealth Group (parent company of UnitedHealthcare) revealed in January that it lost $475 million on ACA-compliant plans in 2015 and expects to lose a larger amount for the same category of plans in 2016.1 Humana announced that it took a $176 million premium deficiency reserve charge in Q4 2015 for their anticipated 2016 ACA plan expenses.2 Aetna indicated that the company lost money on their ACA plans in 2015 but hoped to break-even in 2016.3 Several major Blue Cross Blue Shield insurers also experienced losses in 2015 and the losses are associated with their ACA lines of business.4 Oscar Health Insurance, a new insurer attempting to apply Silicon Valley reasoning to the health insurance industry, experienced losses above $100 million for 2015.5 Co-ops, nonprofit health insurers created under the ACA, have dwindled from 23 insurers in 2014 to 11 insurers in 2016 with eight out of 11 now under corrective action plans.6

With respect to rate setting for 2017, it is possible that some plans with high medical claims costs in 2016 might request rates lower than what is dictated by the current claim history if these plans believe current costs are driven by pent-up healthcare demand7 that has been satisfied or if their risk is expected to significantly improve through factors such as the addition of a higher percentage of healthy enrollees. State regulators can also affect 2017 rate setting by rejecting rate increases or approving a lower increase than requested. However, if an inadequate rate increase is approved it may motivate an insurance company to leave the ACA market in that state.

Alongside the medical claims issue are the pending changes to financial protections for ACA insurers in 2017. From 2014 through 2016, the ACA insurance market had a combination of three programs to help insurers stabilize premiums and prevent dramatic cost increases as more sickly portions of the population entered the privately purchased health insurance market. These three government programs were known as reinsurance, risk corridors, and risk adjustment. Two of these three programs (reinsurance and risk corridors) are scheduled to discontinue at the end of 2016. The temporary reinsurance program sought “to reduce premiums and ensure market stability for issuers and thereby reduce premiums for enrollees in the individual market to ensure market stability with the implementation of new consumer protections in 2014.”8 The risk corridor program collected charges from plans whose rates led to unacceptably large profits and paid funds to health plans with rates that led to unacceptably large expenses. This protected “qualified health plans from uncertainty in rate setting from 2014 to 2016 by having the federal government share risk in losses and gains.”9

Only the risk adjustment program will assist insurers with unacceptably high medical claim risks in 2017. It is reasonable to assume that the discontinuation of the government’s reinsurance and risk corridor programs will have some inflationary effect upon 2017 rates among insurers that had previously received payments from these programs. However, the actuarial consulting firm Milliman, writing in late 2015, was uncertain regarding the rate impact of the disappearance of the programs, noting that insurers could purchase private reinsurance (at a higher cost) or go without reinsurance coverage thus eliminating costs associated with it altogether.10 Additionally, Milliman stated that insurers likely did not directly factor risk corridor payments within their rate setting calculations.11

For consumers in states that have their own health insurance marketplace (as opposed to the government’s website), there is another variable. Almost half of these state-based marketplaces have financial sustainability problems and may need to increase fees on the insurers selling policies from the marketplace websites, the costs of which will ultimately be passed along to consumers.12 However, another alternative for these states is to utilize the federal marketplace should their financial problems persist.13

Taken together, the aforementioned issues represent legitimate concerns for significant rate increases for consumers who need health insurance but face premiums without the benefit of subsidies from the government or employers. Despite its size, the unsubsidized market is often overlooked in media discussions of health insurance for a variety of reasons. One of these reasons is that consumers in the unsubsidized health insurance market do not have a dominant demographic profile. Rather, as we will see later in this report, they include people of very different income levels and health insurance purchase behaviors. Some of the individual groups within the population do attract media interest such as those in the “Medicaid gap” or the uninsured. Another reason that has likely contributed to the lack of media interest in the unsubsidized health insurance market is the market’s lack of stake in headline-grabbing legal battles fought over the ACA (e.g. King v. Burwell). By definition, the unsubsidized would not be immediately affected by any Supreme Court decision on the legality of existing subsidies.

What People Comprise the Unsubsidized Market and How Large Is The Market?

People who belong to the unsubsidized market for health insurance come from many different groups. However, before delineating those groups it is first important to establish who does not belong to the market for privately purchased health insurance without subsidization.

  • People who receive health insurance through their employer or a family member’s employer
  • People who are enrolled in a Medicare-based or Medicaid-based insurance program
  • People who obtain group health insurance from their membership in a union or other association

With respect to the groups that are part of the unsubsidized health insurance market, there are:

  • Consumers who obtain health insurance through a government exchange but do not qualify for premium subsidies
  • Consumers who obtain health insurance off-exchange without subsidy through an insurer web site or through a broker
  • Consumers living in states without Medicaid expansion whose income is below the minimum eligibility for premium subsidies but still does not qualify them for Medicaid eligibility
  • Consumers enrolled in grandfathered health plans that are not-ACA compliant
  • Consumers enrolled in healthcare sharing ministries exempted from ACA requirements and penalties
  • Consumers enrolled in term health insurance
  • Consumers with critical illness insurance policies or other limited benefit health insurance policies
  • Consumers without insurance

The table below represents an effort to combine disparate data sources into a unified estimate of the unsubsidized health insurance market's size.

Estimated Size of Unsubsidized Health Insurance Market
Population Notes 2016 Estimated Market Size Data Source
Off-Exchange ACA Enrollees Unsubsidized people who enroll in ACA plans outside of a government exchange (e.g. an insurer or broker web site) 8,000,000-12,000,000 HHS14
Uninsured without Citizenship or Legal Residence This group cannot enroll in exchange plans or receive subsidies but they are not legally prevented from purchasing health insurance15 4,900,000 Kaiser Family Foundation 16
Grandfathered Health Plans People enrolled in pre-reform health plans grandfathered under the ACA (both pre-3/23/10 & post 3/23/10 noncompliant health plans) 3,000,000-4,000,000 Charles Gaba17
Uninsured U.S. Citizens Ineligible for Assistance Uninsured U.S. citizens under age 65 who are ineligible for Medicaid or premium assistance due to income 3,700,000 Kaiser Family Foundation 18
Critical Illness Policies Policies that provide consumers coverage specific to critical illnesses such as cancer 3,100,000* Gen Re19
Medicaid Gap People living in states without Medicaid expansion who also make below the minimum income to qualify for ACA premium subsidies 2,895,000 Kaiser Family Foundation 20
On-Exchange Unsubsidized ACA Enrollees Consumers enrolled in a government health insurance exchange who did not qualify for an Advanced Premium Tax Credit 2,190,000 HHS21
Healthcare Sharing Ministries People whose health coverage is provided by a healthcare sharing ministry allowed under the ACA 500,000 Wall Street Journal22
Term Health Insurance Limited duration medical insurance with a maximum term of 6 to 11 months depending on state Enrollment data not available**
Total 28,285,000-33,285,000

* The critical illness market likely includes a portion of enrollees who have another form of health insurance alongside a critical illness plan. However, other forms of ancillary health insurance policies that may be used by as a consumer as primary coverage are not included in this figure.
** The federal government does not publish term health insurance data analogously to its publications on Medicare insurance and Affordable Care Act insurance enrollees.

At approximately 28 to 33 million people, the unsubsidized health insurance market represents a sizable population. Efforts were made to avoid data that might double count consumers however we recognize that the risk of double counting was not eliminated completed. For example, an enrollee in a critical illness plan may also be enrolled in another health insurance product. Efforts were also made not to undercount but data was not always available to achieve this goal for every group within the unsubsidized market. In the case of enrollees in term health insurance, limited duration major medical plans with maximum coverage periods from 6 months to 364 days depending on the state, there was no recent aggregated market data available commercially and no government databases on the group similar to ones available for Medicare enrollees and Affordable Care Act enrollees.

How Will 2017 Rates Affect Healthcare Coverage In This Market?

Should health insurance premiums climb considerably in 2017, we should expect multiple effects upon the millions making up the unsubsidized health insurance market. First and foremost, this scenario presents another impediment to market expansion for the Affordable Care Act market of health insurance. The Congressional Budget Office (CBO) had predicted in 2015 that there would be 21 million enrollees in Affordable Care Act health plans by 2016.23 However, by the end of the 2016 open enrollment period the government recorded 12.68 million enrollees.24 One of the data points relevant to this discussion is the price sensitivity of the health insurance market. A nationwide poll conducted in 2015 by HealthPocket found that 57 percent of respondents claimed that $100 or less was the maximum amount they could afford for monthly health insurance premiums.25 This price point aligns well with subsidized enrollees who paid an average monthly premium of $106 in 2016 for health insurance offered through However, the average 2016 premiums for unsubsidized ACA insurance are quite higher. Below are nationwide averages27 for entry-level bronze plans without premium assistance.

  • 30 year-old: $257.68
  • 40 year-old: $289.88
  • 50 year-old: $405.28

Should they occur, significant rate increases in 2017 would be less of a concern for consumers with premium subsidies since the subsidies are intended to cap premium payments at a maximum percentage of income.28 For the unsubsidized, however, rate increases represent greater strains on personal finances. In the unsubsidized market, significant rate increases will have the greatest impact on the 10.2 to 14.2 million individuals who buy health insurance off-exchange or buy health insurance on-exchange without the assistance of premium subsidies. Since this group already purchased ACA insurance in the past, the assumption is that this purchase behavior would continue even in the presence of steep rate hikes.

Big ACA rate hikes in 2017 would also be an equally negative development for the uninsured groups within the unsubsidized market regardless of their citizenship status. Higher rates would do nothing to reduce the 8.6 million uninsured nonelderly who make too much for premium assistance or who otherwise do not qualify for health insurance assistance because their immigration status excludes them from premium assistance or Medicaid. Alongside these uninsured groups, an additional 2.9 million people live in states without Medicaid expansion and make less than the federal poverty level, which excludes them from ACA subsidies, but still do not qualify for Medicaid health coverage.

Considerably higher ACA rates in 2017 do not mean, however, that none of the insured groups among the unsubsidized will increase in 2017. In fact, more expensive ACA plans may accelerate growth among noncompliant health coverage options. These options include healthcare sharing ministries, term health insurance, and various limited benefit insurances.

Healthcare sharing ministries distribute medical expenses among members and have already enjoyed considerable growth under the Affordable Care Act. Membership is reported to have grown 150 percent since the Affordable Care Act passed in 2010.29 For healthcare sharing ministries, higher ACA rates could positively contribute to their growth since some of these ministries claim to charge 30 percent less than private health insurance.30

Similar conditions exist for the term health insurance market. These limited duration medical plans offer lower premiums than ACA plans due to narrower benefits and they also perform application underwriting that rejects people with expensive pre-existing medical conditions. For enrollees, the plans cover healthcare for new medical needs but care for conditions that existed prior to insurance coverage is not typically covered. These application and coverage restrictions result in healthier risk pools and lower claim costs than is the case with ACA plans. Consequently, large rate increases are less likely for this category of insurance coverage, which protects their price point advantage. While government databases are not available for the term health insurance market the way they are for the Medicare and Affordable Care Act markets,31 there are reports of significant enrollment growth among companies providing this category of insurance.32 Moreover, one of the providers in this market, AgileHealthInsurance (NOTE – AgileHealthInsurance is owned by the same parent company that owns HealthPocket, Inc.) reported that over half of its enrollees were in the 18 to 34 year-old age group, a group highly desired in the insurance industry for their positive effects upon premiums because of their lower statistical utilization of healthcare.33 In comparison, the federal health insurance exchange had approximately 28 percent of their enrollees within this age group for 2016.34

Another emerging consumer trend is the combination of multiple forms of non-compliant health insurance coverage. As reported in Kaiser Health News, faced with high premiums and high deductibles, some consumers are combining noncompliant coverage (e.g. limited benefit health plans, critical illness, dental) into a package that is more aligned with their financial limitations.35 As is the case for healthcare sharing ministries and term health insurance, big rate hikes in 2017 would be advantageous for the further growth of this coverage alternative since it is attractive to price sensitive consumers.

The tax penalty for not having ACA-compliant health insurance does not appear to have negatively affected growth for the aforementioned categories of non-compliant health insurance coverage. For healthcare sharing ministries, members are exempt from the tax penalty under the Affordable Care Act. Term health insurance enrollees and enrollees in noncompliant ‘bundles,’ on the other hand, are not shielded to the tax penalty. However, multiple factors may be blunting the penalty’s effect. First, the tax preparation service, TurboTax, publicized an analysis of tax filings they prepared in the prior two years (2014-2015) that found 70 percent of their customers who were considered uninsured or partially insured claimed an exemption from the penalty for not having ACA-compliant health insurance.36 A second factor that may be blunting the penalty’s effect concerns the penalty cost. There are combinations of age and income where the cost of term health insurance plus the uninsured penalty is still less expensive than a subsidized bronze plan for the same age/income profile.37


The market for unsubsidized health insurance is over twice the size as the 2016 pool of government exchange enrollees. However, the populations comprising the unsubsidized market represent very different states of health coverage, ranging from ACA insurance on one end of the spectrum to the uninsured on the other end, with noncompliant coverage options falling in the middle. Consequently, big rate increases for ACA plans in 2017 would have very different implications within the same market (should these increases occur).

As discussed in this study, 10.2 to 14.2 million individuals within the unsubsidized market are directly exposed to greater financial burdens if reports of high ACA plan expenses in 2015 foreshadow significant rate hikes for 2017. For most of the remaining millions in the unsubsidized health insurance market, big ACA rate hikes won’t bring major changes in their health coverage or lack thereof. However, within this group of nearly 20 million, there are 3 to 4 million consumers who are being displaced by the progressive cancellation of the grandfathered health plans in which they are enrolled.38 It is unclear whether the displaced will migrate to the ACA market en masse or if rate conditions will disperse them across exchanges and noncompliant health insurance alternatives. The fact that they choose to remain in noncompliant plans for as long as they have suggests that a significant portion will explore non-ACA alternatives in their health coverage shopping.

In the coming months, the public will begin to have access to 2017 rate filings for ACA plans. Conjecture about rates and insurer departures will be replaced with actual data. Should the average ACA rate increase reach double digits in many states then this often ignored market for unsubsidized health insurance may become vocal in calls for American health insurance reform to benefit a wider audience beyond the heavily subsidized.


This analysis was written by Kev Coleman, Head of Research & Data at HealthPocket. Correspondence regarding this study can be directed to Mr. Coleman at


1 Tami Luhby. “UnitedHealth expects to lose nearly $1 billion on Obamacare.” CNN. (January 19, 2016). Last accessed March 8, 2016.
2 “The Louisville-based health insurance company…said net income fell to $101 million, or 67 cents a share, in the fourth quarter from $145 million, or 94 cents a share in the year-ago period. Humana’s results included a charge of $176 million, or 74 cents a share, for a premium deficiency reserve ‘related to the company’s 2016 (Affordable Care Act)-compliant individual commercial medical offerings.’” Bruce Jaspen. “Humana May Withdraw From Obamacare Exchanges.” Forbes. (February 10, 2016). Last accessed March 8, 2016.
3 Katie Kuehner-Hebert. “Aetna Suffers Losses On Affordable Care Act Business.” (February 2, 2016). Last accessed March 8, 2016.
4 “The nation’s Blue Cross and Blue Shield plans have fared worse than publicly traded health insurance companies on the new health insurance exchanges, with many of these plans losing hundreds of millions of dollars last year on individual policies sold under the Affordable Care Act.” Bruce Jaspen. “Blue Cross Plans Hit Hard By Obamacare Losses” Forbes. (February 26, 2016). Last accessed March 8, 2016. See also:,, and Last accessed March 9, 2016.
5 Elizabeth Whitman. “Oscar Health Insurance’s Obamacare Losses: Hip Startup Lost $105 Million In 2015 In New York And New Jersey Exchanges.” International Business Times. (March 3, 2016). Last accessed March 9, 2016.
6 Ali Meyer. “Official: 8 of 11 Remaining Obamacare Co-Ops on the Brink.” The Washington Free Beacon. (February 29, 2016). Last accessed March 8, 2016.
7 In 2013, HealthPocket conducted a nationwide survey that asked “Would better health insurance coverage lead you to see the doctor more often or get a medical procedure you had put off?” 15% of respondents indicated that they would get a medical procedure that they had put-off. Kev Coleman. “Pent-Up Demand for Healthcare Threatens to Increase Premiums.” HealthPocket (June 10, 2013).
9 Ibid.
10 Aaron S. Wright, Hans K. Leida, Lindsy Kotecki. “Ten potential drivers of ACA premium rates in 2017.” Milliman. (December 2, 2015). Last accessed March 10, 2016.
11 Ibid.
12 Lena H. Sun and Niraj Chokshi. “Almost half of Obamacare exchanges face financial struggles in the future.” Washington Post. (May 1, 2015). Last accessed March 9, 2016.
13 Ibid.
14 “There are 8 to 12 million people with individual off-Marketplace coverage.” (November 10, 2014). p.4.
15 Lisa Zamosky. “Healthcare options for undocumented immigrants.” Los Angeles Times. (April 27, 2014). Last accessed March 10, 2016.
16 Rachel Garfield, Anthony Damico, Cynthia Cox , Gary Claxton, and Larry Levitt. “New Estimates of Eligibility for ACA Coverage among the Uninsured.” Kaiser. (January 22, 2016). Last accessed March 10, 2016.
17 Last accessed March 7, 2016.
19 The critical illness market likely includes a portion of enrollees who have another form of health insurance alongside a critical illness plan. Enrollee estimate based on data from 59 insurers for 2014.
20 Table 1: Number and Characteristics of Poor Uninsured Nonelderly Adults in the ACA Coverage Gap, by State. Rachel Garfield and Anthony Damico. “The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid – An Update.” Kaiser Family Foundation. (January 21, 2016). Last accessed March 7, 2016.
21 12.68 million total enrollees as of February1, 2016 minus 10.49 million enrollees receiving financial assistance. Department of Health & Human Services. “HEALTH INSURANCE MARKETPLACES 2016 OPEN ENROLLMENT PERIOD: FINAL ENROLLMENT REPORT.” ASPE. (March 11, 2016). p.12. Last accessed March 14, 2016.
22 Stephanie Armour. “More People Turn to Faith-Based Groups for Health Coverage.” Wall Street Journal. (January 4, 2016). Last accessed March 7, 2016.
23 Congressional Budget Office. “Insurance Coverage Provisions of the Affordable Care Act—CBO’s March 2015 Baseline.” Table 3. “Enrollment In, and Budgetary Effects of, Health Insurance Exchanges.” Last accessed March 11, 2016. Prior to the first enrollment period of the Affordable Care Act, the CBO had projected 22 million exchange enrollees for 2016. Last accessed March 11, 2016.
24 Department of Health & Human Services. “HEALTH INSURANCE MARKETPLACES 2016 OPEN ENROLLMENT PERIOD: FINAL ENROLLMENT REPORT.” ASPE. (March 11, 2016). p.12. Last accessed March 14, 2016.
25 Kev Coleman. “Survey: Most Consumers Only Can Afford $100 or Less for Health Insurance Premiums” HealthPocket. (October 20, 2015).
26 Department of Health & Human Services. “HEALTH INSURANCE MARKETPLACES 2016 OPEN ENROLLMENT PERIOD: FINAL ENROLLMENT REPORT.” ASPE. (March 11, 2016). p.15. Last accessed March 14, 2016.
27 Kev Coleman and Jesse Geneson. “2016 Affordable Care Act Market Brings Higher Average Premiums for Unsubsidized.” HealthPocket. (November 2, 2015).
28 The premium assistance available to ensure this cap, however, is still determined by the benchmark silver plan in an enrollee’s rating region.
29 Stephanie Armour. “More People Turn to Faith-Based Groups for Health Coverage.” Wall Street Journal. (January 4, 2016). Last accessed March 7, 2016.
30 Ibid.
31 As noted by the New York Times, insurance companies do not necessarily itemize their short-term health insurance enrollments so market data is limited. Ann Carrns. “Short-Term Health Insurance Attracts Many Despite Drawbacks.” New York Times. (June 5, 2015). Last accessed March 11, 2016.
32 Beth Pinkser. “Despite Obamacare, gap health insurance market explodes” Reuters. (June 3, 2015). Last accessed March 11, 2016. “Insurer IHC Group’s nationwide sales of short-term medical products increased 25 percent last year compared with 2014, said Dave Keller, chief marketing officer of IHC Specialty Benefits, based in Minneapolis. The company’s sales of short-term plans followed the same general trend in Texas.” Peggy O’Hare. “Buyer beware: short-term medical plans are convenient, but come with a catch.” San Antonio Express-News. (February 19, 2016).
33 Emily Bazar. “Short-Term Health Plans: The Pros And Cons.” CaliforniaHealthLine. (January 28, 2016). Last accessed March 11, 2016.
34 Department of Health & Human Services. “HEALTH INSURANCE MARKETPLACES 2016 OPEN ENROLLMENT PERIOD: FINAL ENROLLMENT REPORT.” ASPE. (March 11, 2016). p.12. Last accessed March 14, 2016.
35 Michelle Andrews. “Consumers Cut Costs By Combining Limited Coverage Health Plans, Despite Penalty Risks.” Kaiser Health News. (January 26, 2016). Last accessed March 14, 2016.
36 Ellen Chang. “Consumers Are Claiming an Exemption From the Health Insurance Penalty” TheStreet. (March 2, 2016). Last accessed March 11, 2016.
37 “Term health insurance costs less than Obamacare for young adults losing coverage on their parents’ health plans.” (December 14, 2016). NOTE - AgileHealthInsurance is owned by the same parent company that owns HealthPocket, Inc.
38 “Keeping grandfathered plans — those in place before March 23, 2010 — in place under the Affordable Care Act is up to individual insurers. BlueCross BlueShield of Tennessee and other insurance companies around the nation have begun to end grandfathered plans, which do not have to comply with all ACA requirements, such as covering preventative visits.” Holly Fletcher. “Humana to end grandfathered health plans in 2016.” The Tennessean. (December 23, 2015). Last accessed March 11, 2016.


Kev Coleman

Kev Coleman was the Head of Research & Data where he was the author of the HealthPocket InfoStat Reports. Mr. Coleman had been performed research across the healthcare market, leveraging emerging sources of data from government, nonprofit, and private sectors. Key areas of study for Mr. Coleman include healthcare consumerism and issues associated with the implementation of the Affordable Care Act.

Mr. Coleman lives in New England and holds degrees from Eastern Nazarene College, Yale University, and Duke University. His professional career includes over a decade of executive work in consumer-facing healthcare and financial technology. provides information on insurance products. If you choose to obtain a quote or apply for an insurance plan, you may be transferred to a partner website to complete your request. Always review the privacy and terms of use of the partner website.

HealthPocket is a free information source designed to help consumers find medical coverage. Whether you are looking for Medicare, or an individual and family health insurance plan, we will help you find the right healthcare option and save on your out of pocket healthcare costs. We receive our data from government, non-profit and private sources, and you should confirm key provisions of your coverage with your selected health plan. If you select a plan presented on our site, you will be directed (via a click or a call) to one of our partners who can help you with your application. Our website is not a health insurance agency and not affiliated with and does not represent or endorse any health plan. HealthPocket, Inc. is part of the Benefytt Technologies, Inc. family of companies.