The reported success of the Affordable Care Act (ACA or ObamaCare) is based on enrollment numbers. Millions more have “coverage.” Similarly, the predicted disasters from repeal have to do with loss of coverage. Tens of thousands of deaths will allegedly follow. Activists urge shipping repeal victims’ ashes to Congress—possibly illegal and certainly disrespectful of the loved one’s remains, which will end up in a trash dump.
Where are the statistics about the number of heart operations done on babies born with birth defects, the latest poster children? How about the number of babies saved by this surgery, and the number allowed to die without an attempt at surgery—before and after ACA? I haven’t seen them. Note that an insurance plan doesn’t do the operation. A doctor does. The insurer can, however, try to block it.
House Energy and Commerce Committee Republicans seemed surprised last week when representatives of the insurance industry reported that they didn’t have enough data yet to forecast prices for next year’s health insurance exchanges, the market was not about to blow up, and that so far at least 80% of consumers have paid for the health insurance policies they purchased on the exchanges.
The executives also reported there are still serious back-end problems with HealthCare.gov––particularly in being able to reconcile the people the carriers think are covered and the people the government thinks are covered.
These are all things that you have read about a number of times on this blog.The insurance companies are doing their best to make Obamacare work.
Because if they want to be in the individual and small group markets, Obamacare is the only game in town––it has a monopoly over these markets. The same rules that apply to the individual market also apply to the even larger small group health insurance market.
Unless Obamacare is repealed this is the business reality insurance companies have to deal with. So, you make the best of it.
Republicans are right to think Obamacare is unpopular. The latest Real Clear Politics average of all major polls taken since open-enrollment closed still has 41% of those surveyed favorable to the law and 52% opposed to the law––about as bad it is always been.
But Obamacare is not going to be repealed. The sooner Republicans come to understand that the better for them.
I really think Democrats have the potential to take back, or at least neutralize, the health care issue by the November elections if Republicans aren’t careful.
Last Thursday, HHS released the final enrollment stats for health exchange enrollment for 2014. Here’s what we learned:
8.1 million enrolled in a plan in the Health Insurance Marketplace. 3.8 million (47% of total) since the end of February including 1.2 million in the much-watched 18-34 age cohort.
54% are female; 28% are between the ages of 18-34; 63% are White, 17% Black, 11% Hispanic, 8% Asian/other.
20% chose a bronze plan, 65% chose silver, 9% gold, 5% platinum and 2% catastrophic. Note: At the silver level, individuals who earn less than 250% of the federal poverty level — ($29,175 for an individual, or $59,625 for a family of four) — are eligible for assistance for out-of-pocket costs. 85% who picked an exchange plan qualified for a subsidy: 82% in the 14 state-run exchanges and 86% in the federally-run exchange.
Young adults 18-34 were 83% of those applying for the catastrophic coverage.
The Obama administration blew the doors off Obamacare’s enrollment expectations this week and scored big political points.
But in doing so, they may have set Obamacare’s expectations going forward at a level that can only undermine their credibility and that of the new health law.
What happens when the real number––the number of people who actually completed their enrollment––comes in far below the seven million?
What happens when the hard data shows that most of these seven million were people who had coverage before?
What happens when it becomes clear that the Obamacare insurance exchanges are making hardly a dent in the number of those uninsured?
Yesterday, the Los Angeles Times reported that the non-profit Rand Corporation estimated that two-thirds of the first six million people to enroll in Obamacare were previously insured––only two million were previously uninsured.
If all of the one million people who signed up in the last week were previously uninsured, that would mean that only three million previously uninsured people have purchased coverage in the government-run exchanges.
Rand also estimated that about nine million people have enrolled directly with the insurance companies, bypassing the government-run exchanges. But Rand also reported that the vast majority of those were previously insured.
If 20% do not pay, as has been the case since Obamacare launched, then the real Obamacare exchange enrollment number is about 5.7 million.
The administration has confirmed that the individual policies that were supposed to be cancelled because of Obamacare can now remain in force another two years.
For months I have been saying millions of individual health insurance policies will be cancelled by year-end––most deferred until December because of the carriers’ early renewal programs and because of President Obama’s request the policies be extended in the states that have allowed it.
The administration, even today, as well as supporters of the new health law, have long downplayed the number of these “junk policy” cancellations as being insignificant.
Apparently, these cancelled policies are good enough and their number large enough to make a difference come the November 2014 elections.
As a person whose policy is scheduled to be cancelled at year-end, I am happy to be able to keep my policy with a better network, lower deductibles, and at a rate 66% less than the best Obamacare compliant policy I could get––presuming my insurance company and state allow it.
But for the sake of Obamacare’s long-term sustainability, this is not a good decision.
The fundamental problem here is that the administration is just not signing up enough people to make anyone confident this program is sustainable.
Last week, HHS issued its much-anticipated report about the first wave of enrollees in the state and federal health exchanges. Its release coincided with the 32nd Annual J P Morgan Healthcare Conference in San Francisco, arguably Woodstock for health care investors.
HHS reported that, as of December 28, 2.2 million signed up for coverage. They are older and probably sicker than the overall population of 50 million uninsured in the U.S.:
Per the analysis, 54% of these are female, 71% are eligible for financial assistance and most signed up for silver plans (60%) vs. the more expensive platinum (7%) and gold (13%) or the less costly bronze (1%) options.
The 14 states run exchanges fared well in the first 90 days accounting for 956,991 enrollees—most in blue states where governors were supportive of the exchange effort. In fact, 10 exceeded their enrollment target even though the national target fell 1.1 million short.
Concerns about whether insurance sold on the individual Exchanges under the Affordable Care Act will succumb to an adverse selection death spiral have focused mainly on the shortage of younger enrollees into the system.
This shortage is potentially a problem because, due to section 1201 of the ACA, premiums for younger enrollees must be at least one third of that for older enrollees even though actuarial science tells us that younger enrollee expenses are perhaps just one fifth of those for older enrollees.
Younger enrollees are needed in large numbers to subsidize the premiums of the older enrollees. But at least premiums under the ACA respond at least somewhat to age.
The lesser studied potential source of adverse selection problems, however, is the fact that medical expenses of women for many ages are essentially double those of men and yet the ACA forbids rating based on gender.
In a rational world, one would therefore expect women of most of the ages eligible for coverage in the individual Exchanges to enroll in plans on the Exchange at a higher rate than men. But, since the women have higher than average expenses than men, premiums based on the average expenses of men and women will prove too low, creating pressure on insurers to raise prices.
And, of course, there could also be some disproportionate enrollment by older men who have higher medical expenses than women of equal age. While I welcome contrary arguments in what I regard as a fairly new area of study involving the ACA, gender-based adverse selection would certainly appear to be a real problem created by the structure of that law.
To me, it looks to be potentially as large a problem as age-based adverse selection. It is certainly one that needs continuing and careful evaluation.
I see only three limited factors that reduce what would otherwise appear to be a significant additional source for significant adverse selection. As set forth below, however, I do not believe that any of these factors are likely to materially reduce the problem.
The first is ignorance. Adverse selection emerges only if individuals can accurately foretell their future medical expenses with some accuracy. To the extent, therefore, that men and women are ignorant of the effect of gender on their projected medical expenses, adverse selection is potentially diminished. I say “potentially,” however, because of a subtlety: people don’t have to know why their expenses are what they are in order for adverse selection to emerge; they only have to be somewhat accurate in their guess.
Thus, even if men and women don’t make the cognitive leap from seeing lower (or higher) medical expenses to issues of gender, but they still on balance get it right, adverse selection can exist. Thus, I end up doubting that ignorance of the correlation between gender and medical expense is going to retard adverse selection problems very much.
Shifting Millennial Attitudes on Obamacare December 2013.
Harvard Institute of Politics. Dec 4th, 2013. Poll
A few observations after 10 weeks of Obamacare implementation.
The Obama administration released the first two months enrollment figures this week. With HealthCare.gov still struggling in November, the enrollment of 137,000 people in the 36 states was expected. The main event for the federal exchanges will play out in December now that most people can navigate it
What I found notable in the report was the lack of robust enrollment in the states. In states where the exchange has been running at least adequately for many weeks now, the enrollment numbers are far from what I would have expected.
California enrolled 107,000 people in private plans in the first two months. But California has cancelled 800,000 current individual health plans effective January 1––all of whom have to buy a new plan by January 1 or become uninsured. The only place those who are subsidy eligible can get a subsidized plan is in the California exchange.
The federal government announced yesterday that 137,204 people have selected a healthcare plan through the federal Exchange as of November 30, 2013. The number is an increase over the 29,794 who had done so by the end of October, a month during which the website portal for enrollment, healthcare.gov, was in disarray.
The government reports that 258,497 have now selected a plan through one of the state Exchanges, making a total of 364,682 enrolled. Asked by reporters whether the Obama administration stands by its estimate that 7 million will enroll in individual plans sold on the various Exchanges by March 31, 2013, the day necessary to do so in order to avoid a tax penalty, Michael Hash, director of the office of health reform in the federal Health and Human Services Department, said that they were “on track, and we will reach the total that we thought.”
The pace of enrollment announced by the federal government today is inconsistent with the claim that its 7 million goal will be achieved. The claim rests on hopes of two surges, one taking place over the next 12 days before the December 23, 2013, deadline for coverage starting January 1, 2014 and a second surge taking place as we approach the end of March at which point, if coverage has not been obtained, many Americans will be hit with a tax penalty.
The magnitude of the surge required strains credulity. A scenario in which most of those who wanted coverage have already applied and in which the pace of enrollment stays the same or even sags for lengthy periods as we go forward would appear almost as likely. Plus, it seems unlikely that there will be major enrollment between December 23, 2013, the first deadline, and March 23, 2014, the second deadline. If someone wanted coverage, they would try to get it earlier. What does applying in the middle of February accomplish? Moreover, if, given the unpredictability of human behavior, the surge actually materialized, it might well strain the government’s computer systems.
Many people who remain basically positive about the Affordable Care Act are viewing the enrollment statistics like the football fan whose team is 2-6 and who point out that the team could win 7 out of its 8 remaining games and still probably make the playoffs.
Yes, getting off to a really bad start doesn’t preclude a happy ending. Success may still be mathematically possible. But unless there’s good reason to think that the fundamental factors such as poor coaching, poor game plans or unexpected injuries that have led to the bad start no longer apply, the more reasonable prediction is that things will continue more or less as they have.
It’s time to start thinking realistically about what happens if a core component of the Affordable Care Act, subsidized, non-underwritten health insurance available from private insurers, essentially fails to provide many with better access to medical care. This might not happen in every state — there might be a few whose Exchanges can be deemed “successful” — but it is looking more and more to me as if we are heading for enrollments in many states well, well short of that on which the arguments for the ACA were significantly premised.
For purposes of this blog entry, I’m going to assume that enrollment in the Exchanges ends up being about 2 million for 2014 instead of the projected 7 million. I can’t rigorously justify that number — but, of course, neither could the pundit who is now saying 4 million. And, if I had time and space I’d prefer to do this analysis under a variety of scenarios, but, for now, the 2 million figure feels about right. And if I were betting on which side of the 2 million we will fall, it would be the lower side. What are the consequences? I can’t address all of them in a single blog entry — and trying to predict matters past 2014 gets very treacherous — but here are some.
And, for those of you who don’t want to read further, here’s the headline:
Insurance sold through Exchanges without medical underwriting — a central promise of the Affordable Care Act — is likely to implode in a significant number of states by 2015 while limping along in several others but providing little net desired decrease in the number of people without quality health insurance. The silver lining in this failure will be that the program will likely cost less than projected due to fewer number of people receiving subsidies, although this reduction will be partly offset by higher-than-projected subsidies to the insurance industry. Expect significant pressure to grow among supporters of the Affordable Care Act to use these net savings to increase the subsidies available to people buying coverage through the Exchanges and to lure insurers in the problem states back into the Exchanges.