6 Mill. Obamacare 'Sign-Ups,' But Number Of Uninsured Enrollees A Mystery
Earlier today, Marilyn Tavenner of the Centers for Medicare and Medicaid Services announced that "more than 6 million Americans have signed up for coverage through the Health Insurance Marketplaces since October 1, thanks to the Affordable Care Act." Given all of the technical problems that dogged healthcare.gov last October, this is an impressive turnaround. But it sheds little light onto the two questions most analysts are focused on. First, how many of those signing up have paid their first month’s premium, thereby activating coverage? And second: How many of those with coverage were previously uninsured? At this point, we have no definitive answers.
There won’t be an Obamacare death spiral
The Obama administration’s original goal was to enroll 7 million people by the end of the open enrollment period on March 31. But contrary to the commentary of some, reaching 7 million was never critical to the stability of the Obamacare exchanges. What matters more is that the mix of people signing up for coverage was sufficiently broad so as to prevent a catastrophic increase in exchange premiums next year.
The information we have thus far is that there won’t be a death spiral. The mix of signer-uppers is indeed older and sicker than the White House originally promised. But there are enough healthy people who benefit from Obamacare’s subsidy scheme that it won’t be a complete disaster on this front.
More worrisome is the fact that we’re getting indications for insurance companies that premiums in 2015 will be significantly higher than those in 2014. Executives from Aetna and WellPoint have openly predicted that most carriers will raise rates by "double digits." Some anonymous insurers have predicted that rates could double or even triple in extreme cases.
It’s this issue that will be the ultimate test of whether or not the "Affordable Care Act" lives up to its billing. Does the law make health insurance more affordable? Or does it make insurance more costly, papering over those higher costs by shoveling more and more taxpayer subsidies to some low-income enrollees?
Sign-ups ¡Ù enrollment ¡Ù impact on uninsured
One thing that’s important to clear up. A number of journalists are running around equating the White House’s 6 million figure with 6 million enrollments. If you read these pages regularly, you know this, but to reiterate: just because someone has signed up for coverage doesn’t mean someone has coverage. In order to be formally enrolled in coverage, you have to pay the first month’s premium.
Most insurers predict that around 20 percent of signer-uppers will fail to pay; that percentage appears to be substantially higher for people who were previously uninsured. For example, a McKinsey survey found that among those who were previously insured, 86 percent paid their first month’s premium; among those who were previously uninsured, only 53 percent had.
If we assume that 80 percent of the 6 million will ultimately pay up, that’s 4.8 million enrollees. And we don’t know what percentage of those enrollees were previously uninsured. After all, the core goal of Obamacare is to increase the number of Americans with health insurance. Thus far, surveys indicate that the vast majority of enrollees were previously insured.
If we assume, beyond the available evidence, that as many as half of Obamacare exchange enrollees were previously uninsured, we end up with 2.4 million uninsured exchange enrollees. The Congressional Budget Office’s original prediction was that more than 6 million previously uninsured people would sign up for exchange-based coverage in the first year.
Failing to succeed, and failing to fail
That means true exchange-based enrollment among the uninsured will fall well short of the White House’s original first-year goals. But that doesn’t mean that the law will ultimately fail to reach its long-term benchmarks. For that, we go back to our earlier point: if the Affordable Care Act makes the underlying cost of health coverage less affordable, it will over the long-term make it more difficult for the middle class to maintain health coverage.
This is the opportunity for Republicans, should they choose to accept it: to spend less time talking about what they’re against, and more time talking about the fundamental problem with American health care. That problem is that American health care is too expensive. Obamacare does nothing serious to address this problem¡ªindeed, the law makes it worse.
Thus far, we’ve seen precious little from the GOP on this front. And that’s why, for all of Obamacare’s problems, polls routinely show that Americans still trust Democrats more than they trust Republicans on health care policy. Whatever happens in 2014, that should be a red flag for conservative triumphalists.
This piece originally appeared in Forbes
This piece originally appeared in Forbes