Obamacare’s Musical Chairs Deadline Passes, What’s Next?

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The deadline for Americans to purchase Affordable Care Act-compliant health insurance beginning coverage on January 1 has finally passed. Originally, the cutoff was scheduled for December 15, but with the design flaws and software problems plaguing the exchanges of 36 that defaulted to federally-facilitated marketplaces, the date was pushed to the 23 of December.

Then, when that day arrived, the Obama administration gave potential exchange enrollees an additional day, in case further technical difficulties obstructed the sign-up process. As Christmas Eve drew to a close, a notice popped up on the federal website healthcare.gov that informed visitors that if they had “run into delays” that caused them to miss the deadline, they should contact a federally-sponsored call center any day this week, except Christmas Day, in order to complete insurance applications. “We still may be able to help you get covered as soon as January 1,” the message said. Plus, deadlines also were flexible for the purchase of insurance via the 14 state-run exchanges.

Much has been made of the passing of this deadline by both supporters and critics of the health care law. As President Barack Obama said in his pre-holiday press conference last Friday, “the basic structure of that law is working despite all the problems” that plagued the insurance exchanges after their October 1 launch, yet December 23 (before the last-minute change) was described as yet another watershed moment for the health care reform.

At issue, as always, were the number of enrollments; the Monday deadline was supposed to show the viability of the insurance exchange system. So far, half a million people purchased health insurance via the federal and state insurance exchanges in the first three weeks of December and more than a million have signed up for private coverage in total, as the president said in his press conference, showing that enrollment did gain momentum as the deadline approached.

On a state by state basis, New York and California have posted some of the strongest numbers, signing up 157,000 residents and 400,000 residents, respectively, thus far. Still, California extended the enrollment deadline to 8 p.m. local time on Friday. Extensions to enrollment deadlines make sense; many states reported a last-minute rush to sign up. For example, nearly a third of the 65,472 applications for private health plans received by Washington State as of Monday were filed within the final four days; and, Connecticut recorded 6,700 enrollees on Monday, a number twice as great as any other single-day totals. However, technical troubles affecting the state-run exchanges in Maryland, Minnesota, and Oregon have kept their enrollment numbers far lower than similarly-sized states.

Flexible and shifting deadlines undoubtably make the enrollment timeline confusing for insurance customers, but from the trickle of official figures, it appears that the extended cutoffs did in fact accommodate procrastinators. More importantly, even though many people waited until the last minute, the figures did show a measure of demand; as the administration expected, enrollments did accelerate as the deadline approached.

Yet, the overall sign up numbers will likely miss an early target set by the administration. Including enrollments from both the 36 federally-facilitated exchanges and 14 exchanges operated by the remaining states and the District of Columbia, the number of signs ups will approximately total two million. The administration had projected three million people would enroll by the cutoff date and around seven million by the end of the six-month enrollment period.

The passage of the enrollment deadline is a watershed moment because it shows a measure of confidence by insurance consumers in the exchange system and the reform as a whole. But equally important is whether that confidence is proved to be well-founded, and the success of the exchange system — the cornerstone provision of the Affordable Care Act — depends of the mix of enrollees. Insurers calculated premium prices, premium price that were meant to be affordable, on the assumption that young, healthy, and therefore cheap-to-insure individuals would be moved into the new marketplaces because their current, cheaper plans would not comply with the Obamacare’s new benefit requirements and be canceled.

If those healthier individuals do not enroll, the risk pools of the insurance exchanges will be dominated by older, sicker people, who are more like to find more affordable policies through the exchanges. That could be problematic because exchange risk pools must be broad enough to balance out the proportionally higher medical costs of the sicker and older individuals who will likely be among the first to sign up.

Policy prices have already been set for 2014. If current rates are not profitable, insurers could hike premiums the following year, which could cause more people to drop out of the system, causing a self-feeding cycle of higher premiums and fewer enrollments. Alternatively, insurers could also leave exchanges, decreasing the competition needed to keep policy prices low. Either way, insurance offered on the exchanges could become less affordable, thereby undermining the success of the reform.

It must be remembered that more important to Obamacare’s success than absolute numbers is who the exchange enrollees are and where they sign up. “All of this is very state-specific on how it plays out,” Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, told the Atlantic. Even though the exchanges of 36 states are operated by the federal government and dependent on the same broken website, each state does have its own insurance market and its own risk pool. “Premiums and all the discussion of rate shock — all that is very state-specific,” Park added.

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