Who Are Obamacare’s 7 Million Enrollees?

Enrollments in the insurance marketplaces created by the Affordable Care Act soared just above 7 million. That is the number of Americans the nonpartisan Congressional Budget Office calculated would sign up before the federal health care website launched with numerous design flaws and software errors that significantly hampered enrollments. Now the key questions are: What does that number mean and who are the 7 million?

To the Obama administration that number means success, a target hit. As the president said in a statement released late Monday, “now, millions of our fellow Americans have the comfort and peace of mind that comes with knowing they’re no longer leaving their health and well-being to chance. For many of them, quality health insurance wasn’t an option until this year — maybe because they couldn’t afford it, or because a pre-existing condition kept them locked out of a discriminatory system.” In his opinion, “regardless of your politics, or your feelings about the Affordable Care Act, millions more Americans with health coverage is something that’s good for our economy and our country.”

The Affordable Care Act changed the American health care system in more ways than the creation of insurance exchanges, which were designed to allow consumers to comparison-shop for health insurance policies in online marketplaces, where their collective bargaining power theoretically fosters competition and drives down prices. The president pointed out that the health care reform was also meant to make insurance coverage more accessible, at least theoretically, by allowing young adults under the age of 26 to remain covered by their parents’ insurance policy and by the expansion of Medicaid. According to Obama, 3 million young people are now covered by their families’ plans, while “millions more” are covered thanks to states’ voluntary expansion of the Medicaid program and the Children’s Health Insurance Program. That 7.1 million-covered figure also “doesn’t include the more than 100 million folks who now have better care — who are receiving additional benefits, like mammograms and contraceptive care, at no extra cost,” he added.

But Obamacare critics, health industry analysts, and health care analysts are asking what these numbers really mean for the successful reform of the American health care system. In a broader sense, “the whole narrative about Obamacare — ‘Will they get to six million? What is the percentage of young adults going to be?’ — has almost nothing to do with whether the law is working or not, whether the premiums are affordable or not, whether people think they are getting a good deal or not,” Kaiser Family Foundation President Drew Altman told The New York Times.

It is still early to assess the full impact of the health care reform, but there are several main areas were incomplete data cloud the analysis of how successfully did the Affordable Care Act achieve its main objective: making health insurance accessible to a large percentage of the nation’s uninsured population, which totaled 48 million in 2012.

1. How exact is the Obama administration’s enrollment tally?

There are a number of factors that could push the total enrollment number higher or lower.

Several factors could increase the overall count; the raw number does not include the latest updates from the fourteen states, plus the District of Columbia, which operated their own insurance exchanges. Plus, some applications on both the state-run and federally-facilitated exchanges are still pending, as the Obama administration has extended the signup deadline in certain circumstances; and individuals will become eligible to enroll after major life changes — like marriage or moving to a new state, meaning people will be signing up throughout the year. Plus, people who purchased Obamacare-compliant policies directly through insurers have also not been counted.

But it is important to keep in mind that enrollments do not equal paying insurance customers; the Obama administration’s official numbers do not have information on how many enrollees took the crucial final step and paid the first month’s insurance premium to guarantee coverage. As Department of Health and Human Services Secretary Kathleen Sebelius said Monday night on KWTV-TV, approximately 80 percent to 90 percent of enrollees have paid thus far. She also added that: “Lots of companies have different timetables for when their new customers have to send their first payment.”

2. How many previously uninsured Americans are now covered?

Given that the Affordable Care Act mandates insurance coverage, expands the Medicaid program, and offers subsidies to low-income households, it seems logical that to assume that uninsured Americans would account for a large number of enrollments. But logical assumptions are not the same as hard data, and several mitigating factors must be considered.

Last fall, health insurers began canceling the policies of about 4.7 million of Americans that were not in compliance with Obamacare regulations. While the Obama administration, facing a wave of criticism, later implemented a two-year extension for those policyholders, a number of them likely purchased insurance coverage through the insurance exchanges before the change was announced. Backing up that supposition is data from the nonprofit Rand Corporation.

The organization’s unpublished survey data of 2,600 people shows that nearly all customers whose policies were terminated have replaced that coverage with other plans, according to The Los Angeles Times. But problems of interpretations arise. In an article entitled “Obamacare has led to health coverage for millions for more people,” The publication noted that the organization’s data showed that 4.5 million previously uninsured adults have enrolled in state Medicaid programs — and data compiled by the consulting firm Avalere Health reflected a similar reality. The unpublished report also found that 9 million people purchased policies directly from insurers, eschewing the Affordable Care Act’s exchanges. More importantly, Rand reported that fewer than a million 2013 policyholders are now uninsured because their plans were canceled for now complying with the standards set by the health care reform law.

“We are talking about a very small fraction of the country” who lost coverage, said Katherine Carman, a Rand economist who is overseeing the survey. A greater number of holders of policies that were originally cancelled by insurers were able to renew those policies after a wave of backlash forced President Barack Obama to implement an extension. That extension, which was subject to the approval of each state’s insurance commissioner, was allowed in about half of all states. And insurers themselves have reported they retained a large number of their 2013 customers by renewing old policies.

Rand’s survey results appear to tell a story of a massive improvement in the nation’s uninsured rate, but the report also estimated that of the 9 million who signed up for coverage directly through insurers, “the vast majority of these people were previously insured.” As for exchange signups, the survey found that around one-quarter of exchange enrollees, or approximately 1.78 million, were previously insured. The problem is that the non Congressional Budget Office Government officials have not released specific enrollment numbers figures for the 36 federally-facilitated exchanges, but data from several states have painted very different pictures of character of exchange enrollees; in Kentucky, 43 percent were previously uninsured and 70 percent of New Yorkers were previously uninsured.

The only real piece of data that suggests the number of uninsured Americans has decreased came in the form of the Rand Corporation’s rate of uninsured working adults, which fell from 20.9 percent last fall to 16.6 percent on March 22, according to the Times. Of course that “working adults” is a fairly narrow catagory. Data collected by Gallup between early January and late February shows that the percentage of Americans without health insurance has dropped to 15.9 percent so far in 2014, from 17.1 percent in the fourth-quarter of last year. “This drop could be a result of the ACA, which aims to provide healthcare coverage to more Americans through multiple provisions, including federal and state healthcare marketplaces where Americans can purchase health insurance coverage at competitive rates,” noted the firm’s Jenna Levy. By comparison, the nonpartisan Congressional Budget Office, has projected the share of legal U.S. residents without health coverage will decrease from 14 percent this year to 8 percent by 2024.

3. Young adult coverage

Premiums in the new federally-facilitated and state-run insurance exchanges were calculated based on the assumption that young, healthy, and therefore cheap-to-insure individuals would be moved into the new marketplaces because the cheaper plans they were currently enrolled in would not comply with Obamacare’s new requirements, or they would have previously been  without insurance. If those healthier individuals chose not to purchase Obamacare insurance policies, the risk pools of the insurance exchanges will be dominated by older, sicker people, who are more likely to find more affordable policies through the exchanges. 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.

The most recent release from the Centers for Medicare and Medicaid Services reported that young adults between the ages of 18 and 34 years old made up 25 percent of total enrollments. Health care experts have calculated that percentage should be closer to 40 percent for the system to be viable. But, while the final share of young adult enrollees might not be much higher than one quarter, several health insurers have reported that this age group saw a brisk uptick in signups in the final days of the enrollment period. Confirming that enrollments were trending younger was data from insurance broker eHeath, which reported that 45 percent of customers who purchased Affordable Care Act-compliant plans between January 1 to March 23 were between ages 18 years old and 34, an increase from 39 percent from Oct. 1 to Dec. 31.

WellPoint (NYSE:WLP) has had a similar experience. “We are seeing our average age come down every week, so it’s clear that younger people are starting to come into the pool,” said WellPoint Chief Executive Wayne DeVeydt to The Wall Street Journal last week. “What isn’t clear yet, though, is, did it come down enough.” WellPoint has said the demographics of its enrollments have generally matched its projections.

4. How much more is health insurance going to cost next year?

“Sweeping statements about the effects of the Affordable Care Act on premiums should be interpreted very carefully because the law has complex effects that will differ depending on individuals’ age and smoking status, the actuarial value of the plan chosen, individuals’ eligibility for for federal tax credits, and state implementation decisions,” noted an executive summary of a recent Rand Corporation study. “Once we adjust for age, actuarial value, and tobacco use, nongroup premiums are estimated to remain unchanged at the national level and in many states. Further, after accounting for tax credits, average out-of-pocket premium spending in the nongroup market is estimated to decline or remain unchanged in all states considered and in the nation overall.” And that statement speaks to a very important point when analyzing the Affordable Care Act: Premiums and benefits can vary significantly from person to person.

But with WellPoint indicating well before the deadline for insurers to submit 2015 rate proposals that it may ask regulators for a “double-digit plus” increase, many analysts are theorizing how much more health insurance will cost next year. Even though there was little doubt that premiums would increase next year as they have for decades, the size of that projected increase was surprising.

What is still unknown is for whom and in what regions will prices increase the most. Overall proportions of young enrollees and health enrollees matter little. Because insurance prices are set based on risk pools at the state level and the proportion of young and health private insurance exchange customers varies a lot from state to state, it is difficult to make one broad-based assessment.

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