Obamacare Offers Up a Pleasant Surprise for the Holidays

By Markets Fool.com


Source: White House on Flickr.

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While consumers are busy buying holiday gifts and preparing holiday feasts, the Affordable Care Act, better known as Obamacare, was doing one thing: signing up more than a million people for health insurance in a single week!

Enrollments ramp up quickly
Last week marked one of the three major deadlines for Obamacare in the 2014-2015 enrollment period. The first being the kickoff of open enrollment on Nov. 15. The second, on Dec. 15 for most states, being the last day consumers could choose a health plan and be covered by Jan. 1, 2015. The final important deadline is Feb. 15, 2015, the date at which open enrollment will close at 11:59 p.m.

In the 2013-2014 open enrollment period we witnessed many consumers procrastinate to enroll until the last few days. Whether it was the glitch-filled software that prevented them from completing their enrollment, a sense of invincibility on the part of younger consumers, or a sheer dislike for the politics behind the health reform law, many Americans waited as long as they could without violating the actionable component of the individual mandate that requires Americans to purchase health insurance or face a penalty.

However, this year we're witnessing something markedly different. People aren't waiting and enrollment in both the federal Healthcare.gov and most state-run exchanges is moving along at a brisk pace.

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Source: Covered California.

According to week four data (Dec. 6 -- Dec. 12) from the Department of Health and Human Services, 1,082,879 people selected a plan on Healthcare.gov, which represents 37 states. This brought the grand total of plan selections via Healthcare.gov to 2,466,562 through four weeks, with 48% of those enrollees designated as new customers. In the 2013-2014 enrollment period it took around four months to reach this tally!

The additional data provided demonstrates just how busy of a week it was. Call center volume rose to 1.56 million for the week, while the average call center wait time tripled to 13 minutes. Window shopping Healthcare.gov users also rose by 1.27 million to a cumulative 4.09 million during the first four weeks since open enrollment began.

State-run exchanges show impressive gains
But, it wasn't just Healthcare.gov drawing strong enrollment numbers. State-run exchanges also offered us a glimpse of their enrollment data thus far, with many delivering average to above-average results.

Courtesy of U.S. News which aggregated the state-run exchange data, California has added in excess of 290,000 plan participants (this figure includes Medi-Cal patients, California's Medicaid program), New York added close to 155,000, Washington tacked on nearly 56,000, Connecticut witnessed 52,0000 additions, and Maryland saw more than 80,000 residents enroll, to name a few of the standouts.


Source: Daniel Borman via Flickr.

With the exception of Idaho and Rhode Island, which still haven't reported their enrollment data, I calculate in the neighborhood of 728,000 total plan selections by state-run exchanges. Keep in mind this figure includes enrollees totally new to Obamacare, people reenrolling in Obamacare, and individuals that qualified for, and enrolled in, their states' Medicaid program.

Together, all reporting states have led to nearly 3.2 million plan selections in just under a month. If Healthcare.gov's new user figure of 48% is applied to state-run exchange enrollees it would imply 1.53 million new enrollees in just one month. This is a great start and a pleasant holiday surprise considering that the HHS only forecast adding 3 million-4 million new enrollees in 2014-2015. Furthermore, HHS data for week five will include three days leading up to the Jan. 1, 2015 insurance coverage cutoff period, so expect robust enrollment figures from those dates as well.

Why consumers aren't shy about signing up in 2015
You might be wondering what's changed in the course of a year to make enrollment levels perform so well compared to last year? I suspect it's a combination of four factors.

First, the enrollment period is a lot shorter this year. Last year consumers had six months to ponder which plan to go with, and some were even given an extension once the deadline of March 31 came around. Time isn't as much of a luxury this year, which is requiring consumers to take decisive action quicker than last year.

Source: Covered California.

Secondly, the exchanges are generally working well. With the exception of a few glitches in California's and Washington's state-run exchanges, consumers have been able to enroll for health insurance without too much trouble. As a tech-savvy and tech-reliant individual I'd opine that last year consumers -- especially young adults -- became discouraged by the lack of functionality of Healthcare.gov and a handful of state-run exchanges, deterring their enrollment for weeks or months. With that not a problem during the 2014-2015 enrollment period consumers can make educated decisions on the spot if they'd like.

Third, pricing really wasn't as much of an issue as previously anticipated. With skeptics predicting double-digit premium price increases and Obamacare optimists projecting prices could actually fall, the reality fell right in between with an increase of 5.6% based on data from PriceWaterhouseCoopers' Health Research Institute. Though plan prices could certainly fluctuate based on your location and a small handful of other personal factors, the addition of more insurers to state-run exchanges and Healthcare.gov appears to have made a tangible difference in keeping premium prices reasonably low. With premium price moves under control I believe consumers feel more comfortable enrolling in 2014-2015.

Lastly, Obamacare's individual mandate penalty for not having health insurance is rising by as much as 242% for some people, to the greater of $325 or 2% of modified adjusted gross income, from the greater of $95 or 1% of modified AGI last year. While it's still probably cheaper on an annual basis to take the penalty than purchase health insurance, we could be getting to an inflection point where consumers realize they're paying so much in penalties that they may as well just purchase health insurance and be covered in case something goes wrong.

Still a mixed bag for insurers
On the surface the initial enrollment data bodes well for insurers through week four, but there are still a number of unaccounted for variables that have yet to play out.

Source: Covered California.

For example, insurers are jockeying for new enrollees but also have to adjust their game plan to retain as many members as they can from the 2013-2014 period. Assuming my calculations above are fairly accurate it means nearly 1.7 million people reenrolled through four weeks. With many expected to change plans this time around in search of better value it's uncertain if last year's top-performing insurers can retain a majority of enrollees.

This is extremely important for Anthem (formerly WellPoint) which was the big Obamacare enrollment winner last year and has banked its success on courting Medicaid expansion enrollees as well. California's strong Medi-Cal enrollment so far is encouraging, but I'd reserve judgment until Anthem's fourth-quarter earnings report.

We also don't know if the enrollment momentum can continue. Dec. 15 was a critical psychological date, and we don't have another critical date until Feb. 15. In other words, enrollment data up until Feb.15 has the potential to get sluggish, which could zap any excitement out of the insurance industry.

Lastly, don't forget about the Supreme Court's June ruling on whether or not subsidies granted via Healthcare.gov are legal. This overhang could have major implications on Obamacare's ongoing enrollment if the Supreme Court upholds the plaintiffs' argument that they aren't.

What I can say with certainty is there's rarely a dull moment when it comes to Obamacare.

The article Obamacare Offers Up a Pleasant Surprise for the Holidays originally appeared on Fool.com.

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool recommends Anthem. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.