Published November 13, 2013
After weeks of speculation following the rocky debut of the Affordable Care Act’s health insurance exchanges, the Department of Health and Human Services reported 106,185 Americans selected insurance plans from Oct. 1-Nov. 2.
The first official enrollment figures were lower than expected, but not surprising after the health insurance registration site, healthcare.gov, experienced abundant outages and glitches that made navigating and signing up for coverage nearly impossible for some users following its debut.
HHS also reported Wednesday that an additional 975,407 have made it largely through the enrollment process by applying and receiving an eligibility determination for a subsidy, but they have not yet selected a plan. The administration also said 396,261 Americans have been determined or assessed as eligible for government-run programs Medicaid or the Children’s Health Insurance Program.
Analysts say the report is troubling because HHS is going against insurance industry standards by calculating “enrollees,” as those who have selected plans but may or may not have paid their monthly premiums. According to Brookings Institution visiting fellow Larry Kocot, , insurers only count people who have signed up and made a premium payment as enrollees.
What’s also troubling is the government’s report shows only 502,466 people are “positioned” to have health care in 2014, falling significantly short of the seven million enrollees the White House has said it needs to have the law work as intended and keep premium costs in check.
Selected Plans vs. Paid Premiums
The fact that the administration is counting those who may or may not have paid their monthly premiums yet is not encouraging, says Devon Herrick, senior analyst at the National Center for Policy Analysis. People can sign up for a plan, but never actually make a payment to receive coverage.
“If I don’t pull out a credit card to pay for something on Amazon (AMZN), I don’t want something that badly,” he says. “People may have made accounts, but haven’t made the full effort to enroll.”
The numbers are “disappointing, but expected” says Kocot.
“This is not unexpected given the problems the administration has had with the website,” Kocot says. “What is somewhat confusing is that the administration is defining the enrolled as people who have selected, but not yet paid for their premiums. I would be most interested in those who actually paid their premiums, as it would give a more complete picture,” he says.
Can the Administration Reach Its Goal?
The Obama Administration has projected signing up seven million people in 2014, with 2.7 million being young and healthy patients that are necessary to balance out the pool of policyholders so it would not be too heavily weighted with older and presumably less healthy people that cost more to insure.
The administration has also set a deadline of Nov. 30 to fix the troubled Healthcare.gov website, a target both Herrick and Kocot say might be a stretch. The Washington Post reported last week, citing sources close to the matter, that this may not be an attainable goal.
“If the White House can fix the flaws on the site, they probably still can’t get the enrollment they need to maintain the amount of coverage needed,” Herrick says. “The federal government is probably encouraged that it can show actual people are enrolling, but that is obscuring the greater point that the numbers aren’t big enough.”
As an economist, Herrick says he often dissects actions with the motto “listen to what I say, and watch what I do.”
“This just show a lack of intensity of preference,” he says. “If I reveal my preferences about what I actually buy and if I make a payment— that means I am pretty intent on getting that good or service. If not, there is a much greater chance that I will walk away.”
The administration reaching its goal will largely rest on the website being up and running as soon as possible, Kocot says.
“It’s possible they could make up those numbers, but every day that goes by where we don’t have the pieces in place to ensure success means that reaching that seven million number becomes more of a stretch,” he says.
Skewing the Risk Pool
The reason enrollment numbers are so crucial in year one of the ACA is because insurance premiums for 2014 have been set in accordance with the administration’s sign-up projections.
“The question of the year will be whether or not there are enough young and health people in the risk pool to balance it out,” Kocot says.
It was always known that those who signed up first would be older and less healthy people, he says, because the law prohibits they can no longer be charged more than young and healthy people for care.
“We anticipated that many of the first people to sign up would be those who really needed coverage at this moment,” Kocot says. “They would be the ones pounding the keys to get coverage first.”
But Herrick argues that if those who needed coverage badly were supposed to sign up during month one, there should have been a surge in enrollment.
“There are an estimated 48 million people who lack coverage, and they should have been the first in line,” he says. “If this is the ‘surge’ it’s not encouraging.”