ObamaCare Enrollment Fails to Attract the Uninsured Once Again

It has been just over a week now since the ObamaCare exchanges 2015 open enrollment period closed and nary a word has been heard from neither the Obama Administration nor the news media, even the report that 11.4 million individuals selected a healthcare plan through the state and federal exchanges lasted no more than a day in the news cycle.

So why all the quiet?  According to the Department of Health and Human Services (HHS) report, enrollment far surpassed their projection of 9.1 to 9.9 million.  Even with the expected attrition rate enrollment should still end up someplace in the mid 9 million range.  Shouldn’t the Obama Administration be jubilant over this?

Maybe the hush hush from the administration is due to the fact that for the second year since their opening, the ObamaCare exchanges have fallen far short of their intended purpose.


The Purpose of ObamaCare

The intended purpose of ObamaCare was to make healthcare insurance both affordable and accessible to the uninsured and by doing so it would attract millions who have for years found healthcare insurance unobtainable, at least that was the plan.  But if that didn’t work, the new law imposed a federal mandate requiring all individuals to have healthcare insurance or face a penalty.

To accomplish this, ObamaCare created two avenues through which the uninsured could gain access to affordable healthcare.  For the lowest income earners, an expansion of the Medicaid system brought them access to free healthcare services.  And for those with incomes above the Medicaid threshold, government managed healthcare exchanges were formed through which taxpayer subsidized, private insurer provided healthcare plans could be purchased.

Of course, the Medicaid expansion provision of ObamaCare is working great, maybe even too great for some states which are now facing budgetary issues as a result of higher than anticipated participation.  And why shouldn’t the Medicaid expansion be working great, it provides fully taxpayer funded healthcare for the very low income.  It’s pretty hard to beat FREE!

The healthcare exchanges on the other hand, are not fairing as well in their effort to attract the uninsured.  Why are the exchanges experiencing difficulties?  There are two primary reasons the first being quite simple, affordability. 

The number one mission of ObamaCare was to drive affordability into the individual healthcare insurance market but it failed to do so in epic proportion.  The new law transformed how private insurers packaged and rated their healthcare plans through a mountain of new regulations and mandates.  There were some minor reforms put in place but nothing close to what was needed to offset the cost of the new regulations and mandates now being imposed on individual insurance plans much less enough to lower rates.

Instead, the new mandates drove individual insurance plan rates up substantially in virtually every state as the nation saw firsthand when the healthcare exchanges first opened back in October of 2013.  Even with tax subsidies, only the lowest income qualifiers receive any substantial savings. The exchanges did make affordable healthcare available to those who were previously denied coverage by private insurers however, this accounts for a very small fraction of the uninsured in this country.

The second and far less talked about reason the exchanges have failed to attract the uninsured is the fact that many of the nations uninsured simply are not interested in obtaining healthcare insurance.  It was naïve for the Obama Administration to think that millions of people who have historically chosen to be uninsured were going to have a change of heart.  Failing to bring affordability to healthcare gave even less incentive for this particular group of individuals to get in line and sign up.


What Where the Enrollment Goals?

All we hear from the liberal media today is that the ObamaCare exchanges have met their enrollment goals, but have they?  It all depends and what you believe the goal is!

Was it the goal of the ObamaCare exchanges to merely transfer millions of insured individuals from one marketplace to the ObamaCare exchanges or was it the goal of the ObamaCare exchanges to play a major role in lowering the number of this nation’s uninsured population?  It was the latter of course although this certainly is not being promoted by the Obama Administration.  And the administration’s silence on the intended goals of the ObamaCare exchanges is for good reason as they have missed their mark by a huge margin.

So what were the goals of the ObamaCare exchanges exactly?

At the request of then Speak of the House Nancy Pelosi, the Congressional Budget Office (CBO) performed a study regarding the projected effects of H.R. 3590 PPACA.  The study projected that in 2014, the number of the nation’s uninsured would be reduced by 6 million as a direct result of enrollment through the ObamaCare exchanges.  For the following year (2015) the study projected the reduction would increase to 10 million and by 2016 16 million Americans were projected to have purchased and maintained a qualified healthcare plan through the ObamaCare exchanges.  The following day that this CBO report was released, the House voted on H.R. 3590 PPACA which passed without a single republican vote.  Just 2 days later, ObamaCare was signed into law.

Exactly one year later the CBO released another study which included the projected effect of the ObamaCare exchanges.  The report was submitted as testimony in a March 20, 2011 hearing conducted before the Subcommittee on Health Committee on Energy and Commerce U.S. House of Representative.  This CBO report revealed the same projections for the reduction of the uninsured through the ObamaCare exchanges as did the CBO report of one year prior.  There were many other CBO reports on the effect that ObamaCare would have on the uninsured population released during the crafting of the law, all of which provided similar results.

More recent CBO studies have lowered the projected effect of the ObamaCare exchange on the nation’s uninsured population slightly however, the figures state above are the enrollment projections use to sell the law to Democratic Lawmakers who voted for the law as well these are the enrollment figures that the law is expected to achieve by those who have been stuck picking up the tab.

Just How Bad Have the ObamaCare Exchanges Fail?

Overshadowed by the attention generated by the massive failures of the HealthCare.gov website, the first round of ObamaCare open enrollment has been largely forgotten.  Nearing the end of the enrollment period and fearing major public and political backlash from what appeared to be horribly low enrollment, the Obama Administration lowered expectations from 7 million down to 6 million.  But with the bandaids applied to the website and a surge in last minute enrollment, at the closing bell it appeared that some 8 million individuals had selected a healthcare plan through the state and federal exchanges during the 2014 open enrollment period.

Over the following year those 8 million selected plans slowly dwindled down to 6.7 million enrollments, just short of the original enrollment projection however, no report has ever been released by the administration which identifies exactly how many of those enrollments were made by the formerly uninsured.  Republican Lawmakers and watchdog groups have tried and tried again to get the Obama Administration to release a breakdown of the 2014 enrollment figures but transparency not being this administration’s strong suite, they have failed to do so to this day.  But there is always more than one way to skin a cat!

The Urban Institute conducted a study that looked at the effects of the ObamaCare during its first year of implementation.  What the study revealed was that at the end of the first year 10.6 fewer American’s were uninsured.  The report also went on to state that the most of the gains in reducing the number of uninsured were made through the Medicaid expansion which a report released by the Centers for Medicare andMedicaid Services (CMS) quantifies as 9.2 million during the same period.   The net, 1.4 million, is the reduction in the uninsured through the purchase of a qualified healthcare plan during the first year the law was fully implemented, not all of which were purchased through one of the ObamaCare exchanges it must be noted.

The 2015 open enrollment period did better at attracting the uninsured than did the 2014 open enrollment period although the numbers are still terrible.  Let’s take a look.

2015 Open Enrollment by the Numbers:

            Total plans selected                            11.7 million
            Renewals                                             5.9 million
            Attrition                                              1.0 million
            Known Transfers                                2.5 million
            Reduction in Uninsured                   2.3 million

The total plans selected reported here differs slightly from the 11.4 million that HHS announced to the media.  This figure is based on the weekly enrollment on the federally managed exchange which HHS reported in their weekly blog and expanded to represent 100% of exchange enrollment.  The same method was used for renewals which were also reported by HHS in their weekly blog enrollment updates. 

New enrollment attrition, i.e. those who will never pay for the plans they selected or will cancel their plans within the first few months is a projection based on a loss of 17% of the non-renewal plans selected, the new enrollment attrition rate of 2014 enrollment. 

Know transfers are the sum of 2015 employer healthcare cancelations, 2015 private policy cancelations, late renewals and state exchange closure transfers.  What is missing from the know transfer figure is the number of off-exchange non-cancelation transfers that took place as there is no accurate method to determine this figure.

When all the figures are tallied up, 2.3 million enrollments remain which is the maximum number of individuals who could have obtained a qualified healthcare plan through the state and federal exchanges during the 2015 open enrollment period.


ObamaCare is Losing Customers

Almost as troubling as the low turnout by the uninsured in 2015 is the prediction that 1.2 million 2014 ObamaCare enrollees would likely not renew their plans in 2015.  This admission was made in a brief issued by HHS (ASPE) just days before the open enrollment period began.  In the brief HHS made reference to industry information regarding insurance marketplace retention rates being between 80-85% and predicted the same for the 2014 ObamaCare exchange enrollment. 

The problem with this prediction is that in the pre-ObamaCare marketplace the 15% lost  enrollment of one insurer becomes a 15% gain by another insurer whose loss moves to another and so on and so forth.  In the case of ObamaCare however, the ObamaCare exchanges are the last stop for those seeking out the most cost effective healthcare plans as only through the exchanges can the vital cost saving tax subsidies be obtained.  With 87% of those enrolled through the exchanges receiving subsidies, those leaving ObamaCare are not doing so because they found a more affordable plan.  More likely those leaving the ObamaCare exchanges are doing so as even with subsidies, healthcare insurance has still been found to be too costly.  There are also certain number of individuals ending their subsidized coverage and transitioning to employer provided insurance plans.

The argument of normal attrition, made by HHS, to account for enrollment losses they predicted to suffer in 2015 is little more than a smoke screen raised in an effort to try and explain away the losses caused by other variables such as high premiums and deductibles.  But if it is any consolation, renewals appear to have been better than HHS projected with 5.9 million of the 6.7 million 2014 enrollment returning.  That equates to a net loss of 0.8 million versus the 1.2 million HHS projected prior to the open enrollment period beginning.

   
To summarize, fewer than 1.4 million uninsured Americans purchased a healthcare plan through the ObamaCare exchanges during the 2014 open enrollment period and an additional 2.3 million did so in 2015 making the total reduction of the uninsured through the ObamaCare exchanges a whopping 3.4 million to date.  This figure is significantly short of the 10 million that was originally projected when selling the bill to congressional lawmakers back in 2010.  And with the loss of 0.8 million re-enrollees in 2015, at least a portion of which are a direct result of the ObamaCare exchanges, the reduction in the number of the nation’s uninsured through the exchanges likely lingers around the 3 million mark as we enter our second full year of ObamaCare.

The uninsured seem unimpressed with the offerings made to them through the ObamaCare exchange and even under federal mandate and the threat of penalty seem to be disenchanted with the whole idea of ObamaCare!

ObamaCare Enrollment Week 12 - Nothing New To Report

On Wednesday HHS reported the federally facilitated marketplace (FFM) enrollment figures for Week 12 of the 2015 open enrollment period.

There is little new to report that was not covered in last week’s enrollment update.  As was predicted, as we approach the end of the open enrollment period the rate of enrollment improved by 53.5% from the previous week.  The HHS report indicated that 275,676 additional plans selected during week 12 bringing the cumulative number of plans selected on the FFM to 7,749,375.  If this enrollment rate holds, and accounting for the expected last minute surge in enrollment, the Daily POV best estimate for the total number of plans to be sold through all exchanges by the end of the enrollment period will be just over 11 million. 

If enrollment continues as expected, it is also projected that at very best case 2.2 million uninsured nonelderly will have purchased a qualified healthcare plan through one of the state or federal healthcare marketplaces.  More realistic however is the number of uninsured nonelderly obtaining a healthcare plan through the exchanges this enrollment period to be closer to 1.4 million.

What if we were surprised with a massive last moment enrollment surge?  Hypothetically, if the last week’s enrollment were to be four times that of week 12, the number of uninsured nonelderly obtaining a healthcare plan through the exchanges could be as high as 2.8 million.

Enrollment Numbers by the Week (as reported by HHS)

Here are the enrollment figures HHS has reported for the first 12 weeks of the period:

Week 1  -  462, 125 plans selected, 51% new enrollments (235,684)
Week 2  -  303,010 plans selected, 49% new enrollments (148,475)
Week 3  -  618,548 plans selected, 48% new enrollments (296,903)
Week 4  -  1,082,879 plans selected, 47% new enrollments (508,953)
Week 5  -  3, 927, 484 plans selected, 17% new enrollments (667,672)
Week 6  -  96,446* plans selected
Week 7  -  102,896* plans selected
Week 8  -  163,050* plans selected
Week 9  -  400,253* plans selected
Week 10  -  137,298* plans selected
Week 11  -  179,710* plans selected
Week 12  -  275,676* plans selected
Week 13  - 
* No distinction between new enrollment and renewals provided

With less than 4 days remaining in the 2015 open enrollment period at the time of this writing, we should expect to see the final week’s enrollment figures in just over a week from now, assuming HHS maintains their past reporting schedule.  It’s hard to say when they will release the final enrollment report as they will need input from the 14 states which operate their own exchanges.
 

Breaking Down the Number of Plans Sold

Once all the states chime in and HHS has a moment to put together a rough tally of the total number of plans sold through the exchanges, the claims of success will quickly hit the streets.  If our predictions are correct, the total number of plans sold will be just over 11 million, well in excess of the 9.1 to 9.9 million enrollment projection stated by HHS.  What will be lacking in the mainstream and social liberal media hype is the qualification of the number of plans sold and don’t expect HHS to be volunteering any information either.

From the estimates derived from the My POV Model, here is how the numbers break down:

·         Total number of plans selected *                    11,067,636

·         Plans sold (after attrition) **                          10,291,034

·         Renewals ***                                                  6,499,387

·         Plans sold non-renewals                                  3,791,647

* Assumes week 12 enrollment twice that of week 11 and expands the federal exchange reported figure by 25% to reflect the portion of enrollment that is expected from the state exchanges.
** Adjusted for a 17% attrition rate (as adopted by HHS) on new enrollments only.
*** New enrollments, as reported by HHS expanded by 25% to reflect state marketplace enrollment.

What is left out in the above totals is the number of individuals who were already insured and transferred to the state and federal marketplaces for any number of reasons. 

·         Transfers from other marketplaces (fewest)               1,618,527

·         Transfers from other marketplaces (realistic)              2,382,928

And when you reduce the “plans sold non-renewals” by the number of other marketplace transfers, what remains is the number of plans purchased by the uninsured nonelderly, 2.2 million on the high side and 1.4 million on the low end.

Of course, the next question is, where did we come up with the number of “other marketplace” transfers?  A simple enough question to answer.

The bulk of the off exchange transfers come from employer plan cancelations.  A second round if private policy cancelations also attributed to the large number of off exchange transfers as did the states of Nevada and Oregon closing their states exchanges.

·         Employer plan cancelations  -  A survey of insurers conducted by the Society of Human Resource Management reviled that 1% or 964,000 employer provided healthcare plans would be canceled at the end of the 2014 insurance period.  This count does not including spouses and children which when included will significantly increase this figure.

 

·         Private policy cancelations  -  348,914 private policy cancelations were identified in 9 of the 13 states whose insurers sent out cancelation notices near the end of 2014.  As not all states require insurers to publically report cancellations nor are all states required to do so, it is likely that the actual cancelation number exceeds 500,000.

 

·         State exchange closures  -  Nevada and Oregon have thrown in the towel in trying to get their states exchanges functioning properly and have deferred to the federally managed healthcare exchange for individual enrollment for 2015.  The number insured by these states in 2014 was 105,000 all of which are expected to have renewed their plans through the federally managed healthcare marketplace.

Certainly every policy canceled may not have resulted in a transfer to the state and federal exchanges but the alternative would be the canceled individual would then be uninsured, an action counterproductive to ObamaCare and from a numbers standpoint creates a net zero gain or loss, therefore we will assume a 100% transfer rate for simplicity.

The above listed off exchange transfers do not include the 200,000 late renewals or any other off exchange transfer that did not fall in the three categories listed.

Unless it is discovered that a gross error in the number of off exchange transfers exists, the predicted best and likely cases of 2.2 million and 1.4 million uninsured nonelderly enrollment projections appear to be the sad truth to a healthcare law that now looks to be roughly 9 million short of its second year marketplace target.

ObamaCare Enrollment Week 11 - The Marketplaces are Failing

For the 11th week of open enrollment on the Federally Facilitated Marketplace (FFM), the Department of Health and Human Services (HHS) reported that 179,710 plans were selected, a nice increase over the previous week.  If enrollment continues to improve over the final two weeks, which it likely has, HHS could in fact reach its enrollment projection but only after having significantly changing the goals of the federal and state operated marketplaces as well as the ObamaCare law itself. 


HHS Has Changes the Goal of the Marketplace and ObamaCare

Once upon a time the goal of the stated and federal operated marketplaces was to put a qualified healthcare plan in the hands of 24 million uninsured nonelderly Americans by 2017.  The Obama Administration seems to have drifted from that goal considerably however, and through a conscious effort put forth by HHS, has taken the proponents of ObamaCare along with them.

The change started almost immediately after the HealthCare.gov website rolled out in October 2013 when it became apparent that the bulk of early enrollments on the healthcare exchanges were a product canceled healthcare plans.  Overnight HHS seemed to have dropped the term “uninsured” from its vocabulary and strictly referred to activities on the exchanges as enrollments. 

Even with constant pressure from Republican Lawmakers and opponents of the healthcare law, for HHS to provide enrollment data that differentiated between the number of uninsured verses reinsured that had enrolled on the exchanges, with the support of the White House, HHS has avoided doing so to this day.  And while 6.7 million individuals may have obtained a qualified healthcare plan through the state and federal exchanges in 2014, as few as 1.4 million of those plans might have actually made it in to the hands of the formerly uninsured, a significant shortcoming from the 7 million the president himself once proclaimed would have the security of securing healthcare insurance through the marketplace by the close of the inaugural open enrollment period.

And the change continues.  This open enrollment period HHS does not refer to “uninsured” at all.  The distinction in enrollment made on the FFM is between renewals and new consumers, the definition of which the latter has nothing at all to do with the uninsured.  Here is how HHS defines a new consumer as taken directly from the Week1 HHS enrollment blog:

New Consumers: New consumers are those consumers who are selecting a plan for the first time or whose plan selection in 2014 was terminated, because, for example, they failed to pay their premium or gained coverage through employer-sponsored insurance. In addition, because Oregon and Nevada consumers now use the Federally Facilitated Marketplace platform, they are considered new enrollments.

Keeping in mind that this definition pertains only to how HHS classifies a New Consumer on the FFM, it is significant that in this definition HHS points out that the state of Oregon and Nevada are considered new enrollments.  Why is this significant?  It is so as it explains how the FFM distinguishes between enrollments. 

For the 2015 enrollment period, the FFM has only two distinctions, renewals and new enrollments.  To be counted as a renewal, the customer’s 2014 enrollment had to be made through the FFM so that when they returned in 2015, they would be recognized on the FFM database and counted as a renewal.  Customers enrolling on the FFM but not recognized on the database are all considered new enrollments regardless of their previous insured or uninsured status.  For example, those who lost their 2014 employer sponsored insurance and those who were insured on a state facilitated marketplace 2014 and transferred to the FFM in 2015 are counted as new enrollments or new consumers regardless of the fact that they were previously insured.   After week 5 of the open enrollment period the auto re-enrollment period ended and all plans selected beyond that point were considered to be new enrollments aka new consumers. 

There is absolutely no distinction made between an uninsured and previously insured individual on the FFM other than recognized renewals, at least not in HHS’s reporting, and this appears to be the way HHS and the Obama Administration wants it to be.  The goal of the state and federal healthcare exchanges no longer seems to be to insure the uninsured.

Have the Exchanges Achieve Their Enrollment Goal?
 
Whether or not the enrollment goal for 2015 has been met depends on ones understanding of what the goal is or at least was.

Here is the forecasted change in uninsured taken directly from Table 1 of the CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage report {see full report here}:

EFFECTS ON INSURANCE COVERAGE                      2013       2014       2015       2016       2017
(Millions of nonelderly people by calendar year)

Change                  Medicaid and CHP                             1              9              12           12           12                                 Employment-Based                          2              *              -2            -6            -6                                 Nongroup and Other                         *              -2            -3            -4            -5                                 Insurance Exchanges                        0              7             13           22           24                                 Uninsured                                         -2            -14          -20          -25          -25

It’s no coincidence that the enrollment goal originally touted by HHS during the 2014 enrollment period was 7 million nor is it a coincidence that, before their last minute revision, the goal for 2015 was 6 million {7+6=13}.  These enrollment targets adopted by HHS were taken directly from the CBO forecast provided to HHS, at their request, and are indisputably earmarked for the uninsured. 

It is important to understand that these enrollment forecasts were also provided to and utilized by insurers who used them in their rate calculations for plans they would offer on the exchanges.  With this in mind, it is easy to conclude that any significant shortcoming in the enrollment of the uninsured will have an impact on future rates set by the insurers and possibly even a particular insurer’s participation on the exchanges.

To put a little history to the original intent of the law, we need to look no further than the CBO report prepared for then Speaker Nancy Pelosi in response to her request for spending estimate revisions outlined in H.R. 4872, the Reconciliation Act of 2010, the House Bill that would be voted on and would push the ObamaCare bill forward to final signing by the President.  Two excerpts from page 9 of the CBO report make it clear that the goal of the insurance exchange was for 24 million uninsured nonelderly to purchase a healthcare plan through insurance exchanges that would be set up as part of the law {see full report here}:

 

the combined effect of enacting H.R. 3590 and the reconciliation proposal would be to reduce the number of nonelderly people who are uninsured by about 32 million

and

 

Approximately 24 million people would purchase their own coverage through the new insurance exchanges, and there would be roughly 16 million more enrollees in Medicaid and the Children’s Health Insurance Program than the number projected under current law.

The goal to significantly reduce the number of uninsured through the exchanges is again emphasized in another CBO analysis produced a year after the law was enacted.  The report was prepared as part of testimony for a Subcommittee hearing regarding the Affordable Care Act.  An excerpt in the summary reads as follows {see full report here}:

In 2021, approximately 24 million people will purchase their own coverage through insurance exchanges, and Medicaid and the Children’s Health Insurance Program(CHIP) will have roughly 17 million additional enrollees, CBO and JCT estimate.

Table 3 in the same report concludes that 23 million will have obtained insure through the exchanges by 2017.

These are just a few examples that make the goal of the healthcare exchanges clear and indisputable.

Back to Week 11 Enrollment

Here are the enrollment figures HHS has reported for the first 11 weeks of the period:

Week 1  -  462, 125 plans selected, 51% new enrollments (235,684)
Week 2  -  303,010 plans selected, 49% new enrollments (148,475)
Week 3  -  618,548 plans selected, 48% new enrollments (296,903)
Week 4  -  1,082,879 plans selected, 47% new enrollments (508,953)
Week 5  -  3, 927, 484 plans selected, 17% new enrollments (667,672)
Week 6  -  96,446* plans selected
Week 7  -  102,896* plans selected
Week 8  -  163,050* plans selected
Week 9  -  400,253* plans selected
Week 10  -  137,298* plans selected
Week 11  -  179,710* plans selected
* No distinction between new enrollment and renewals provided

For the 11 weeks reported, there have been 7,473,699 plans selected though the FFM.  Based on current enrollment trends, this should bring the cumulative total of both the state and federal marketplaces, for the full open enrollment period, to roughly 10.3 million.  If a robust last minute surge in enrollment were to occur it would come as no surprise if as many as 11 million plans were selected before the marketplaces close their doors on 2015 shoppers. 

As for the number of uninsured that are expected to show up for the party, there is reasonable disagreement between the My Daily POV model and what is being projected by HHS, neither of which comes close to the original CBO projection of 6 million.
 

How Many Uninsured Will Gain Healthcare Coverage Through the Marketplaces?

Just how many of America’s uninsured nonelderly population will have gained healthcare coverage through the state and federal marketplaces this open enrollment period will depend largely on who you ask.  If last year is any indication, we should not hold our breath waiting for HHS to release a breakdown of the enrollment figures but then again, under the new leadership of Secretary Sylvia Burwell, HHS has been a great deal more forthcoming with information, lest we forget however, that the White House still controls the puppet strings. 

HHS has not provided an actual figure as to the number of uninsured they predicted to gain healthcare coverage through the marketplaces this open enrollment period however, they have eluded to it in a round about way, without committing to an actual figure.

HHS has broken away from using the CBO forecast as their target and instead have developed their own “bottom-up” methodology in predicting enrollment.  The fundamentals behind their newly adopted methodology are described in a report they issued just days before the 2015 open enrollment period started {see full report here} in which HHS also disclosed their lowered enrollment projection of 9.1 to 9.9 million for the period.  This projection of course includes all renewals, transfers and newly insured marketplace customers. 

A hint of what HHS expects in the way of enrollment by the uninsured is given in this excerpt taken directly from the report {see bottom of page 4 and top of page 5}:

HHS’s analysis implies that most of the new Marketplace enrollment for 2015 is likely to come from the ranks of the uninsured, with approximately three or four previously uninsured new enrollees for each new enrollee drawn from the ranks of those who previously had off-Marketplace individual coverage.

In other words, for every 1 off-marketplace transfer to one of the state and federal marketplaces, HHS is concluding that an additional 3 to 4 of American’s uninsured would sign up for a qualified healthcare plan through the exchanges as well.

This is a pretty ambitious claim being made by HHS and one that prompted some digging into the numbers.  And while anything is possible, what a little number crunching revealed was that the chances of HHS’s claim to come to fruition are slim to none, siding heavily to the side of none.

Starting with the lesser side of the claim, that for every 1 transfer 3 uninsured would enroll through the marketplace, based on the current rate of enrollment, the number of renewals reported and the know number of off-exchange transfers that will affect 2015 marketplace enrollment, for the HHS claim to hold water the following would have to occur:

·         Total enrollment would have to reach a minimum of 11.6 million, an increase of almost 1.7 million in the final two weeks.

·         The very least number of expected off-exchange transfers would have to occur.

·         A 2014 retention rate of 100% must be achieved.  HHS however predicts only 83% retention of 2014 marketplace enrollments.

It is unlikely that any of the above listed is achievable much less all three.  Where it appears HHS may have failed the most in their projection is in accurately quantify the number of off-exchange transfers which looks as though they have completely ignored in their bottom-up projection. 

If HHS’s 3 for every 1 prediction were to be correct, the current low ball estimate of off-exchange transfers would have the number of uninsured obtaining a qualified healthcare plan through one of the marketplaces at 4 million with the total number of plans selected at 11.6 million, neither number of which is believed to be achievable.  And if we use the more realistic off-exchange transfer figure, the uninsured enrollment rate would rise to 4.3 million and the total number of plans selected would be well in excess of 12 million.  Unless HHS is making the assumption that a large percentage of those losing their off-exchange healthcare plans will chose to remain uninsured, an act that is counterproductive to the goal of ObamaCare, the model used by HHS to predict 2015 enrollment appears to be highly flawed.

As for HHS’s 4 for every 1 prediction, this would require that no off-exchange transfers take place or a total enrollment figure so high that it would be impossible to achieve.

The flawed HHS model is unable to provide a reasonable answer to the question of how many uninsured will gain healthcare coverage through the marketplace this open enrollment period so let’s consider the other model.

A Simpler Uninsured Enrollment Prediction

The My Daily POV enrollment model (the model) takes a very simplistic approach in predicting the number of uninsured that will purchase a qualified healthcare plan through the state and federal marketplaces this open enrollment period.  

The model does not consider the results of numerous studies, enrollment by age demographic or any number of other statistics that are considered in the HHS approach, the model instead relies only on enrollment data, largely provided by HHS, along with a small number of fair and well supported assumptions that have a direct impact on enrollment.  Unlike HHS, which had the misfortune of having to devise a method of predicting what the future held for enrollment, the My Daily POV model is a work in progress and improves with each week’s enrollment report as well as other aspects of enrollment we may learn and can be used to improve the fortune telling of the model.

With 11 weeks reported and at the current enrollment rate the model projects that the final cumulative number of plans selected will surpass 10.3 million. After accounting for renewals, off-exchange transfers and adjusting for attrition, the resulting number of uninsured gaining healthcare coverage through the marketplaces is predicted to be no more than 1.5 million.

What is not considered in the prediction just stated is a surge in enrollment that will likely occur in the closing weeks and days of the open enrollment period.  To what degree the surge in enrollment will be is unknown but if we assume that week 12 enrollment will be 50% greater than week 11 and the final week 100% greater than week 12, then the model projects just over 11 million plans will be selected and the number of uninsured that will obtained a qualified healthcare plan through one of the exchanges will number between 1.4 and 2.2 million.  The large disparity in the projection number of uninsured obtaining a healthcare plan stems from the number of off-exchange transfers that can be confirmed with a reasonable degree of certainty verses an unconfirmable but more realistic number of off-exchange transfers.

   
The Success of the Marketplace Put In Perspective

From the pool of 38 million uninsured Americans eligible for marketplace plans this year, the best we are likely to see is this number shrinking by roughly 2 million.    

On the outside, our current projection of 10.3 plans being sold through the state and federal marketplaces looks like a success and will be portrayed as such by the administration and the liberal media.  However, of those plans sold, 6.5 million can be attributed to plan renewals and another 1.7 million to off-exchange transfers, the majority of which originate from employer sponsored healthcare insurance program cancelations.  The Daily POV model also predicts a worst case scenario where fewer than 1 million uninsured participate on the exchanges this year but let’s be optimist and hope this not to be the case.

Similar results were experience during the 2014 open enrollment period where over 5 million plans purchased were the result of off-exchange transfers on to the state and federal marketplace.  The 2014 open enrollment period yielded as few as 1.4 million uninsured obtaining a qualified healthcare plans through the exchanges.

In Conclusion

At the close of the 2015 open enrollment period the law’s original goal to have reduced the number of uninsured nonelderly American’s  who were eligible to participate on the marketplaces by 13 million will likely fall short by 10 million.  This leaves little if any doubt that reducing the eligible pool of uninsured nonelderly Americans by 24 million, as has been the intended purpose of the marketplaces from the start, will never come close to being successful.

Unless a miracle takes place over the final days of enrollment, it should be clear now that the insurance marketplaces established by the ObamaCare law are a complete and abysmal failure.  After two rounds of open enrollment, they will have accomplished little more than to have moved the already insured from one marketplace to another while hardly putting a dent in the number of the uninsured eligible to participate on the stated and federal marketplace’s.  Even with the incentive of federal subsidies and the threat of penalty, the vast majority of American’s uninsured are simply not interested in ObamaCare.

ObamaCare Proves to be Nothing More Than a Costly Entitlement Program

Originally projected to put a qualified healthcare plan in the hands of 24 million uninsured Americans by 2017, enrollment of the uninsured nonelderly through the state and federal healthcare insurance exchanges is the heart of the ObamaCare law.

Despite this, the Department of Health and Human Services (HHS) remains tight lipped on the number of uninsured nonelderly who purchased a qualified healthcare plan through the exchanges during last year’s inaugural open enrollment period.  There is no plausible explanation as to why HHS has not been forthcoming with this vital piece of enrollment information other than it must not speak in favor of the laws success which appears to be the case judging from the findings of a survey being conducted by the Urban Institute.

What Studies Have Found

The Urban Institute initiated its Health Reform Monitoring Survey (the survey) in the first quarter of 2013, the intent of which is to monitor the changes in the nation’s uninsured rate following the opening of the healthcare exchanges and the start of the Medicaid expansion.  In a report released by the Urban Institute dated December 3, 2014, it stated that at the end of the first year of the implementation of ObamaCare, the survey revealed that 10.6 million fewer American’s were uninsured.  The report also stated that most of the gains in reducing the number of uninsured were made through the Medicaid expansion provision of the law but did not quantify the reduction.  We are in luck however, as the Center for Medicaid and CHIP Services (CMS) has done so for us.

In their Medicaid & CHIP: September2014 Monthly Applications, Eligibility Determinations and Enrollment Report, CMS disclosed that over 9.2 million additional individuals enrolled on Medicaid and CHIP between September 2013 through September 2014 (see page 3 of report), the same period covered in the Urban Institute report.

 
The Uninsured are No Shows on the Exchanges

 If we remove the number of individuals who enrolled on Medicaid and CHIP, as reported by CMS, from the total reduction of the uninsured, as reported by the Urban Institute, it becomes painfully evident how ineffective the healthcare exchanges were.  With only 1.4 million uninsured individuals purchasing a qualified healthcare plan in 2014, many of whom did so outside of the state and federal healthcare exchanges, it is no wonder that the Obama Administration is keeping enrollment figures a secret.  And at the cost of $2 trillion over the next decade, the failure of the healthcare exchanges has turned ObamaCare into the most costly social entitlement program in history!

The 2015 open enrollment period is currently on track to place a qualified healthcare plan in the hands of as few as 2.2 million uninsured nonelderly Americans by the end of the enrollment period {see week 10 enrollment blog}.  Couple this with what appears to be fewer than 1.4 million qualified healthcare plans purchased by the uninsured nonelderly during the 2014 open enrollment period and what you have is a healthcare law that is in significant trouble.  Unless an enrollment miracle takes place in the next 2 weeks, it will be next to impossible to keep insurers interested in participating on the healthcare exchanges following  2 consecutive disastrous enrollment turnouts by the uninsured.

   
Trying to Change the Intent

Proponents of ObamaCare have been working diligently to extract the word “uninsured” from the discussion when speaking about enrollment.  As well, they are putting as much focus as possible on the success of the Medicaid expansion.  However, doing so does not erase the massive failure of the healthcare exchanges.  The intent of the law remains the same, to significantly reduce the number of uninsured in this country through the Medicaid expansion and in much larger part, by putting 24 million qualified healthcare plans in the hands of the nation’s uninsured by 2017, the latter of which has become a statistical impossibility.

The Urban Institute is a well-respected, left leaning Washington DC based think tank that conducts economic and social policy research.  The Urban Institute has followed the evolution and growth of ObamaCare and has conducted countless studies and surveys pertaining to the law.

Week 10 Enrollment - Number of Uninsured Barley Reduced

Last week the Department of Health and Human Services (HHS) reported that at the end of the 10th week of enrollment there were 7,293,989 plans selected on the federally managed healthcare exchange. 

Pretty impressive but it remains unfortunate that HHS continues to withhold the most relevant piece of information in regards to measuring the success of ObamaCare, the number of uninsured nonelderly that have secured a qualified healthcare plan through the exchanges.  After all, putting a qualified healthcare plan in the hands of the uninsured is the major objective of ObamaCare, or at least it was once upon a time.

While the number of uninsured nonelderly is not being directly reported, we can dig down into enrollment figures and get a feel for how many may have signed up.  But before we do, a quick review of what the ObamaCare enrollment goals are I think is in order.

Healthcare Exchange Enrollment Goals

Maybe the least understood component of ObamaCare is the importance of the healthcare exchanges.  The success or failure of ObamaCare rests on the ability of the law to attract enough of American’s uninsured to purchase a qualified healthcare plan through one of the state and federal exchanges, as in order to gain the interest of insurers to participate on the exchanges, the Obama Administration had to ensure them that the marketplace would expand by roughly 24 million by 2017.

The first step towards achieving the 24 million marketplace expansion began with last year’s inaugural open enrollment period which was projected to put a qualified healthcare plan in the hands of 7 million uninsured nonelderly Americans.  Enrollment on the state and federal exchanges turned out to be rather disappointing for both the Obama Administration and insurers however, with on only 6.7 million plans sold through the exchanges, barely half or fewer of which were purchased by the target demographic.

Exactly how many of the uninsured nonelderly purchased a healthcare plan through the exchanges during the inaugural enrollment period is unknown, at least by anyone outside of HHS and the Obama Administration.  It has been nearly a year since the open enrollment period ended and yet HHS still refuses to release the single number that can be used to gauge the success or failure of the exchanges.  As such, it is safe to assume that the news cannot be good and will require legal means to pry this information from the clutches of the claimed most transparent administration in history. 

There are a couple of hints as to how low the enrollment rate of the target demographic was however.  At their own round about admission, HHS can attribute no more than 4.5 million¹ uninsured to have purchased a healthcare plan in 2014 including both on and off exchange enrollments.  And even this figure is controversial due to the cherry picking² of the number of uninsured used by the HHS.  Also, there was the damaging admission from the CEO of Aetna that at the halfway point of the open enrollment period, only 11% of the plans they sold through the exchanges were purchased by the uninsured nonelderly spurring concerns by Aetna’s CEO if they would continue their participation on the exchanges.

And in an indirect admission of the 2014 enrollment failure, just five days before the 2015 open enrollment period began, HHS announced that it would lower the long standing enrollment forecast of 6 million down to 2 million of America’s uninsured nonelderly while the most recent Congressional Budget Office (CBO) report lowered their enrollment forecast by only 2 million.

HHS’s lowering of the enrollment projection is little more than a public relations move by the Obama Administration in hopes that they have lowballed the target enough so that they can claim they exceeded their goal at the end of the open enrollment period.  This is the same move they made near the end of the 2014 enrollment period where HHS dropped the enrollment projection down to 6 million from 7 when enrollment looked bleak.

The lowering of the bar does not let the Obama Administration off the hook however.  Insurers are still basing their rates on a much higher enrollment projection.

The big jump in enrollment was to take place during the 2016 open enrollment period where the CBO originally projected that an additional 9 million uninsured nonelderly would obtain a qualified healthcare plan through the state and federal exchanges.  And during the 2017 open enrollment period CBO projected an additional 2 million uninsured nonelderly would join the ranks of those who had obtained a qualified healthcare plan through the exchanges.
In all likelihood HHS will lower the 2016 projection bar by a similar margin that they did this year.

A Look at 2015 Enrollment So Far

Just shy of 7.3 million healthcare plans have been selected on the federally managed healthcare exchange so far this enrollment period.  Of those plans selected, 4.5 million are renewals and no fewer than 1.4 million³ are a result of transfers from other insurance marketplaces.  This leaves, at very best, a mere 1.4 million selected plans allocated to the newly insured.

What might those 1.4 million newly insured look like at the end of the open enrolment period?  Taking in to account 3 additional weeks of enrollment, the additional plans purchased through the 14 states marketplaces {32% of the market} and accounting for attrition, it is projected that 2.2 million⁴ of American’s uninsured will purchase a qualified healthcare plan through the state and federal exchanges during the 2015 open enrollment period.  While this projection does exceed the extremely low expectation set by the Obama Administration, it is an endorsement of the laws failure to attract the uninsured nonelderly, the number of which was expected to have been lowered by 13 million not fewer than 6 million.

Here are the enrollment figures HHS has reported for the first 10 weeks of the period:

Week 1  -  462, 125 plans selected, 51% new enrollments (235,684)
Week 2  -  303,010 plans selected, 49% new enrollments (148,475)
Week 3  -  618,548 plans selected, 48% new enrollments (296,903)
Week 4  -  1,082,879 plans selected, 47% new enrollments (508,953)
Week 5  -  3, 927, 484 plans selected, 17% new enrollments (667,672)
Week 6  -  96,446* plans selected
Week 7  -  102,896* plans selected
Week 8  -  163,050* plans selected
Week 9  -  400,253* plans selected
Week 10  -  137,298* plans selected
* No distinction between new enrollment and renewals provided

No explanation has yet been found that would account for the week 9 enrollment anomaly.  More than double that of the week before and the week after, the figure reported seems suspect and it would come as no surprise if HHS were to adjust this figure upon discovery that an error in reporting has occurred.  But for now, the week 9 enrollment figure stands until we learn otherwise.

Week 11 enrollment will be out in just a few days and is not expected to deviate from what has been reported over the past several weeks.

Should I Stay or Should I Go?

Obviously the enrollment projections that the Obama Administration used to persuade insurer participation on the healthcare exchanges will never come to fruition.  So what does this mean to the consumer?   At the moment, very little as insurers are being protected from losses through the transitional risk-corridor provision in the healthcare law which, at the pleading of the White House, has prevented insurers from imposing massive rate increases in 2015.  However, the risk-corridor provision expires on December 31, 2016 at which time insures will be faced with the decision to either increase their rates to a level that ensures their profitability in a significantly smaller than promised marketplace or to cut ties with the healthcare exchanges all-together.

The greater question is, will insurers even wait that long?  Certainly there is a market share to take advantage of on the exchanges however, for the major insurers anyway, it is a fairly small piece of their business at the moment and with the failure of the marketplace to grow at the levels projected by the CBO, they may see no short or long term gain in their continued participation. 

The poor turnout of the uninsured nonelderly will spur yet another rate increase which in turn will have the president again pleading with insurers to hold down rates, just as he had to do last year.  Insurers doing so will create an even larger disparity between todays perceived rates and what rates would actually be if insurers were not being protected from losses through the risk-corridor provision.  Insures may not wish to be a part of the disruption in the marketplace when the risk-corridor provision comes to an end and rates skyrocket so high that millions of customers will again be drive out of the insurance marketplace.  The second round of poor turnout by the uninsured will likely prompt at least some insurers to exit the marketplace come 2016.

The issue of adverse-selection will also be taken into account by insurers when weighting their decision whether or not to participate on the exchanges next year.  The number of the young and healthy who enrolled through the exchanges in 2014 fell far short of the 38-40% necessary to offset the cost of insuring the older and less healthy, as reported by HHS.  However, as the bulk of the sicker and older rushed to the exchanges in 2014, it is expected that for this enrollment period the adverse-selection ratio should improve, but to what extent we will not know until HHS releases that figure, assuming they choose to do so.

Failing to Meet Its Primary Objective

Beginning in 2014 and through the following decade, ObamaCare was intended to reduce the number of the nation's uninsured by 37 million.

The primary objective of ObamaCare is for 24 million uninsured nonelderly Americans to have purchase and maintain a qualified healthcare plan through one of the state and federal healthcare exchanges by 2017.  But with the second round of enrollments nearing a close it has become painfully evident that this objective will never be met.  While the overall enrollment figure looks impressive, the number of uninsured nonelderly participating on the exchanges is half or less than what was projected.  At the current enrollment trajectory, by 2017 it is likely that less than 10 million uninsured nonelderly will have purchased and maintained a qualified healthcare plan through  the exchanges, a shortfall of nearly 60%. 

So far this provision in the law has accomplished little more than to drive individuals out of their existing healthcare plans and transfer them on to the exchanges.  This was not the objective of ObamaCare and its failure comes at a massive cost to hard working Americans who are footing the $2 trillion tab.

The second objective of ObamaCare is to expand the Medicaid program.  Through the Medicaid expansion, 13 million Americans are expected to gain access to healthcare over the next decade, 12 million of those by the close of 2015.  The Medicaid expansion provision of the law will meet and likely exceed its goals with no difficulty.

With only two weeks remaining (3 weeks of reporting) in the 2015 open enrollment period, we can soon expect to hear how HHS choses to portray its success.  As was in the case in 2014, HHS is unlikely to provide the public with a breakdown of enrollment, specifically how many uninsured nonelderly individuals gained healthcare coverage through the exchanges however, they will be quick to boast the large enrollment numbers without qualifying them.

President Obama is just as likely to claim public success however, behind closed doors he will be singing a very different tune as insurers will undoubtedly be screaming bloody murder and  demanding answers as to what the administration intends to do about failing to hold up their end of the deal.

Footnotes:

¹ No More than 4.5 Million Uninsured Nonelderly Purchased a QHP through the Exchanges in 2014
 HHS adopted the figure of 10.3 million as the number of uninsured who gained some form of healthcare coverage, including Medicaid, over the 2014 open enrollment period as stated in their press release dated July 23, 2014.  For the same period, CMS released a fact sheet which stated that 5.8 million took advantage of the Medicaid expansion.  Reducing the total number stated to have gained coverage during the open enrollment period (10.3 million) by the number of those who gained coverage through the Medicaid expansion (5.8 million) leaves no more than 4.5 million able to have  purchased a QHP on or off exchange.

² HHS Cherry Picking Reduction in Uninsured Figure: In a July 23, 2014 press release HHS sighted a study published in the NEJM which indicated that the number of uninsured dropped by 10.3 million over the 2014 open enrollment period.  The press release did not state however the source of the study with is Gallup-Healthway.  Three other respected industry experts also performed a similar study, covering the same period.  The Rand Corp, a left leaning think tank projected the drop in the uninsured rate to be 9.3 million while the Urban Institute, another left leaning think tank projected the number to be only 8 million.  Most significant of all is the results of the same study conducted by the Commonwealth Fund, a very pro-ObamaCare organization, which reported the drop in the uninsured rate to be 9.5 million, nearly a full million less than the source HHS chose to adopt.  In all 4 studies,  their findings included all sources of insurance coverage gains including Medicaid.  The Commonwealth Fund study would have been the most logical choice for HHS to have adopted however HHS cherry picked the Gallup survey as the numbers put ObamaCare enrollment in the best light.

      ³  More than 1.4 Million Insured Transferred to Exchanges from other Marketplaces: A large number of plans selected during the 2015 open enrollment period are a result of transfers from other marketplaces.  The total transfers are no less than 1.4 million and could easily exceed 2 million.  Transfers of the insured have a net zero effect in reducing the number of the nation's uninsured. 

·         Employer plan cancelations  -  A study conducted by the Society of Human Resource Management reviled that 1% or 964,000 employer provided healthcare plans would be canceled at the end of the 2014 insurance period.  This count does not including spouses and children which when included will significantly increase this figure.

 

·         Private policy cancelations  -  348,914 private policy cancelations were identified in 9 of the 13 states whose insurers sent out cancelation notices near the end of 2014.  As not all states require insurers to publically report cancellations nor are all states required to do so, it is likely that the actual cancelation number exceeds 500,000.

 

·         State exchange closures  -  Nevada, Oregon and New Mexico have all thrown in the towel in trying to get their states exchanges functioning properly and have deferred to the federally managed healthcare exchange for individual enrollment for 2015.  The number insured by these states in 2014 was 137,000 all of which are expected to have renewed their plans through the federally managed healthcare marketplace.

 

·         Other sources of uncounted transfers are late renewals, off exchange transfers and relocation transfers all of which will be recorded as a “selected plan” by HHS.

 

⁴  Steps taken to Project 2.2 Million Total Enrollment:

  1.       Increase 10 week federal exchange enrollment of 1.4 million to reflect a 13 week average - 1.82 million.
  2.       Expand 1.82 million federal exchange enrollment {68% of population} to reflect 100% of population - 2.68 million.
  3.       Assume a 17% new enrollment attrition rate (based on 2014) - 2.2 million projected total enrollment.