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!