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.