ObamaCare Enrollment Week Six - Enrollment Plunges As Does the Viability of the Law

As predicted, activity on the state and federal healthcare exchanges declined after the December 15th deadline passed but nobody thought the drop off would be so drastic!

Week 6 ended just a few days shy of the halfway point for the 2015 enrollment period and produced the mere 102,000 new enrollments, the lowest of any week so far.  In contrast, the previous week drew over 700,000 new enrollments as customers rushed to the state and federal exchanges to beat the December 15th deadline.

It is unlikely that ObamaCare will experience another weekly enrollment boom, such as it did in week 5, and the enrollment figures record in week 6 are likely indicative of what can be expected during the second half of the 2015 open enrollment period, at least until the very final days.


Enrollment So Far

Factoring in a 27% increase in plan selections to account for state exchanges, which are not included in the HHS report, and a 17% attrition rate, at the half way point new enrollment looks to have broken the 2 million mark. 

This will come as great news to the Obama Administration who will soon be touting that enrollment has already exceeded their expectations for 2015.  Of course there will be no mention that, at the direction of the White House, HHS lowered the enrollment bar by 4 million nor will there be mention of the fact that new enrolment is likely being driven by much stiffer penalties being imposed on those who fail to secure a federally mandated healthcare insurance plan in 2015.  And of course the Obama Administration will fall completely silent regarding the latest round of insurance policy cancelation that have many transferring from their private healthcare plan to one purchased through the state and federal exchanges.  

There will also be those who will claim that signing-up 2 million during the first half of the 2015 enrollment period sets the trajectory to have 4 million enrolled up by February 15, the final day of open enrollment.  This is as likely to happen as Obama signing repeal legislation for his signature law as the drop-off experience in week 6 will likely trend through the remainder of the open enrollment period.


A Look at Enrollment Week By Week

The Department of Health & Human Services (HHS) has been gracious in their providing timely enrollment updates however, the figures they publish do come with a few caveats, some they explain in their updates, others they do not.

First is understanding exactly what it is that is being reported.  The figures provided by HHS are data collected from the federal exchange, operated by the Centers for Medicare and Medicaid Services (CMS).  State exchange data is excluded from the HHS reports as the states operating their own exchanges cannot be relied upon to make this data available in a timely manner.  As the states operating their own exchanges make up only 27% of the total, increasing the federally reported enrollment by this amount creates a figure accurate enough to make general assumptions regarding enrollment. 

HHS also makes it very clear that the numbers they are reporting are “selected” plans not actual enrollments.   A selected plan simply means that a customer has placed a plan in their shopping cart but has not necessarily filled out the enrollment forms nor made payment.  Failing to make this distinction got the Obama Administration in a great deal of hot water earlier this year when it was learned that 1 million of the enrollments they were claiming had either canceled their policy or never paid.

Selected plans encompass both new enrollments as well as renewals however, in most cases HHS has provided the percentage of which are new verses renewals.

Another distinction that should be noted regarding selected plans is while they are described as ‘plans’, HHS states clearly that the figure they are publishing accounts for the total number of members named on those plans.

The attrition rate is not mentioned by HHS of course as the attrition rate cannot be determined until it actually happens.  However, over the past year we did learn that of those who selected plans on the exchanges for 2014, 17% did not follow through with payment or canceled their plans a short time later.

Now for the numbers:

Week 1  -  462, 125 plans selected, 51% new enrollments
Week 2  -  303,010 plans selected, 49% new enrollments
Week 3  -  618,548 plans selected, 48% new enrollments
Week 4  -  1,082,879 plans selected, 47% new enrollments
Week 5  -  3, 927, 484 plans selected, 17% new enrollments
Week 6  -  94,446* plans selected, no distinction of new enrollments provided

There are a few trends that are easily identified at quick glance:

 Weeks 1 through 3 there was a pretty even split between new enrollments and renewals.

Weeks 3 and 4 saw a big uptick in enrollment as the December 15th deadline neared.

Week 5 saw significant re-enrollment as well as a surge in new enrollment, both likely a result of the December 15th enrollment deadline.

Week 6 experience a massive drop-off in enrollment due to the passing of the December15th enrollment deadline, the ending of the auto-reenrollment cycle and the week falling in the middle of the Christmas Holiday period.

Week 6*  HHS stopped reporting the distinction between new enrollment and renewals as the auto-renewal cycle had ended.  Customers are still able to and are renewing manually however.


Putting ‘New’ Into Perspective

One final caveat in the HHS reporting is the distinction between ‘new customers’ and ‘customers renewing coverage’. 

The latter is simple and encompasses those customers who returned to renew their coverage or auto-renewed their coverage after having purchased a qualified healthcare plan through the federal exchange during the 2014 open enrollment period. 

‘New customers’ is a little less straight forward.  Essentially, HHS identifies a new customer as anyone who is new to the federal exchange.  This means that for those who were formerly insured on the private insurance marketplace and let’s say for example they had their insurance policy canceled and sought out a new plan on the federal exchange, they will count as a new customer.  The same holds true for those who transferred over from a state exchange on to the federal exchange, such as the 100,000 customers from the now defunct Oregon and Nevada state exchanges.

It is important to understand who HHS includes as “new customers” as far too often it is assumed that “new” means ‘formerly uninsured’ which is by no means the case.  The liberal media will assuredly distort the meaning of ‘new customers’ working on the now infamous Gruber Principal that due to the “stupidity of the American voter” they can get away with claiming ‘new’ to be the same as ‘formerly uninsured’


Enrolling the Uninsured is Everything and it's Failing

It would be nice if concern for the success of enrollment from those within the Obama Administration stemmed from the human desire to know that the millions of uninsured will no longer be without quality healthcare, but sadly this is not the case.  

ObamaCare became the number one priority of the presidents from the moment he set foot in office and after 6 years remains his single major achievement.  But the law is in trouble and its success or failure very much relies on the number of qualified healthcare plans put in the hands of the uninsured via the state and federal healthcare exchanges.   This is what is most concerning to the president and his administration.

Let us not forget that the insurance marketplace is still privately owned and operated and their participation on the healthcare exchanges is purely voluntary.  Insurers agreed to participate on the healthcare exchanges under the condition that healthcare would be made affordable enough to ultimately attract 24 million new customers for them by 2017.  Insurers have little control over holding down the cost of healthcare plan as the ObamaCare law mandates that all plans include a number of essential benefits which runs up the cost.

Standing on their own, literally all healthcare plans offered on the exchanges cost more than comparable plans offered prior to the ObamaCare mandate, plans that were not littered with unnecessary benefits.  Now insurers were relying on government {taxpayer} provided subsides to offset the higher cost of premiums so as to make insurance affordable to the millions who have for years opted out of obtaining insurance.  Roughly 85 to 90% of all insurance plans sold through the state and federal healthcare exchanges receive some level of federal subsidy.

Insurers participating on the exchanges developed their initial rate structures based on the same enrollment predictions that the White House used to determine funding of the law, those 18 new taxes and surcharges.  And due to the uncertainties of these early years of implementation, insurers are protected from losses through safety net provisions built into the law.  Without such a safety net, insurers would be unwilling to take on the risk of such a new and untested idea.

But enrollment went astray from the start as before the first person enrolled on the healthcare exchanges, insurers had to send out millions of cancelation notices to existing customers whose insurance plans did not include the essential benefits package now mandated by law.  Once the 2014 enrollment numbers were sorted out, HHS reported that 6.7 million individuals selected and paid for a healthcare plan from the exchanges and in a round-about way, claimed that 4.5 million of those enrollment were made by the formerly uninsured, a number that has come under great scrutiny and is in all likelihood is significantly lower than stated.

The 2014 enrollment figures were very concerning to insurers who were expecting to add 7 million new customers to their books and not kick several million off in the process.  Also concerned was President Obama who feared that the poor enrollment would force insurers to increase premiums in 2015.  Subsequently, the president struck another deal with insurers to hold premiums down and in exchange he would ensure that any losses they realize would be covered.

And now, all are watching closely as we reach the halfway point of the 2015 open enrollment period.  So far no really so good as all indication are that enrollment will fall far short of the 6 million new customers that insurers were initially told would arrive when they agreed to participate on the exchanges.  New enrollment at the halfway point looks to be just over 2 million, many of which are transfers from the private marketplace after receiving their cancelation notices. 

There is little reason to believe that enrollment over the next six weeks will be as robust as the first.  In all likelihood enrollment will end up somewhere in the vicinity of 3 million and it must be kept in mind that all will not be from the pool of America’s uninsured as was intended.

All indications are that by the close of the 2015 enrollment period ObamaCare will have put a qualified healthcare plan in the hands of no more than 8 million of America’s long term uninsured.  That’s a far cry from the 13 million that insurers were expecting and based their due diligence of this experiment on.

And what happens next year?  The 2016 enrollment period was originally projected to move 11 million more of America’s uninsured on to the rolls of the insured, bringing the total to 24 million.  Fat chance of that happening, the Obama Administration will be lucky if 12 million uninsured Americans will have gain healthcare insurance through one of the exchanges by that time!

It would be hard to imagine that there are any more deals that the president can strike with the insurers to prevent them from significantly raising their rates come 20016, assuming they stick around at all.  And even if the president were able to pull off this small miracle, the safety net currently protecting insurers from losses expires on January 1, 2017 at which time insurers will simply pack their bags and walk away, knowing that the only way to become profitable again is by the removal of ObamaCare, be it through congressional repeal or the law failing on its own.