ObamaCare Enrollment Week 7 – The Lowered Goal Has Been Met

Week 7 marked the passage of the halfway point for the ObamaCare 2015 open enrollment period and it came and went without fanfare.

The Department of Health and Human Services (HHS) reported that between the dates of December 27, 2014 through January 2, 2015, 102,896 plans were selected, through the federal healthcare exchange.  This should easily push the number of new customers beyond the administration’s revised goal of 2 million as we head into the second half of the open enrollment period. 

The goalposts were lowered in a move by the Obama Administration to thwart off the possibility of repeating the embarrassing 2014 enrollment failure.  Lowering the goal by a full two thirds grossly underestimates enrollment and is working out exactly as the administration had hoped.  


They Have Met Their Goal But Not Really

Just half way through the open enrollment period and HHS looks to have met their round 2 revised enrollment goal of putting a qualified healthcare plan in the hands of 2 million uninsured Americans.  But there is little to celebrate as lowering the goal has no effect on the measurement of success of the law itself.  Insurers are still looking to add in the vicinity of 24 million new customers to their Christmas Card list by 2017, as promised to them, and cannot be all too happy with enrollment as we head into the second year of ObamaCare.

Taking a quick look back on how the law was developed, private insurance companies were enticed to participate in the grand experiment with the promise of millions of new customers.  The goal was to progressively reduce the number of America’s uninsured by 24 million through the purchase of healthcare plans provided by private insurers.  These insurance plans would be offered to customer through a federally managed marketplace (FMM) also referred to as healthcare insurance exchanges. 

Through a complex modeling process, the Congressional Budget Office (CBO) projected that for years 2014 through 2017 the number of uninsured nonelderly that would purchase healthcare insurance through the FMM to be 7 million; 6 million; 9 million and 2 million respectively.  These figures were critical in the determination of the rates which insurers would offer on the FMM.

But the CBO projections were speculative and therefore inject uncertainty which created a risk insurers were not willing to take.  The solution, provide insurers a safety net that would protect them from losses due to low enrollment and other unknown factors during the initial years of the new program.  Conversely, if enrollment surpassed projection or profits are excessive, the same safety net would have insurers paying back excessive profits to the federal government.  The safety net for insurers runs through the end of 2016 after which time it is expected that the marketplace would be settled.

Where the problem lies is come 2017, if a sizable shortfall in enrollment exists, insurers will be forced to drastically increase their rates or end their participation on the FMM.  Either way, it spells death for ObamaCare.


How Is Enrollment Stacking Up

HHS has been fairly punctual and somewhat forthcoming in their release of enrollment figures but there still remains a number of caveats that prevent the nailing down of any exact enrollment figure.  Some assumption must be made and of course, whenever we wade into the waters of assumption it inevitably creates a degree of uncertainty and for some, injects enough doubt to discredit the conclusion.  The shortcomings of enrollment are significant enough however, that erring the uncertainties on the side of caution has absolutely no affected on the conclusion so we are safe.

Here is what HHS has reported for enrollment so far:

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  -  94,446* plans selected
Week 7  -  102,896* plans selected
* No distinction between new enrollment and renewals provided

The first caveat in HHS’s reporting should be pretty obvious.  In weeks 6 and 7 HHS no longer made the distinction between new enrollments and renewals.  The explanation given by HHS is that the auto-renewal deadline passed therefore there was no longer the need to make this distinction.  For all practical purposes this is true, the number of late renewals will be so few from this point forward that they will not influence the conclusions drawn on the success of failure of enrollment.  From week 6 forward we will assume all enrollments to be new.

The total number of new enrollments reported for the first 7 weeks total 2,055,029 which brings us to the second caveat.  The figures reported by HHS represent only those plans selected on the federal healthcare exchange.  As the states not participating on the federal exchange make up for approximately 27% of the nation’s enrollment, increasing the federal figure by that amount brings the number of selected plans to 2,609,887.

Last, a correction for attrition is needed.  As has been used in previous weeks, applying the 2014 attrition rate of 17% arrives us at 2,166,206 plans selected and paid for at the end of week 7.

And the one final caveat, “new” consumers.

 
‘NEW’ Remains a Mystery

A twist to 2015 enrollment is the introduction of the term “new” .

HHS has assigned enrollment to one of two categories, new consumers and consumes renewing coverage.  The latter is simple enough, any consumer who is renewing the coverage they obtained through the FMM last year is considered a renewal.  Being a new consumer is not near as simple however.

In the context of open enrollment, many might interpret the meaning of being a new consumer as an uninsured individual new to the insurance marketplace but this is not the case.  As described by HHS, a new consumer is anyone new to having previously purchased a qualified healthcare plan through the federal exchange.  In a nut shell, new consumer means only that they are new to the federal exchange and has nothing to do with their previous insured or uninsured status.  This is the final enrollment caveat.

A new consumer on the FMM could in fact be a formerly uninsured individual seeking out healthcare coverage for the first time and likely the majority that are defined as such by HHS fall in this catagory.  However, a new consumer could also be an individual who transfers over from the private marketplace so as to take advantage of tax subsidies which are only offered through the state and federal exchanges.  A new consumer could also be an individual who purchased a healthcare plan through their state exchange last year and since has relocated to a state which utilized the federal exchange instead or, as in the case of consumers from the states of Oregon and Nevada, could be one of the 100,000 consumers who have had to transfer over to the federal exchange after their state exchange was abandon.  There are also a number of individuals who have transferred off of employer provided insurance plans and on to the FMM, they too would be considered a new consumer.  And last, a new consumer could be an individual whose income situation improved over the past year and was transferred off of Medicaid and on to the federal exchange.

As you can see, there are a large number of individuals that fall under the classification of a new consumer in the HHS enrollment count that do not affect the reduction in the number of uninsured in this country.  Currently HHS offers no way to differentiate who of its new consumers were previously insured and who were not.  This will without a doubt raise questions and create new controversy over enrollment claims that will be made by the Obama Administration at the end of the open enrollment period.

For the sake of this and previous weeks enrollment evaluations made by My POV, we will again err to the side of caution and assume all new consumers enrollment figures, provided by HHS, to be enrollments by the formerly uninsured.  This will skew the number in favor of the healthcare law and removes any question of bias in the evaluation.


What We Can Expect from Here On Out

It does not appear that we will be seeing great things coming from this latest round of enrollments and after the Obama Administration lower their expectations by two thirds, why would anyone expect there to be.

Enrollment is likely to remain flat for the remaining 6 weeks of the open enrollment period with each week producing enrollment figures similar to what was experienced in week 7.  If this turns out to be the case, there would be another 600,000 to 700,000 new customers added which would push enrollment to just shy of the 3 million mark.  There may also be a number of procrastinators that will flock to the exchanges at the very last moment so as to avoid having to pay the tax penalty.  If this were to happen, enrollment could possibly be pushed over 3 million.  Of course, removing the number of new consumers who were previously insured from the mix will drive the enrollment figure back down but how far nobody knows and there is little optimism in believing that HHS will make this figure public, at least not without coercion.

 One last important factor, which is new to this and all future enrollment periods, is retention.  It will be interesting to learn the retention rate of those who purchased a healthcare insurance plan through one of the state and federal healthcare insurance exchanges last year. 

With the knowledge of last year’s less than stellar enrollment outcome, insurers reassess their plan costs and stood poised to significantly increase premiums for 2015.  Fearing this would create a renewed pushback from Republican and even some disgruntled Democrat lawmakers, President Obama was successful in his plea to the insurers to hold their premium increases down to a minimum.  However, those increases did not vanish in to thin air and instead were shifted to policy deductibles and co-payments which have skyrocketed.   How this will affect returning customers we will not know until HHS releases this information, assuming they ever will. 

There is little to compel HHS to release enrollment retention rate figures, especially if they do not bode well for the troubled healthcare law and failing to do so adds yet another layer to the unknown that surrounds the ever growing ObamaCare enrollment mystery.