ObamaCare Enrollment Week 9 and a Closer Look at Reporting

ObamaCare enters its final month of open enrollment coming off a week 9 high note.

After a bit of a roller coaster ride through the first 6 weeks, it was anticipated that the second half of the 2015 open enrollment period would remain relatively flat having gone through the renewal and unpredictable holiday periods.  The last two reported weeks however, has shown an unforeseen climb in enrollment, especially week 9 where HHS reported that 400,253 individuals had selected plans, almost 2 ½ times that of the previous week.

Here is what HHS has reported 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
Week 8  -  163,050* plans selected
Week 9  -  400,253* plans selected
* No distinction between new enrollment and renewals provided

The first 5 weeks of enrollment was a mixed bag of new and returning customers with the bulk of renewals taking place during week 5.  Beyond week 5, HHS has assumed all plans selected to be new consumers.

How Many “New Consumers” Have Purchased A HealthCare Plan?

 
The toughest question to answer is exactly how many individuals have selected, paid for and maintained health insurance through the state and federal healthcare exchanges.
As it is the goal of ObamaCare to empower 24 million of America’s long term uninsured with a qualified healthcare plan, one would think that the administration would be willing and eager to share the enrollment successes of their new healthcare law.  However, this has never been the case and the exact number of uninsured that have obtained a healthcare plan through one of the state and federal healthcare exchanges remains as elusive as the answer to the question: Where is D. B. Cooper?  And so, we are forced to make a number of educated assumptions in order to derive a “best estimate” as to how many of America’s uninsured have obtained a qualified healthcare plan, through one of the state and federal exchanges during the 2015 open enrollment period.

After nine weeks of open enrollment, HHS reports that 2.62 million new consumers {see new enrollment figures above} have selected a healthcare plan on the federally managed healthcare exchange.  The key word here is “selected”, as many never complete their insurance transaction or cancel their plans in the opening months of the year.  In 2014 the enrollment attrition rate was 17% and many experts predict that it will be much higher for 2015 however, for these estimations, we will stick with numbers we can support and follow suite with 2014.  And after accounting for attrition, the 9 week adjusted enrollment, through the federally managed healthcare exchange, comes in at 2.17 million.

As the states that manage their own marketplaces do not report enrollment to HHS in a timely manner, the next step in understanding how many uninsured have purchased a healthcare plan this open enrollment period is to estimate that enrollment.

Two factors were taken into account in the estimation process, the first being the difference in the percentage of the uninsured in the effected states as compared to the states participating on the federal marketplace {3.5% lower} and the difference in cumulative state population in the federal and state marketplaces {68% and 32% respectively}.  From this we are able to derive that .99 million new consumers are estimated to have enrolled through the 14 states that operate their own marketplaces, over the same period.

This brings the total new consumer enrollment for the first 9 weeks to 3.16 million.  And to take the enrollment estimate one final step, using a simple weekly average of the first 9 weeks, the 13 week long open enrollment period is estimated to yield somewhere in the neighborhood of 4.56 million new consumers obtaining a qualified healthcare plan in 2015, barring any major upsets in enrollment of course.

But don’t get too excited over this promising enrollment figure just yet as there is a major caveat to the “new consumer” enrollment!

What Makes a “New Consumer”

Leave it to HHS to find yet another way to prevent having to disclose how many uninsured individuals actually purchased a qualified healthcare plan through one of the state and federal healthcare insurance exchanges.

For the first 5 weeks of the 2015 open enrollment period, HHS classified those selecting a healthcare plan through the federally managed marketplace as either new consumers or consumers renewing coverage.  HHS’s differentiation between the two was simple; if a consumer’s name was listed on the federal exchange database as having been insured through the federal exchange in 2014 they were recognized and counted as a renewal.  All other consumers selecting plans on the federal exchange, regardless of their origin or their insured or uninsured status, were bundled together as new consumers.

In our quest to determine the reduction in the uninsured during the 2015 open enrollment period, the next logic question to answer is exactly how many of the estimated 4.56 million new consumers were already insured?



Which “New Consumers” Where Already Insured?

In the exercise of determining those new consumes who were already insured, the first step was to brainstorm all the potential sources that would cause an insured individual to transfer to the federally managed marketplace such as insurance policy cancelations, late renewals and relocation from a state which facilitated their own insurance marketplace.  Once that evolution was complete, the task of quantifying the number of the insured each source brought to the federal marketplace took place.  Here are the results of that exercise:

·         Employer HealthCare Cancellations  -  A Health Benefits Survey conducted by the Society for Human Recourse Management reported that 1% of the 96.4 million employer provided healthcare plans will be canceled in 2015.

964,000 employer cancelations (does not include family members)

 

·         Private Policy Cancelations  -  13 states sent out a second round of cancelations notices near the end of last year.  A quick internet search revealed 348,915 cancelations covering insurers in 9 different states.  The actual number of cancelations is likely well in excess of one half million as not all states nor do all insurers publically report cancelations.

348,915 individual cancelations

 

·         State Exchange Closures  -  The states of Oregon, Nevada and New Mexico have all terminated individual enrollments on their state facilitated healthcare exchanges.  The 2014 enrollees from these states, which numbers 70,000; 33,000 and 34,000 respectively, have been directed to and are expected to reenroll through the federal exchange.

137,000 transfers from closed state exchanges

 

·         Late Renewals  - There were an estimated 6.4 million renewals made between the state and federal healthcare exchange during the first 5 weeks of the 2015 open enrollment, the period in which renewals were being reported.  This would indicate a 300,000 shortfall in renewals.  However, there are a number of factors that may account for some or the entire shortfall which will be address in a moment.

Potential shortfall of 300,000
  

·         Off Exchange Transfers  -  Increasing insurance premiums and decreasing wages could drive some individuals to the state and federal healthcare exchanges so as to take advantage of the tax subsidies offered there.  If in fact this is happening it must be at a very small scale as no major studies or reports seem to have been issued that would quantify this phenomenon.

 

·         Relocation Transfers  -  People move from state to state all the time and as long as they do so without changing their insured/uninsured status, doing so has a net zero effect on the nation’s uninsured rate.  Moving from a state that manages its own healthcare exchange to a state which utilized the federally managed exchange does however affect the new consumer statistic.

As shown here, at the very least, 1.4 million and maybe as many as 2 million of the estimated 4.56 million new consumers were insured prior to the start of the 2015 enrollment period.  This brings the estimated number of uninsured that will have purchased a healthcare plan someplace between 2.56 and 3.16 million.

Taking a Look at Renewals

The renewal target for 2015?  6.7 million, the number of individual who purchased, paid for and maintained a qualified healthcare plan in 2014 through one of the state and federal healthcare exchanges.

Prior to the December 15th renewal deadline, just over 4.5 million customers had their healthcare plans auto-renewed or returned to the federally managed healthcare exchange to manually renew their healthcare plan, as reported by HHS.  Add to that the estimated renewals through the states exchanges and the nation’s renewal count is in the vicinity of 6.4 million, approximately 300,000 short of the target.

The estimated 4.5% shortfall in renewals may or may not be significant.  The shortfall could be attributed to estimation error, late renewals, attrition or any combination of each which is most likely the case.

We’re in the Home Stretch

Throughout the open enrollment period, there has been a deafening silence coming from HHS as well as the news media.  Maybe a lesson learned from last year or maybe the administration is simply trying to keep the attention away from the fact that they had to cautiously lower the enrollment goal by two thirds to thwart off the appearance of enrollment failure.

With 9 weeks of federal marketplace enrollment reported, all indications are that the administration will in fact reach that lowered goal of 2 million however, doing so will be a shallow victory and still spells significant trouble for the healthcare law going forward. 

Aside from unsustainably low enrollment, adverse selection still remains a major hurdle to get over.  Without a drastic improvement over the 28% millennial participation that was realized in last year’s enrollment {the target is 38-40%}, it will be impossible for insurers to offset the higher cost of insuring the pool of much older and less healthy individuals. 

For now, insurer’s losses, which are being created by their holding rates down in an effort to attract new customers, are covered through the law’s risk corridor provision.  But this provision expires at the end of 2016 and unless enrollment and adverse selection both improve significantly, insurers will have little choice but to drastically increase insurance rates or end their participation on the healthcare exchanges which of course means sure death of the President’s signature healthcare law.  Nothing short of an enrollment miracle can change this.

So we standby and wait.  The open enrollment period will close on February 15^th and within a month we should learn the final enrollment tally, at which time a massive fight will be re-ignited between proponents and opponents of ObamaCare.