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Washington Examiner


Many Find Insurance Isn't So Affordable Under The Affordable Care Act

January 17, 2014

By Paul Howard

President Obama and his supporters are touting the recent Obamacare enrollment numbers: 2.1 million people enrolled in private plans on state and federal marketplaces during the first half of open enrollment, which lasts until March 31.

Conservatives should resist the temptation to downplay these results since they’re significantly lower than initially projected. If hundreds of thousands of people with pre-existing conditions are buying coverage for the first time, that’s an unequivocal good. But it’s always been possible to spend more money on expanding coverage for high risk populations.

The broader question is whether Obamacare could create a viable individual insurance market attractive to young and old, healthy and sick. It’s the "Affordable Care Act" after all not just "more affordable for some people, but not others." The data, so far, shows we don’t have that kind of balanced market at least not yet.

The administration likes to tout how many people who bought coverage received subsidies (78 percent). But that can be a misleading teaser rate. For instance, according to government data released this week, 7.7 million people applied for coverage through completed applications but only 2.7 million were eligible to enroll and receive subsidies an overall eligibility rate of just 35 percent. Even if we just look at those found eligible to enroll on the exchanges, slightly more than 50 percent qualified for subsidies.

That shouldn’t matter, however, if the plans are more affordable (and higher quality) than plans available last year. There’s been much debate about that, but people "vote" with their wallets when they find value.

There, the news is equally daunting. Out of 2.1 million people with coverage, only 420,000 bought unsubsidized coverage. Since we know that 2.4 million people completed applications on the website and discovered that they weren’t eligible for financial assistance (but could still buy coverage) that means that only 17.5 percent of eligible enrollees opted to pay for coverage out of pocket.

In short, enrollment is heavily skewed toward subsidized coverage. And it’s likely even more heavily skewed towards low-income enrollees, because the gap between enrollees receiving subsidies (1.7million) and subsidy eligible applicants (2.7 million) means that 1 million people who are eligible for subsidies haven’t bothered to enroll yet. That’s nearly 4 in 10 people for whom the subsidy wasn’t big enough to get them to enroll.

Since we don’t know what percentage of each demographic group (i.e., 18- to 34-year-olds) was eligible for subsidies, or their health status, we can’t make generalized statements about impact of subsidies on enrollment by age.

But we clearly know two things from the new data: the pool is skewing older (only 24 percent of the exchange enrollees are 18-34, compared to 47 percent of the non-elderly adult uninsured population) and it is heavily subsidized (close to 80 percent).

One plausible hypothesis is that early enrollment is dominated by lower income and older or sicker enrollees with no subsidy. That translates into a more expensive risk pool for insurers and taxpayers alike.

Yet all the news isn’t bad. The administration could see a massive surge in enrollment before March 31 of young, healthy people, or of the more affluent uninsured facing the Obamacare tax. It’s just unlikely.

Even, if the numbers come up significantly let’s say they double or even triple between now and March 31 most enrollees could come from "churn" in coverage from people buying policies to replace ones that been canceled by Obamacare last year.

In short, the latest numbers suggest that for a lot of people, the exchanges aren’t turning out to be a compelling value meaning that for the last few months of open enrollment, the remaining customers are going to be the hardest sell.

Of course, if the insurance was more affordable for everyone, it wouldn’t be so hard to sell it.

Original Source:



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