ACA Party Poopers: The Uninsured
What if most of the uninsured literally don’t buy Obamacare?
“Only 11% of consumers who bought new coverage under the law were previously uninsured,” according to a survey of 4,563 consumers eligible for the health insurance exchanges done by McKinsey & Company and reported in the Wall Street Journal.
The Journal reports that “insurers, brokers, and consultants estimate at least two-thirds” of the 2.2 million people who have so far signed up in the new exchanges are coming from those who already had coverage.
This is consistent with anecdotal reports from insurers I have talked to that are seeing very little net growth in their overall individual and small group markets as of Jan. 1.
That’s even worse than I thought it would be, even considering the Jan. 1 individual policy cancellations and small group renewals that are driving employers to reconsider offering coverage––and that is saying something.
This also tells us why the first three months of the Obamacare enrollment had a relatively high average age––they came from the same market that tended to skew older that the health plans already covered.
When McKinsey asked why subsidy eligible people weren’t buying, 52% cited affordability as the reason. I’m not shocked to hear that given what I have been writing about the high after-tax premiums, net of the subsidies, people are finding, as well as the high deductibles and narrow provider networks the subsidized Silver and lowest cost Bronze exchange plans are offering people.
Another 30% cited “technical challenges” with the website as reasons they have not yet bought. That said, enrollment in the state exchanges that have generally been running well––California, Washington state, New York, Connecticut, Kentucky, and Colorado are also only enrolling a very small number of people relative to the number of policy cancellations in their markets and the size of their uninsured population.
At Michigan’s Priority Health about 25% of their new exchange customers came over from employer coverage and 50% from the individual market––leaving only 25% to come from the ranks of the uninsured.
I will suggest that the significant number of the new enrollees coming over from discontinued employer coverage should be troubling to Democratic politicians who support the Affordable Care Act. While low paid workers might fare better in the exchanges, many of those eligible for federal subsidies, particularly in two-income families, will fare far worse compared to the plan their employer offered them.
Creating a circumstance that forces people to lose their employer coverage is not going to be a political win.
If this keeps up there won’t be a “death spiral.” So far the insurers are primarily re-enrolling their old customers at higher rates.
In addition, many of the 2.2 million exchange enrollees have not yet paid their premiums. The carriers I talked to at the end of last week report that anywhere from a low of 70% to a high of 85% of new enrollees have paid so far. Some of the health plans have closed their books on January and some are willing to take premium until the end of the month. It would appear there will be an overall 10% to 20% final attrition rate due to non-payment of premium.
However many finally pay, so far it is clear that the uninsured just aren’t buying Obamacare.
The Obama administration will now argue they had lots of computer problems between October and January and there are three months remaining to get people interested in and purchasing health insurance.
They are right.
But when the spin is over, they must be sweating bullets.
Robert Laszewski is the president of Health Policy and Strategy Associates in Alexandria, Va.
