Decoding Obamacare enrollment numbers

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by Dan Lucas

It can be very difficult to figure out what all the numbers mean as we sift through the news coming out about the Affordable Care Act (Obamacare) enrollment numbers.

To aid in understanding the numbers and to provide some context, here’s a high-level overview of the health insurance enrollment numbers.

US Health Insurance Coverage - 2012

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On Wednesday, the U.S. Department of Health and Human Services released the exchange enrollment numbers for October and November. So far 365,000 people have enrolled in the insurance exchanges. 44 of those are from Oregon.

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The Congressional Budget Office (CBO) projections show 7 million people enrolling in the insurance exchanges by the end of open enrollment on March 31, 2014.

So the numbers in the news these days1 are mainly referring to people who had individual health insurance, some people who had health insurance through small employers, and people who were uninsured – who were expected to sign up for health insurance through the new exchanges either because their old plans didn’t meet Obamacare standards or because they were uninsured.

Why have the exchanges? One of the primary goals of Obamacare is to reduce the number of Americans who don’t have health insurance. The CBO estimates Obamacare will reduce the number of uninsured by 25 million over ten years – leaving 31 million Americans uninsured instead of 56 million.

13 million of the 25 million uninsured will get coverage by expanding Medicaid – the government health care payment system for the poor.

The remaining 12 million of the 25 million uninsured are expected to get coverage through the insurance exchanges2.

The Medicaid expansion, as well as subsidies for the exchanges, will be paid for by a net $1.4 trillion in new federal spending over the next ten years.

What will happen if not enough people sign up for the exchanges? That will leave more Americans uninsured – failing one of the key goals of Obamacare. Additionally, it’s not just the number of people who sign up for the exchanges that matters – it’s the mix. Obamacare depends on getting large numbers of young, healthy Americans to sign up for the exchanges to put more people in the pool who pay more than they take out in health care expenses. It’s critical to keeping the exchange premiums affordable – if only people with big health care expenses sign up then the exchange premiums will be too expensive and fewer people will join – leaving more Americans uninsured. It won’t benefit people with pre-existing conditions if they can’t afford the insurance they now can’t be turned down for.

How do people who are losing their existing coverage factor in? About 4 million Americans found out this fall that their existing health insurance was being cancelled because it didn’t meet Obamacare standards. In reaction to the political pressure from the cancellations, President Obama announced that he wouldn’t be enforcing the law if state insurance commissioners and health insurers wanted to continue selling non-compliant plans for one more year. While the president’s “fix” may help his party by pushing the cancellations out past next year’s midterm elections, it puts the viability of the exchanges at risk. Forbes reports that the “CEO of America’s Health Insurance Plans, the trade group, was also cool to the President’s plan, because it would incentivize healthy people to stay in the old market, while sicker and older people sign up for the new exchanges. This will exacerbate the problem of adverse selection, in which sicker people enroll early on, driving up the average health-care consumption per enrollee and thereby the cost of coverage.

Harvard economist David Cutler, one of the architects of the law, expressed similar concerns. ‘If it turns out to be a delay of a year, we can work through that. If it becomes a permanent situation that people who are healthier stay away and people who are sicker go into the exchanges, that becomes a very big problem. That could be the beginning of a death spiral. That is, you could have a situation where people in the exchanges are very unhealthy people with high premiums.'”

Our neighbors in Washington State experienced a death spiral in the 1990s – a collapse of their individual insurance market when they implemented similar health insurance reforms.

Interestingly, one of the big Democratic players in pushing the reforms through (when Democrats controlled both legislative chambers and the Governorship in Washington) said in 2012 that “A fundamental lesson we learned in the process—and that unfortunately was not learned in the federal process—is that health care is so big, so complex, so passionate, that it has got to have bipartisan support.”

To read more from Dan, visit www.dan-lucas.com

1 The numbers from the Kaiser Family Foundation (KFF) vary from the CBO numbers in part because the CBO numbers only include “nonelderly people,” and they are categorized a little differently. For example, KFF shows 51 million people on Medicaid / CHIP in 2012, but the CBO shows 35 million “nonelderly people” on Medicaid / CHIP in 2013 – yet on their web site, when they’re not only talking about “nonelderly people”, the CBO says “On average during the year, Medicaid covered about 54 million people; and CHIP, an additional 5 million.”

2An additional 12 million Americans are projected to shift from employer-based and individual coverage to the insurance exchanges – bringing the total number of insured through the insurance exchanges to 24 million in ten years.

 

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Posted by at 12:17 | Posted in Health Care Reform, Obamacare | 57 Comments |Email This Post Email This Post |Print This Post Print This Post
  • OregonEngineer

    This is exactly the outcome of crony capitalism, mercantilism, Fascism econimics (look it up if you don’t know how fascism works for economies). All of the above abhor free markets. For a look at what a free market might mean in medical here is one article,
    http://mises.org/daily/6608/Why-Are-Obamacare-Exchange-Policies-So-Bad
    As of today we have not seen a free market for as long as most of us have been alive. A free market would entail removing all regulations regarding insurance companies, removing all protected territories for insurance companies (check out the Oregon regulations) and the insurance policy as a contract between the individual and insurance provider, or better yet no insurance and the market is between you and the doctor/hospital.

    There was a time even as late as the 1960s (ancient history to a lot of readers) when most people did not have medical insurance or if they did it was a catastrophic policy.

    • DavidAppell

      Funny. But so-called “free markets” have never provided inexpensive, universal health care, anywhere in the world.

      And for good reason: The advantages of a free market system do not apply to health care, because
      (1) you cannot predict when you will need care
      (2) what care you will need
      (3) you usually can’t comparison shop.

      Buying health care is not like buying bread. Thus, you need an insurance system. And private insurance systems demand
      a profit, and a large administrative staff to analyze and deny claims (NOT paying for care is, after all, how they make money). Private insurers refuse to insure those they think will be too expensive, and will drop clients who have become too expensive.

      This was pointed out long ago:

      “Uncertainty and the Welfare Economics of Medical Care,” Kenneth J. Arrow, The American Economic Review, Vol. LIII n 5 (Dec 1963)
      http://www.aeaweb.org/aer/top20/53.5.941-973.pdf

      For a synopsis you can read:

      “Why markets can’t cure healthcare,” Paul Krugman, New York Times, July 25, 2009.

      “Patients are not Consumers,” Paul Krugman, New York Times, April 21 2011.

  • Bob Clark

    I should think the Affordable Care Act might be fixable when one day the GOP takes back the reins of power, as political cycles tend to do from time to time. The GOP guts the mandates, broadens the companies and entities offering plans, and offers the federal health exchanges to all citizens regardless of state designs (allow buying of medical coverage across state lines). As for subsidized healthcare, the GOP employs caseworkers through non-profit vendors who actually have a moral affinity to the work ethic, and the caseworkers dog each case to ensure those who can, work to provide for their own necessities.

    It’s old school but promises of free goods usually lead to a Detroit or Greek type social chaotic moment.

    • DavidAppell

      I love your wording — the ACA fixed by the GOP — indicating you finally know it isn’t going away and we aren’t going back to a time when many people were locked out of obtaining health insurance.

      But allowing the purchase of health insurance across state lines would be a disaster, doing for health insurance what a similar law did for credit cards — allow corporations to get extremely favorable terms by bribing whatever state legislature is most bribable.

      Do you want your own representatives to be the ones making decisions about the parameters of your health insurance policy, or representatives in Delaware or North Dakota that you didn’t elect and can’t vote against?

      • .

        Appell, you’re a sic wannabe socialist who’d be better sounding off in some nerd world for pinheads like Kim Jong-un dicktaterhead.

        • DavidAppell

          I believe you have you ideologies confuused — Kim Jong-un is a communist, not a socialist. And also a totalitarian and dictator.

          Back to Poly Sci 101 for you!

          • .

            Denise Rodman loves your poots, too!

  • Dorene

    at 14K a pop couldn’t we have just given them all an HSA and been done with it?
    Fools and idiots make up Washington now.
    Sadly

  • Karol

    I was able to get mine for free after visiting the office and working directly with the nice people. So, I say, it works!!!

    • fffffffff…..

      Only for social parasites.

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