Health Care

Seven Unanswered Questions About Obamacare


Norma Licciardello signs up to a health insurance plan in Miami on  March 31

Photograph by Joe Raedle/Getty Images

Norma Licciardello signs up to a health insurance plan in Miami on March 31

UPDATED |More than 7 million Americans signed up for health plans on healthcare.gov and the state-run Obamacare marketplaces before the deadline at midnight on March 31. That tally—which stood at 6 million just five days ago—was boosted by an 11th-hour surge that strained the website’s capacity. But focusing so intently on the enrollment number makes us all a bit like the proverbial drunk looking for keys under the streetlamp. The real measures of the Affordable Care Act’s success will be found in the darkness of murkier indicators, not under the bright light of the headline total. In some cases we won’t learn the answers for months.

Here are seven unanswered questions about Obamacare:

1. How many new enrollees lacked insurance before? Not every buyer on healthcare.gov and the state-run exchanges was previously uninsured. The total tally sweeps in people who bought private health plans in the past, including many who had their earlier coverage canceled. Gallup surveys show that the rate of Americans without health insurance has dropped since the middle of last year, and a McKinsey survey from February suggests that just over a quarter of the people who bought new health plans for 2014 were previously uninsured.

2. How many of people with new insurance coverage will pay their premiums? People who select plans on healthcare.gov or the state exchanges but don’t pay for them won’t get insurance. Health and Human Services Secretary Kathleen Sebelius said on Monday that from 80 percent to 90 percent have paid so far, according to insurance companies. That would knock the 6 million enrolled through March 27 down to the neighborhood of 4.8 million to 5.4 million paying customers. Whatever the final exchange enrollment number is, expect it to be reduced by the number of people who signed up but didn’t follow through with payment.

3. How many new Medicaid enrollees are freshly eligible? We have the same questions about enrollment in Medicaid, the state-run, federally funded insurance program for the poor that was expanded under Obamacare. The government says 8.9 million people were determined eligible for Medicaid (or the Children’s Health Insurance Program) from October through the end of January. We don’t know how many of them are people who would have had no insurance without the ACA, how many were already on Medicaid, and how many were eligible for the program but hadn’t yet enrolled.

4. How many people are buying coverage off the exchanges? People who aren’t eligible for government subsidies—those earning above $46,000, for an individual, or $94,000, for a family of four—can buy their coverage anywhere from a broker, though online portals, or directly from insurance companies. Given how shoddy some of the government-run insurance marketplaces turned out to be, we can expect that many people bypassed them. These sign-ups don’t register in the White House’s tally. It’s hard to get a good read on these numbers. EHealth (EHTH), an online brokerage, shows that people enrolling off the exchanges bought less-expensive plans as the March 31 deadline approached, suggesting that the most price-sensitive buyers may have waited until the last minute.

5. How many young invincibles signed up? The Obama administration spent March courting twentysomethings. Getting generally young and healthy people signed up is important to keep premiums in check because this cohort subsidizes people who need more medical care. People aged from 18 to 34 represent 40 percent of the potential market, according to a Kaiser Family Foundation analysis. But only about a quarter of enrollees on the exchanges through March 1 were in this age group, according to the administration’s most recent detailed update (PDF). Even at that rate, Kaiser estimates the effect on premiums to be modest. But the national age mix doesn’t matter as much as it does in each state; if sign-ups in certain states skew older, premiums could rise substantially in those markets.

6. Will more insurers sell policies on the exchanges? Many insurers took a wait-and-see approach in the first year of Obamacare enrollment, leaving some local markets with little competition. Watch whether this gets better or worse in year two. If more insurance companies offer plans in the exchanges, consumer choice will expand and premiums will be repressed. That would be a sign that insurers see the exchanges as an attractive market for which they have to compete. If, on the other hand, insurers flee the marketplaces, it probably means that the risk pool is worse than they expected; it could restrict choices and drive up costs for people shopping in a given exchange.

7. What will premiums look like in the next two years? Insurance companies are now preparing to file their premiums for 2015 plans, which state regulators review in the spring and summer. They’re flying blind in many ways because the market rules completely changed in 2014. They won’t have a full year of data on medical claims for their newly insured population until this time next year. So while what happens to premiums in 2015 is important, the rates for the following year will be a much better measure of how accurately the companies predicted their customers’ medical costs. Stable or moderately rising premiums (in line with rising prices for medical care) would broadly indicate success. A sharp jump in insurance costs would mean that they wound up with an unbalanced risk pool—that is, that people required more medical care than the companies anticipated—and insurers needed to hike premiums to compensate.

We won’t know for a year. Until then, we’ll keep seeking our keys under the lamp.

Updated April 1 at 4:45PM with new numbers on health-insurance enrollments from the White House.

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

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