Obamacare enrollment falls far short of expectations
12.7 M signed up, more than 7M below last year’s projection
The number of people who signed up for health insurance for 2016 on the state and federal exchanges was up to 40% lower than government and private estimates, which some say is evidence that the plans are too expensive and that people would rather pay a penalty than buy them.
In 2010, the non- partisan Rand Corp. estimated 27 million people would have exchange policies this year and the Congressional Budget Office estimated 21 million for 2016. The CBO said last June that 20 million people would have plans purchased on the exchanges this year. However, 12.7 million signed up for plans by the end of open enrollment Jan. 31, and about 1 million people are likely to drop their plans — or be dropped when they don’t pay their premiums.
“That’s not the only mistake CBO made, but it was a really big one,” says Brian Blase, a former aide to the Senate Republican Policy Committee, who is a senior research fellow at the free- market Mercatus Center, which is funded in part by Charles and David Koch, two industrialists who have long opposed the Affordable Care Act.
Last week, Health and Human Services Secretary Sylvia Burwell called the enrollment numbers “a success” on track to beat her lowered projection that 10 million people will have paid- for plans at the end of 2016.
The law has led to a drop in the uninsured rate to about 12%, down more than 5% since the requirement that people have health insurance took effect in early 2014, according to Gallup. Along with the nearly 13 million who bought plans on the government exchanges, it’s unclear how many millions of people are buying individual policies through insurance brokers and companies.
Both supporters and critics of the law agree that the exchanges need a better balance of low- and higher- income people buying insurance as insurers set their rates based on who they expect will purchase plans. If there are more unhealthy people, rates go up, and lowerincome people tend to have more health problems. Higher- income people tend to already be insured.
The two sides agree the plans have proved too expensive for many people who make more than 400% of the federal poverty limit ($ 97,000 for a family of four), making them ineligible for subsidies and tax credits to help pay for their insurance. The Centers for Medicare and Medicaid Services reported last month that just 3% of those buying plans on the federal and state exchanges earned more than this amount. The Urban Institute, a non- profit research group that works for state and federal governments, as well as foundations, estimated last year that 25% of exchange customers would earn more than 400% of the poverty limit.
The CBO expected a lotmore employers to drop their plans and send workers to the exchanges for their coverage, says Katherine Hempstead, director of the insurance coverage team at the Robert Wood Johnson Foundation. That hasn’t happened.
The CBO also thought more people who didn’t get subsidies would still buy on the exchanges, but several million probably buy direct from insurers or brokers. Though that affects the overall enrollment numbers for the exchanges, Hempstead says, it also means these people are still getting better plans with the ACA’s protections, including a prohibition against discriminating against people with pre- existing conditions.
Critics say sign- ups were slower than expected because having insurance may not be as important to people as the administration thought it would be, given other financial needs. It’s often cheaper to pay the penalty and pay cash for health care, insurance brokers say. That’s unless people are eligible for subsidized coverage.
Young, healthy people don’t feel like they should have to pay for benefits the plans have to cover, such as mental health and maternity care, says Sam Gibbs, executive director of Agile Health-Insurance. com, a private insurance exchange.
Nearly half of the firm’s clients are in this bracket and purchased insurance plans that don’t meet ACA requirements but will protect them in the event of a serious injury or illness. They will pay the tax penalty and still save money, Gibbs says.
Donald Kirkendall, an insurance broker in Orlando, paid $ 247 a month for a Cigna plan two years ago, but after that premium increased, he switched to an Aetna plan that got canceled because it didn’t comply with the ACA. The Humana plan he switched to just increased to $ 697 a month. “Who can afford that?” he asks. “And I do this for a living.”
In Alaska, where the number of insurers just went from two to one, insurance broker Trish Mack says she has had at least a dozen clients who weren’t eligible for subsidies come in to enroll in insurance but decide to pay the penalty instead.
The CMS has made some changes to address insurers’ concerns, most notably by reducing the number of special enrollment periods when people can sign up for plans.
Insurers have complained they wound up with too many sick people because the administration allowed too many people to sign up during the year — and some waited until they were sick and dropped coverage later.