The open enrollment period for Obamacares insurance exchanges drew to a close last Monday. Sort of. The administration had previously announced that folks who were unable to enroll by the deadline because of technical difficulties would have until April 15 to sign up. Thirteen of the 14 states with their own exchanges followed suit.
But a day after the official deadline, April Fools Day, the administration held what amounted to a victory celebration at the White House to gloat about exceeding its goal of seven million enrollees by hitting 7.1 million sign-ups.
At a press conference in the Rose Garden, President Obama boasted that the share of Americans with insurance is up, and the growth in the cost of insurance is down.
The seven million sign-ups seemed an unlikely success for the Obama Administration, following months of technical difficulties that made the federal exchange, HealthCare.gov, nearly inaccessible. The site was down for six hours the morning of March 31. Several state exchanges, including those in Maryland, Hawaii, New Mexico, and Oregon, have been even more dysfunctional.
But the administrations celebration is premature. A closer look at the enrollment figures shows that the exchanges havent expanded coverage or increased affordability to the degree the presidents team claims.
First off, the total number of sign-ups does not matter nearly as much as how many enrollees have actually paid their first premium. That initial payment activates their coverage. Without it, exchange enrollees dont actually have insurance.
The administration has not released comprehensive information on how many people have made these activating premium payments. But several independent investigators have.
Last week, the Blue Cross Blue Shield Association whose constituent insurers are active in nearly every state announced that 15 to 20 percent of its enrollees hadnt paid their first premium.
Another group of insurers reported something similar in March that one-fifth of people who had signed up had yet to pay their first premium. A separate analysis from the consultancy McKinsey & Company puts that figure even higher, at 47 percent.
Even more important than the number of enrollees or the number of paying customers is the composition of the exchange pool. The exchanges need a substantial number of younger, healthier patients paying premiums to offset the costs associated with covering older, sicker folks especially because premiums for older people are capped at three times what the young pay.
If the demographic mix isnt right that is, if there arent enough young enrollees to subsidize the costs posed by the old the exchanges could become insolvent. Insurers would have to raise premiums for everyone to avoid losses. That could cause people to drop their coverage.
If that cycle repeats, the exchanges will be in a death spiral, with premiums rapidly increasing and coverage rates declining.
The administration projected that itd need 40 percent of enrollees to be between the ages of 18 and 34 for the exchanges finances to work properly. But the non-partisan Kaiser Family Foundation estimates that just 25 percent of exchange customers are between 18 and 34 years old. Sixty-nine percent are 35 years of age and older.
Theres also mounting evidence that many of the seven million enrollees were not actually uninsured that they had insurance before signing up through the exchanges. McKinsey and Company found that seven out of ten of Obamacares new customers had health insurance before. Just 27 percent had been without.
The RAND Corporation indicates that less than 860,000 exchange enrollees both used to be uninsured and have paid at least their first months premium.
Thats well below expectations. The Congressional Budget Office predicted that nearly all exchange enrollees would be newly insured. And the agencys initial scorecard on Obamacare projected that it would reduce the total number of uninsured by two-fifths in 2014.
The actual number of uninsured has declined by 12.5 percent this year roughly one-third of what the CBO originally thought.
Meanwhile, of the nearly five million people who had their insurance policies cancelled because they did not meet Obamacares many mandates and restrictions on what counts as creditable coverage, nearly one million remain uninsured.
Its no wonder, then, that 45 percent of the uninsured report having an unfavorable view of Obamacare. For many of them, its made coverage more expensive and less accessible.
Even the bona fide newly insured are getting a raw deal. Yes, they have coverage. But its far from affordable. Deductibles and out-of-pocket expenses are both higher than promised. And middle-income enrollees who dont qualify for subsidies face significantly higher coverage costs.
During President Obamas widely heralded appearance with comedian Zach Galifianakis on the online comedy talk show Between Two Ferns last month the spear tip of his outreach campaign to youth he said viewers should be able to purchase exchange coverage for the cost of a phone bill.
Hardly. The average monthly premium for a silver plan the most popular kind is about $240 for a 30-year-old, according to the Kaiser Family Foundation. And if that 30-year-old makes as little as $33,000 a year, hell have to make those payments without the benefit of a federal subsidy.
The White House hasnt had many opportunities to pat itself on the back for Obamacare. Enrolling seven million people in coverage through the exchanges may seem like one of them. But a closer look at the numbers shows that its not.