Obamacare Enrollment Has Tapped Out

Obamacare’s third open enrollment period ends in a few days. The White House insists that it’s been an unequivocal success.

According to Health and Human Services Secretary Sylvia Burwell, the exchanges have seen “unprecedented demand” for coverage and “steady progress signing up new customers.” Andy Slavitt, head of the Centers for Medicare and Medicaid Services, claims that over a million new people under the age of 35 have enrolled.

It’s all a lot of hot air. Enrollment in Obamacare’s exchanges is virtually stagnant, as both the young and the middle class have continued to spurn the overpriced plans on offer.

The Congressional Budget Office originally predicted that 21 million Americans would enroll in plans through Obamacare’s exchanges this year.

As of late January, enrollment nationwide was 11.5 million, with 2.7 million coming from state exchanges. The number of people who have signed up isn’t just below the CBO’s forecasts — it’s lower than the 11.7 million who had signed up by the end of open enrollment last year.

Federal officials are hoping for a last-minute surge. More than 1 million people signed up at the end of open enrollment in 2015.

But such a surge looks unlikely. Last week, the Obama administration announced that only about 200,000 people had enrolled through the federal exchange, HealthCare.gov, in January.

For the last two years, the White House has tried to boost these numbers with special enrollment periods. Americans who failed to enroll during the standard three-month window could sign up later under one of 30 “special enrollment” categories. The strategy worked. Twenty-five percent of Aetna’s business on the exchanges last year, for example, came outside the official enrollment process.

But federal officials recently promised to limit these special periods in the face of withering criticism from insurers that were losing money on them.

The exchanges have also failed to attract new customers. By the end of 2015,fewer than 3 million had signed up. That’s well below the 4.6 million who did so by the end of the previous open enrollment period.

Further, the exchanges have continued to prove unpopular with young people. Just 26 percent of enrollees were 18-34 years old as of late December. That’s below the 28 percent share from the year before — and far below the 40 percent threshold experts say is necessary to keep the exchanges solvent.

Absent premiums from young, relatively healthy individuals, the cost of exchange coverage skyrockets. When insurers requested double-digit premium increases for 2016, they cited the older and sicker makeup of the insurance pool as a contributing factor. Already, they’ve suffered huge expenses on the exchanges. UnitedHealth, the largest insurer in the United States, lost $720 million last year. No wonder the health carrier has said it may leave the exchanges in 2017.

Another round of rate shocks seems likely when insurers announce their 2017 rates this summer.

For middle-class families, premium hikes this year have only made a further mockery of the Affordable Care Act’s name. A typical family making 400 percent of the poverty level — the cutoff for Obamacare’s subsidies — must spend almost 10 percent of its income on insurance premiums, according to a new report from the Robert Wood Johnson Foundation. And that’s for a health plan that could still saddle them with thousands of dollars in out-of-pocket costs.

It’s no surprise, then, that the middle class is shunning Obamacare. The Mercatus Center at George Mason University reports that 64 percent of this year’s enrollees have incomes below 200 percent of the poverty line. Just 12 percent of enrollees make more than 300 percent — or $35,300 for an individual — a year.

Avalere Health recently analyzed last year’s enrollment class and noted a similar trend. The consulting firm concluded that the higher the income bracket, the lower the percentage of people who enrolled through HealthCare.gov.

For example, 76 percent of eligible people earning 100 to 150 percent of the poverty line — or $11,770 to $17,655 for individuals — signed up for coverage in 2015. Only 2 percent of those earning more than 400 percent of the poverty lined did the same.

These disappointing enrollment numbers come at a time when Obamacare’s tax penalty for failing to secure coverage is reaching new heights. Those who go without coverage this year will face a fine of either $695 fine or 2.5 percent of household income, whichever is greater.

In other words, Americans just aren’t interested in what Obamacare is selling.

Further, whatever the administration declares as the final enrollment tally will end up declining, as people who sign up fail to pay their first month’s premiums. The 11.7 million signups that the White House bragged about in March 2015 dwindled to just 9 million by December. This year’s drop-off is likely to be just as steep, especially if the White House lives up to its promise to limit sign-ups outside the standard open enrollment window.

The Obama administration will almost certainly tout this year’s enrollment period as a success. But if officials take a closer look at the numbers, they might just see how weak Obamacare’s exchanges really are.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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