MYTH: Enrollment Of Previously Uninsured Insufficient To Make Health Law Work

The Columbus Dispatch: ACA Isn't Enrolling Enough Youth Or Previously Uninsured. The Columbus Dispatch claimed the ACA was failing to enroll the target demographic of the health care reform, those who werepreviously uninsured:

The Affordable Care Act has unleashed upon the American people an avalanche of regulations, booted people off insurance plans they were promised they could keep, killed jobs, raised costs and generated turmoil in an industry that accounts for a sixth of the nation's economy.

And so far, it has largely failed to do the very thing it was set up for: to insure the uninsured. [The Columbus Dispatch, 3/14/14]

FACT: Uninsured Expected To Sign Up Later Than Previously Insured

Kaiser Family Foundation VP: “Early Enrollment Skewed Towards The Already Insured.” According to Larry Levitt, VP of the Kaiser Family Foundation, people who were previously uninsured will likely sign up later, after those whose plans were discontinued or those whose preexisting conditions forced them out of the insurance market:

“There's every reason to believe that early enrollment skewed towards the already insured and that the uninsured will sign up later,” Larry Levitt, vice president at the Kaiser Family Foundation, a non-partisan organization, told TPM. “People who were insured and had their old non-compliant policies cancelled were no doubt first in line in the new marketplaces, along with some people with pre-existing conditions who were locked out of the market before.” [Talking Points Memo, 3/7/14]

TPM: Insurance Trend “Seems To Suggest That The Uninsured Are Starting To Flock Toward The Law.” As Talking Points Memo reported, a survey by consulting firm McKinsey & Company found that 27 percent of people who signed up for health insurance in February were previously uninsured, up from an average of 11 percent from October to January. TPM commented that the finding “seems to suggest that the uninsured are starting to flock toward the law”:

A new survey has found that 27 percent of people who signed up for coverage in February were previously uninsured.

On its face, that finding -- from McKinsey and Company, a national consulting firm -- might sound like bad news for the law and the White House. The broader trend, however, seems to suggest that the uninsured are starting to flock toward the law.

The average percentage of uninsured enrollees had been 11 percent from October to January, according to the firm, so 27 percent is a significant jump. That makes sense, health policy experts say. People who already had coverage likely didn't wait to sign up; they're used to being insured and they wouldn't want their coverage to lapse.

But for uninsured people, being insured isn't the status quo, so they might take more time to enroll. Their deadline is March 31. [Talking Points Memo, 3/7/14]

McKinsey & Company: 65 Percent Of Those Who Plan To Sign Up By March 31 Are Previously Uninsured. A survey by McKinsey & Company's Center for U.S. Health System Reform found that 65 percent of people who said they plan to enroll by the March 31 deadline are currently uninsured. [McKinsey & Company, 3/6/14]

MYTH: McKinsey Study Proves Previously Uninsured Aren't Signing Up In Large Numbers

Columbus Dispatch: Only Small Percentage Of Those Signing Up Were Previously Uninsured. A Columbus Dispatch editorial cited a Forbes op-ed by Manhattan Institute senior fellow Avik Roy in which he claimed that the McKinsey survey showed that the main goal of the law -- providing insurance to those who were previously uninsured -- is failing:

In a March 8 op-ed for Forbes, Avik Roy, a senior fellow at the conservative Manhattan Institute, notes that the White House has seriously inflated its Affordable Care Act numbers on two fronts:

"First, not everyone who has 'selected a marketplace plan' under Obamacare has actually paid the require premiums, payment being required to actually gain coverage.

“Second, only a fraction of people on the exchanges were previously uninsured.”

Roy cites a survey from McKinsey & Co., a global management-consulting firm, based on percentages of those who had enrolled as of Feb. 1. He concludes:

“Only 19 percent of those who have paid a premium were previously uninsured. Among those that the administration is touting as sign-ups, only 14 percent are previously uninsured enrollees: approximately 472,000 people.” [The Columbus Dispatch, 3/14/14]

FACT: McKinsey Survey Did Not Include Medicaid Signups In Uninsured Enrollment Data

TPM: McKinsey Survey Measuring Uninsured Enrollment Did Not Account For Medicaid Signups. As TPM reported, the McKinsey survey did not account for the number of people who were previously uninsured who signed up for insurance under Medicaid (emphasis added):

McKinsey and Company surveyed 2,096 people who would eligible to buy insurance on HealthCare.gov and its state counterparts, both previously insured and uninsured.

The survey doesn't account for Medicaid enrollees, which could also significantly cut into the uninsured rate. According to Kaiser, 31 percent of uninsured Americans have an income below 138 percent of the federal poverty level -- the threshold for expanded Medicaid under the law in states that chose to participate. The Obama administration has said that nearly nine million people have enrolled in Medicaid since Obamacare launched in October, though that number includes both new sign-ups and renewals. An independent analysis estimated that between 1.1 million and 1.8 million new enrollees could be attributed to the law through January.

There is also some mixed signals outside of the McKinsey survey, though it is likely the most comprehensive attempt to gauge Obamacare's direct impact on the uninsured. The administration is not tracking the statistics for those signing up through HealthCare.gov. [Talking Points Memo, 3/7/14]

Wash. Post: “Ohio's New Medicaid Expansion Could Cover 330,000 People.” According to the Washington Post's Wonkblog, Medicaid expansion in Ohio could cover as many as 330,000 low-income Ohioans out of about 1.5 million state residents who are uninsured. [The Washington Post, 10/21/13; Kaiser Family Foundation, accessed 3/14/14]

MYTH: Enrollees Who Have Not Yet Paid Premiums Pose A Threat To ACA Stability

The Columbus Dispatch: Enrollees Who Have Signed Up But Have Yet To Pay Could Destabilize HealthLaw. The Dispatch said the number of enrollees who have yet to make their first premium payment could jeopardize the stability of the health care exchanges:

On March 6, The Post pointed to the McKinsey study and also raised the premium-payment problem. It noted, “Just over half of uninsured people said they'd started to pay, compared with nearly 9 in 10 of those signing up on exchanges who said they were simply switching from one health plan to another.”

This threatens the scheme's financial underpinning.

[...]

The administration's enrollment numbers show that 4.2 million Americans have “signed up” for private health plans, but this number throws in shoppers who haven't paid with actual purchasers. [Columbus Dispatch, 3/14/14]

FACT: Surveys Show That Majority Of Enrollees Pay Their Premiums

CNNMoney Survey Found That The Number Of People Who Have Yet To Pay Their Premiums Is Less Than 30 Percent. CNNMoney reported that, according to insurers polled by the outlet, about “one in five people who picked health insurance policies on the state and federal exchanges last year haven't paid their first month's premiums.” CNNMoney further reported:

Some 2.1 million people signed up for a plan in time for their coverage to start January 1, according to the Obama administration. But with the payment deadlines stretching until January 31 at the latest, anywhere between 12% and 30% of those folks still haven't paid up, insurers say. [CNNMoney, 1/30/14]

NY Times: Only About “One In Five People” Has Failed To Pay Their Premiums. According to The New York Times, “One in five people who signed up for health insurance under the new health care law failed to pay their premiums on time and therefore did not receive coverage in January, insurance companies and industry experts say.” The article continued:

Lindy Wagner, a spokeswoman for Blue Shield of California, said that 80 percent of those who signed up for its plans had paid by the due date, Jan. 15. Blue Shield has about 30 percent of the exchange market in the state.

Matthew N. Wiggin, a spokesman for Aetna, said that about 70 percent of people who signed up for its health plans paid their premiums. For Aetna policies taking effect on Jan. 1, the deadline for payment wasJan. 14, and for products sold by Coventry Health Care, which is now part of Aetna, the deadline was Jan. 17.

Mark T. Bertolini, the chief executive of Aetna, said last week that the company had 135,000 “paid members,” out of 200,000 who began to enroll through the exchanges. “I think people are enrolling in multiple places,” he said in a conference call. “They are shopping. And what happens is that they never really get back on HealthCare.gov to disenroll from plans they prior enrolled in.”

Kristin E. Binns, a vice president of WellPoint, said that 76 percent of people selecting its health plans on an exchange had paid their share of the first month's premium by the due date of Jan. 31. The company had received more than 500,000 applications for individual coverage through the exchanges in 14 states, she said.

Julie Bataille, a spokeswoman for the Centers for Medicare and Medicaid Services, which runs the federal exchange and supervises state marketplaces, said the government did not know how many people had paid their premiums and thus “effectuated” coverage. But in interviews and in the quarterly reports on their financial performance, insurers provided data indicating that four-fifths of applicants had met payment deadlines.

One big company, Humana, said it had received 200,000 applications for insurance through the exchanges. “About 75 percent of the people paid, and 25 percent did not pay,” said Thomas T. Noland Jr., a senior vice president there. Customers had until Jan. 31 to pay for coverage that took effect on Jan. 1. [The New York Times, 2/13/14]

The Urban Institute: Low-Income And Previously Uninsured People Are Less Likely To Have Heard About Health Exchanges. According to research conducted by the Urban institute, uninsured and low-income Americans report high rates of people who have not heard about the insurance marketplaces:

While these ACA target subgroups were more likely to have looked for or have planned to look for information in the Marketplaces than their respective reference groups, they were also more likely not to have heard at all about the Marketplaces. For example, 23.4 percent of uninsured respondents, 27.0 percent of adults in low-income families, and 22.6 percent of those age 18-34 had not heard about the Marketplaces--significantly higher than the full population average (17.1 percent) and the averages for the respective reference groups. [Urban Institute, 3/5/14]

NY Times: People Have Many Reasons For Not Paying Premiums. As a February 14 New York Times article explained, people may not be paying their premium because they haven't received a bill or they decided they did not want the health plan they originally applied for:

People could have many reasons for not paying their premiums. Some decided they did not want a health plan for which they had applied. Some never received an invoice from the insurance company, or received it late. In addition, phone lines of some health plans were overwhelmed. [New York Times, 2/14/14]

American Academy Of Family Physicians: Enrollees Have A 90-Day Grace Period To Pay Their Premiums. As noted by the American Academy Of Family Physicians, a prevision of the ACA allows for a 90-day grace period before insurers can drop enrollees who have not paid their premiums:

Current laws and regulations on late and outstanding premium payments vary by state, with some states allowing insurers to drop consumers' policies without advance notice. Other states require insurers to offer a 30-day grace period before dropping customers' plans. Under rules issued by the Centers for Medicare and Medicaid Services (CMS), consumers will get a 90-day grace period to pay their outstanding premiums before insurers are permitted to drop their coverage. The rule applies to all consumers, in all states, who purchase subsidized coverage through the Affordable Care Act's (ACA) health insurance marketplace.

The rule also requires insurers to reimburse providers during the first 30 days of the 90-day grace period. If a consumer still fails to make a payment after 90 days and his or her coverage is dropped, depending on most state laws, insurers will not be required to pay for claims incurred during the last 60 days of the grace period. If coverage is dropped for nonpayment, physicians must work directly with patients to collect payments for the balance incurred during days 31-90 of the grace period. [American Academy Of Family Physicians, accessed 3/14/14]

MYTH: Lagging Youth Enrollment Will Destabilize ACA

Columbus Dispatch: Not Enough Young People Have Signed Up For Health Insurance To Save The Law. The Columbus Dispatch claimed the number of young people enrolling will not be enough to stabilize the health care market:

Only about 25 percent of enrollees are young people, far short of the 40 percent necessary to make the health-care scheme financially viable. Without the young and healthy to underwrite the old and the sick, the price of health care will skyrocket. [Columbus Dispatch, 3/14/14]

FACT: Enough Young People Have Already Signed Up To Make ACA Stable And Profitable To Insurance Companies

Wash. Post: “Young People Sign Up Later -- Typically Right Before The Penalty Hits.” In response to the January enrollment report from the Health and Human Services Department, The Washington Post's Ezra Klein explained that the current enrollees are “not the final risk pool” because, based on previous experience with health care enrollment, “Younger people sign up later -- typically right before the penalty hits”:

1. Let's begin with what we know: The Department of Health and Human Services reports that 24 percent of the people purchasing health insurance through Obamacare's insurance marketplaces are between ages 18 and 34. That's below the 38 percent that most people -- including the Obama administration -- estimate the law needs if it's to keep premiums as low as everyone hopes.

2. But -- and this can't be emphasized enough -- this is not the final risk pool. No one anywhere expected that the risk pool would be balanced by Jan. 1. Major health laws always follow the same pattern: The people who badly need insurance sign up first, and they tend to be older and sicker. Younger people sign up later -- typically right before the penalty hits. So far, the age pattern in Obamacare enrollment is tracking the age pattern in enrollment for the Massachusetts reforms quite closely:

The new numbers see Obamacare through December, which is the law's third month of open enrollment and its first month of open enrollment with a working Web site. So you can decide whether February, March or April offer the right comparison to Massachusetts. Whichever month you choose, Obamacare's enrollment pattern looks a whole lot more like Massachusetts than I would've thought given the disastrous launch and the challenging political environment. [The Washington Post, 11/14/13]

Wash. Post: Stabilization Mechanisms Will Prevent ACA From “Facing A 'Death Spiral.'” The Washington Post's Ezra Klein and Evan Soltas outlined “interlocking fail-safes” in the ACA that are designed to stabilize costs if the enrollee pool has disproportionately high health care needs, including provisions like risk corridors, reinsurance and the individual mandate.

3. Risk corridors. Among the least well-known fail-safes in Obamacare are the subsidies to insurers who underprice their insurance. The way this works is that if insurers' actual costs are more than 3 percent above their “target” costs, the government gives them 50 percent of the difference. If they're more than 8 percent above their target costs, the government pays 80 percent of the difference. (The program goes in reverse, too: If an insurer overprices their insurance, they have to pay part of the excess to the government.)

The program exists only for the first three years of the law. But it basically gives insurers a huge incentive to price their insurance low. They don't want to go too low because the program ends in 2016 and they'll lose their customers if they need to raise rates by 500 percent. But for an insurer who's just trying to wait out a bad 2014, the risk corridors are a real buffer. As Adrianna McIntyre wrote, they help plans “weather 2014′s uncertainty and probably keep the following year's premiums relatively unchanged as the risk pool normalizes.”

4. Reinsurance. This is the little brother of the risk corridors. For the first three years of Obamacare, the government basically subsidizes particularly expensive enrollees. So if someone buys insurance and their claims break $50,000 in 2014, the federal government picks up part of the cost. The result is that, for the first few years, really sick people cost insurers less than they normally would, and so can be expected to have less of an effect on premiums than would typically be expected.

5. The individual mandate. The reason the Obama administration is so dead-set against delaying the individual mandate is that it's a key fail-safe against a death spiral.

There's a lot of confusion over the actual costs of the individual mandate, so here's a reminder: In 2014, it's $95 or 1 percent of adjusted income (which is income minus the tax filing threshold, which is $10,000 for individuals and $20,000 for families), whichever is greater. In 2015, it's $325, or 2 percent of adjusted income, whichever is greater. In 2016, it's $695 or 2.5 percent of adjusted income, whichever is greater.

The reason I keep italicizing “whichever is greater” is because it's the part that really matters. A lot of people believe the mandate's penalty in year one is $95. It isn't. Almost everyone who faces the mandate makes more than $9,500. So imagine someone making $53,000. For them, the mandate's cost in year one is $430. By year three, it's $1,075. That's a lot of money. [The Washington Post, 11/7/13]

Kaiser Family Foundation: Youth Enrollment Of 25 Percent Would Still Leave Room For Insurance Companies To Profit. According to the Kaiser Family Foundation, even if youth enrollment stalled at 25 percent, it would still allow insurance companies to turn a profit and stabilize the enrollment marketplace:

Under this scenario, young adults would represent 25% of enrollees, substantially less than their share of the potential market... But, if this more extreme assumption of low enrollment among young adults holds, overall costs in individual market plans would be about 2.4% higher than premium revenues.

Insurers typically set their premiums to achieve a 3-4% profit margin, so a shortfall due to skewed enrollment by age could reduce the profit margin of insurers substantially in 2014. But, even in the worst case, insurers would still be expected to earn profits, and would then likely raise premiums in 2015 to make up the shortfall, However, a one to two percent premium increase would be well below the level that would trigger a “death spiral,” which would occur if insurers needed to increase premiums substantially, in turn further discouraging young and healthy people from enrolling. [Kaiser Family Foundation, 12/17/13]

The Atlantic: Massachusetts' Health Care Reform Enrollment Started Slow, Accelerated Over Time. According to The Atlantic, Massachusetts' health care reform law, which the ACA is modeled after, had slow initial enrollment, but saw enrollment levels spike as the penalty deadline approached:

“To my friends in the media, I have one message: please take a chill pill. You won't see 7 million enrollees for a while, and that's not failure, that's real world,” John McDonough, a professor at the Harvard School of Public Health who was deeply involved in the passage and implementation of Massachusetts' 2006 health reform law, wrote of the new Obamacare program in mid-October. In Massachusetts, getting people signed up “was a slow crawl, not a sprint.”

Data from the first full year of enrollment in the Commonwealth Care plans in Massachusetts shows that the number of people who purchased premium plans was minuscule at first, with a rate of increase of only 123 people in February 2007.

That surged to 3,645 in April and then remained fairly steady all year, before spiking to 7,783 in the month before the penalty deadline for remaining uninsured kicked in.

[The Atlantic, 10/24/13]