Fox Falsely Claims Obamacare Needs 38 Percent Of Enrollees To Be Young And Healthy

Fox News Sunday's Chris Wallace Misleadingly Claims There Aren't Enough Young And Healthy Enrollees. On the March 30 edition of Fox News Sunday, host Chris Wallace misleadingly claimed that the Obama administration needed 38 percent of insurance enrollees under the Affordable Care Act to be “young and healthy,” but because only about 25 percent of enrollees were currently in this demographic, there was a “big hole” in the number of people insured prior to the March 31 deadline for enrollment. Wallace's guest, Senator John Barrasso (R-WY), even went as far as to claim the administration was “cooking the books” in order to inflate the number of people enrolled:

WALLACE: The White House announced this week more than six million people now total have signed up for private health insurance on the exchanges including 1.8 million so far just in March. But, they still have no numbers for how many people have paid for coverage, how many so-called young invincibles have signed up nor how many people have signed up who were previously uninsured. Senator Barrasso, given that, how much is this six million number actually mean?    

BARRASSO: I don't think it means anything, Chris. I think they're cooking the books on this. People want to know the answers to that.

[...]

WALLACE: While the White House is not offering numbers on some of those internal issues, insurance companies and some private studies have offered some numbers, and let's put those up on the screen. The administration said they needed 38 percent of the risk pool to be young, healthy people. So far it looks like they're only a quarter of the enrollees. Studies have found only 27 percent of those who signed up were previously uninsured. And, up to 23 percent of the six million figure haven't paid yet. Senator King, aren't those big holes in this six million number? [Fox Broadcasting, Fox News Sunday, 3/30/14]

Fox News' Sunday Morning Futures: “Critics Say” There Are "Not Enough Healthy People To Keep It All Going." On the first edition of Fox News' new business show, Sunday Morning Futures with Maria Bartiromo, correspondent Eric Shawn reported that young people aged 18-34 only made up 25 percent of enrollees, falling short of the 40 percent “needed to keep Obamacare afloat”:

SHAWN: There are 36 hours to go and while the White House strongly defends the program saying it will protect millions and lower health care costs for all of us, critics say the numbers do not bear that out.

[...]

But the number of younger, healthier people that experts say are needed to keep Obamacare afloat, well apparently not there. The government had just said over 1 million between the ages of 18 and 34 have enrolled, putting that at about 25 percent of the total, but the goal was 40 percent, and critics say that simply is not enough healthy people to keep it all going. [Fox News, Sunday Morning Futures, 3/30/14]

In Fact, Obamacare Already Has Enough “Young And Healthy” Enrollees To Keep Costs Down

HHS: Young Adults Currently Account For 27 Percent Of Marketplace Plans. An issue brief from the Department of Health and Human Services showed that young adults accounted for “27 percent of the Marketplace plan selections,” under the Affordable Care Act so far and that this number “has remained strong,” and “is consistent with expectations”:

Figure 1 and Table 1 show that, consistent with expectations, the proportion of young adults (ages 18 to 34) who have selected a Marketplace plan through the SBMs and FFM has remained strong. Young adults continued to account for 27 percent of the Marketplace plan selections during the fifth month, which was consistent with their share of plan selections during the fourth month (27 percent) and 3 percentage points higher than their share of plan selections during the  first three months (24 percent).

Meanwhile, the proportion of older adults (ages 35 and over) selecting a Marketplace plan has continued to decrease (from 70 percent during the first three months to 67 percent during the fifth month). 

[Department of Health and Human Services, 3/11/14] 

Politico: 38 To 40 Percent Young Enrollees Was An Administration Goal, But Not Required To Keep Insurance Costs Low. Politico reported that while having 38 to 40 percent of enrollees be young and healthy was an Obama administration goal, it was not necessary to avoid the “death spiral,” which would “make insurance costs skyrocket”:

The administration had set a goal of around 38 percent to 40 percent of the enrollees in that age bracket by the time the sign-up season ends March 31.

[...]

A senior administration official said that enough younger people already had enrolled to avoid an insurance “death spiral” -- which would make insurance costs skyrocket. Citing a Dec. 17 report from the nonpartisan Kaiser Family Foundation on insurance markets and youth enrollment, which he said basically found “that even if you only have 25 percent of your marketplace, of your composition being 18 to 34, that essentially takes death spiral off the table, that essentially you have a sustainable marketplace and that premiums would only be affected by a couple of percentages per person.” [Politico, 1/13/14]  

Kaiser Study: 25 Percent Young Adult Enrollees Sufficient To Allow Insurer Profits. A December 17 Kaiser Permanente study found that “the financial consequences of lower enrollment among young adults are not as great as conventional wisdom might suggest.” Kaiser's study showed the effect of having 25 percent of young adults in the overall market would “still be expected to earn profits” and that the effect on premiums “would be well below the level that would trigger a 'death spiral'”_:

[B]ecause premiums are still allowed to vary substantially based on age, the financial consequences of lower enrollment among young adults are not as great as conventional wisdom might suggest.

[...]

Under this scenario, young adults would represent 25% of enrollees, substantially less than their share of the potential market. It is roughly comparable to what Covered California reported for October and November (the first two months of open enrollment), with 21% of all enrollees who picked a plan in the 18-34 age range. However, this is likely a worst-case scenario, since the expectation is that older and sicker individuals are more likely to buy first and that younger and healthier people will tend to wait until towards the end of the open enrollment period (which concludes March 31, 2014). In fact, our recent survey of people in California who are uninsured found that 58% of young adults said they planned to get coverage in 2014. 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]

CBS: Even If Young Adults Comprise Only 25 Percent Of Marketplace, Premiums Will Not Skyrocket. In a December 27 CBS News article, Stephanie Condon reported on the study conducted by the Kaiser Family Foundation, noting “even if young adults only made up 25 percent of the market rather than 40 percent, overall costs in individual market plans would only be about 2.4 percent higher than premium revenues”:

The concern has been that if only older, sicker people join Obamacare, the costs of covering that market would leader to higher premiums. That would, in turn, prompt even more healthy people to leave the market, leading to the dreaded “death spiral.” The death spiral is unlikely to happen in large part because of mechanisms built into the Affordable Care Act to prevent that. In fact, even if far fewer young, healthy people sign up than expected, the impact on the Obamacare markets would be relatively minimal, some argue.

“Even in what I think is a worst-case enrollment scenario, premiums would only go up by two-and-a-half percent,” Larry Levitt, a senior vice president at the Kaiser Family Foundation, told CBS News. “It would be better to get a good mix of enrollees, but it wouldn't make or break the program if you don't.”

Levitt and his colleagues at Kaiser Family Foundation simulated the effects of two different enrollment scenarios. They found that even if young adults only made up 25 percent of the market rather than 40 percent, overall costs in individual market plans would only be about 2.4 percent higher than premium revenues. Given that insurers set premiums to achieve a 3-4 percent profit margins, they'd still be making money. They would, however, likely pass on that increased costs to customers in the form of higher premiums -- though hardly high enough to risk the “death spiral.”

Even if enrollment is very low by the end of March -- with relatively few younger, healthier customers -- the market will have a chance to recover. Rick Curtis, president of the Institute for Health Policy Solutions, co-wrote an article pointing out that a substantial number of people should be expected to enroll in an Obamacare plan during “special enrollment periods,” which accommodate people experiencing certain life changes such as becoming a citizen, getting married, or moving to a new coverage area. [CBS News, 12/27/13]

Young Adults And Previously Uninsured Were Signing Up At Higher Rates Closer To Deadline

Wash. Post: As Deadline Approaches, “A Higher Rate Of Young Adults And Uninsured Are Signing Up For Coverage.” On March 25 The Washington Post reported that private insurance websites were seeing higher rates of young adults and previously uninsured individuals signing up for insurance as the enrollment deadline approached, and that this provided a “snapshot” of consumers purchasing insurance through federal exchanges:

The enrollment data, issued by eHealthInsurance, provides a snapshot of how some customers are shopping for insurance away from Obamacare exchanges during the law's first enrollment period. HHS has issued monthly enrollment reports on Obamacare exchanges, but it's been harder to capture data on enrollment outside of the public exchanges.

[...]

Since Jan. 1, about 45 percent of those picking new health plans through eHealth were between 18 and 34 years old, the company says. By comparison, the all-important demographic accounted for 27 percent of signups on Obamacare exchanges the past couple of months. EHealth says its rate of youth enrollment has increased from 39 percent of signups between October and December. [The Washington Post, 3/25/14]

TPM: Insurance Trend “Seems To Suggest That The Uninsured Are Starting To Flock Toward The Law.”  Talking Points Memo reported that 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 Planned To Sign Up By March 31 Were Previously Uninsured. A survey by McKinsey & Company's Center for U.S. Health System Reform in early March found that 65 percent of people who said they planned to enroll by the March 31 deadline were previously uninsured. The study also did not account for Medicaid sign-ups, which could significantly cut into the uninsured rate. [McKinsey & Company, 3/6/14; Talking Points Memo, 3/7/14]