With Obamacare’s 2014 open enrollment period approaching its end (barring another legally dubious delay or extension), the Department of Health and Human Services (HHS) has released what will be the second-to-last report on exchange enrollment for 2014.
Let’s start with the good news. The exchanges have enrolled some 4.2 million people (though it’s unclear how many have paid their premiums, and how many will do so by March 31). That represents decent growth in total enrollment, adding just under one million new enrollees through all of February. On top of that, the enrollees are making the most out of premium credits (and likely maximizing cost-sharing subsidies as well) by predominantly choosing silver plans (63 percent).
Now, the not so great news. The share of enrollees that are young and healthy – an important target group under the law – hasn’t budged, remaining stubbornly at 25 percent of total enrollment. This group of “young invincibles” is important, generally, because they tend to be healthier and are needed to offset costs for the sicker enrollees. That being said, it’s important to note that enrolling older, healthy individuals is just as, if not more, important – remember that a healthy 40 year old might not use much more health care resources than a healthy 27 year old, but will pay much higher premiums.
Nevertheless, the skewed enrollment continues to be problematic – it means that young adults are enrolling at rates significantly lower than their share of the uninsured population. As I’ve noted before, young people make up about 40 percent of the uninsured non-elderly population, versus 25 percent of the total enrollment. This means that the law, as recent surveys are indicating, isn’t making much of a dent in the uninsured population.
So why aren’t the young enrolling en masse (despite pajama boy)? In all likelihood, the reticence of the young (and more generally, the non-subsidized population) to enroll appears to be concerns about the cost of insurance. A McKinsey survey of February enrollment found affordability to be a primary concern of 50 percent of individuals who had not enrolled. Without significant subsidies, premiums under the law are significantly higher than what was offered in the individual market before, and the cheap penalty for the first year isn’t much of a “stick.”
With all that being said, it’s certainly too early to judge exactly what Obamacare’s risk pool will look like going forward. Until the newly insured begin using health care services, the health status of the exchange population won’t be clear. But the success of the law will invariably be judged, at least partly, on the extent to which young people (who are disproportionately uninsured) enroll in coverage.
Fortunately, this offers an interesting opportunity for any politicians looking to “reform the reform.” Even under CBO’s scenario (which is unlikely to happen, at least for this first year), about 30 million people remain uninsured under Obamacare in steady-state. Based on current enrollment dynamics, and results from McKinsey’s surveys, it would be reasonable to think that these uninsured are highly price-sensitive, and thus, are staying out of the rather expensive market created under Obamacare.
The simplest reform is this – make it less expensive and less burdensome to obtain insurance for those who don’t qualify subsidies. Allowing broader plan design, lower actuarial values, and fewer minimum benefits is a good place to start. And as my colleague, Paul Howard, and I, have written previously, Republican reformers should see Obamacare as a “Trojan Horse” for conservative health care reform.
The most recent enrollment numbers should crush conservatives’ fantasies of seeing Obamacare fall apart. But they should also encourage conservatives who recognize that the health insurance market before Obamacare was a disaster, and was in dire need of reform. There are serious reforms that need to be made to the law – they’ll either happen now or later. It’s up to Republicans whether they will be at the table negotiating, or booing on the sidelines.