While there was much talk recently about how many people had paid their first premiums in an Obamacare plan, a bigger question about the exchanges remains: how many people gained insurance (i.e., didn’t already have insurance)? Insuring the uninsured is perhaps the ACA’s main goal (even if that goal is flawed and even though we should judge its value), so the impact that the exchanges have had on insuring the previously uninsured is important to evaluate.
There have been varying estimates of this number. Bob Laszewski has suggested that the number was about 50% uninsured to 50% previously insured, meaning that only about 4 of the 8 million ACA exchange enrollees already had insurance before Obamacare. That’s arguably not a very good return on investment if we are causing one person to lose their previous insurance for every person who gains coverage (and how many of those who gained coverage wanted it but couldn’t get it before versus how many bought it because they were compelled to by the ACA’s tax?).
A new McKinsey survey paints a similar picture. In this survey, only 26% of the ACA enrollees were previously uninsured, but this survey includes enrollments both inside and outside of the ACA exchanges. This means that only about 1.7 million people gained insurance on the exchange, and 865,000 people gained coverage off the exchange, while about 6 million people were apparently forced into the exchange despite having a previous plan. I doubt anyone would argue that to be a good return on investment for Obamacare. Adding the percentage of enrollees who have paid their first premiums, the McKinsey survey says only 22% of the enrollees were previously uninsured and have paid. That’s really bad.
In addition, a recent Health Affairs summary of the Obamacare insurance marketplace showed that only 25% of exchange shoppers who weren’t eligible for subsidies actually enrolled in a plan (1.2 million people). This contrasted with 77% of those who did qualify for subsidies selecting a plan. This means that the exchanges are successful enrolling people who are being subsidized, but not successful enrolling those who don’t receive subsidies. Put another way, Obamacare is succeeding at increasing the government’s role in the private insurance market, but apparently not a good job at facilitating the market without propping it up via government subsidies.
The government’s role has also increased outside of the exchanges. The McKinsey survey shows about 3 million additional people gaining coverage through the ACA’s Medicaid expansion. One can debate how valuable that coverage is for its cost, and we’ve recently seen two different state studies that call that value into question (one in Oregon suggested that the value was quite poor). It’s also indisputable that we didn’t need the rest of Obamacare in order to have the Medicaid expansion, so we could have insured those 3 million with a lot less hassle.
It’s going to take more time to sort out these numbers and to work out back-end technology issues on the exchanges. It’s also going to take time for the exchanges to sort out their risk pools. In the meantime, however, it’s not a good sign that insurers are lobbying for the risk corridors to not be constrained by budget neutrality. This suggests that significant premium increases are coming (Laszewski suggested they may be mostly at 9.9% to avoid the regulatory review that would be triggered by a 10% increase). How the risk pools look is still being determined, and those pools will impact the price, which will help us judge the value and will impact how many people sign up for these Obamacare plans in coming years.
Right now the jury is still out, but some numbers suggest the exchanges are not functioning well in terms of enrolling the previously uninsured and in keeping premiums down. Those aren’t good signs for the value of these plans and for the success of the ACA.
UPDATE: I’ve updated the summary of the McKinsey study, which considered enrollments both on and off the exchange. Laszewski notes that the study is consistent with his numbers because it considers off-exchange enrollments, so I’ve corrected the part that suggested that the study shows a worse enrollment of previously insured people than Laszewski previously estimated.
UPDATE: A reader comment below suggests that it was expected that ACA enrollees would mostly be subsidized. That’s true, but irrelevant. Just because that was predicted doesn’t change the reality that the exchanges apparently aren’t bringing prices down enough to make insurance more affordable/attractive without the government having to subsidize both the insurers and the customers. Take Laszewski’s word for it:
Obamacare’s two biggest problems come down to this: Not enough people are signing up for it to be sustainable in the long-term because the products it offers are unattractive.
Laszewski also notes that only about 1/3 of subsidy-eligible customers signed up for an ACA plan. That means that while those who signed up may have largely been subsidized, a large majority of those who were eligible for subsidies didn’t sign up. Thus, Laszewski concludes that the plans aren’t attractive enough, which is the point I was making with these numbers.
UPDATE (mid-June): Laszewski looks at the newest Kaiser numbers showing, among some mixed results, general satisfaction among those who enrolled…and concludes that this means very little. Why? Because the survey was only of the people who enrolled, who constitute less than half of the people who shopped for a plan. So he’s emphasizing his earlier point that I highlighted, which is that these ACA plans weren’t attractive enough to enroll most of the people who looked at them and only enrolled 1/3 of people actually eligible for subsidies.
Laszewski notes that most of the enrollees are of the lowest income, meaning higher subsidies are required. Meanwhile, middle income people aren’t finding the plans affordable and attractive enough to enroll.