When Kathleen Sebelius, the Health and Human Services secretary, said earlier this month that there would be no more delays of the Affordable Care Act's individual mandate, perhaps you naively thought that this meant that open enrollment would close on March 31 and anyone who didn't have health insurance by then would be, well, subject to the individual mandate.
No, no, don't chide yourself -- that's also what I thought, and I'm so cynical that lemons pucker up when they look at me.
As you have probably already heard, the administration is going to allow people to sign up for Obamacare after the end of open enrollment if they were genuinely unable to register during the six-month period. And how will the administration be able to tell that applicants were genuinely unable to register? The applicants will check a box on the website, saying so.
In other words, they're delaying the individual mandate, but not calling it a delay of the individual mandate.
It is, to be fair, not a very long delay -- only until mid-April. But given the administration's record, I wouldn't bet on this being the last one.
And now onward to the really important question: What does it all mean? Unfortunately, I'm not sure I know the answer. I find this latest move deeply puzzling.
For starters, total enrollment numbers aren't as bad as they could be. On March 17, the administration announced that 5 million people had selected an exchange plan. That seemed to indicate that the daily pace of signups was quickening from January and February.
If March monthly signups end up in the neighborhood of December's, then they could get pretty close to the 6 million total the Congressional Budget Office was projecting. As I noted earlier today, that would involve a bit of fudging, because a lot of people haven't paid for their policies and thus don't actually count as being insured through the exchanges. But it would be close enough that the administration could claim victory.
The accompanying chart shows what total signups would be under three scenarios: a low projection, where signups continue at the daily rate they've averaged so far in March; a high projection, where signups accelerate to match the December rate; and a medium scenario that's right in between. As you can see, all three deliver some fairly strong numbers for the administration.
So why the delay? I can come up with a few explanations.
One is that the administration fears the system will crash under the kind of demand spike they saw in the last weeks of December enrollment. This is just a prophylactic measure designed to make sure that people who genuinely tried to sign up but couldn't get through don't get hit by the individual mandate -- and show up on television, crying, shortly thereafter.
The second is that the administration knows, or strongly suspects, that most of the people who have so far bought insurance are people who already had insurance. They're concerned that when enrollment is closed, they're only going to be able to point to a net reduction of a few million uninsured -- and that almost all the reduction will come from people on Medicaid. So they're hoping to get a few hundred thousand or million more uninsured people to sign up during the grace period.
The third, most worrying, possibility is that the demographics haven't really improved substantially. A lot of commentators, including me, have been expecting the "Young Invincibles" -- the younger, healthier customers whose premiums will subsidize care for the previously uninsurable -- to show up on the exchanges this month. So far, only 25 percent of total signups have come from young adults. And even that may overstate things, because it isn't unreasonable to assume that the folks who selected plans but didn't pay for them are young and irresponsible people like ... well, like me at 25.
Before the exchanges opened, the administration said it needed 40 percent of enrollments to come from young people to keep the prices of exchanges policies from spiking. The improbable worst-case scenario sketched by a December report from the Kaiser Family Foundation was 25 percent. Yet that's where we've been stuck for months.
You can argue (as that report does) that age itself doesn't matter much. But it seems unlikely that age is the only problem; if young people are staying away from the exchanges in droves, it seems likely that we're also seeing quite a bit of what insurance experts call "adverse selection": The folks who are buying insurance are disproportionately the ones who expect to need some costly health care in the coming year. If that's the case, expect premiums to rise sharply -- which is just what insurers have been threatening.
So again, here's the really worrying scenario: The demographics haven't budged, or have only barely improved from earlier months. The White House knows that means that big premium increases are in the offing for 2015, and they're hoping to head them off at least temporarily with this delay. Extending open enrollment, which is essentially what they're doing, would then be a desperate play to get more young, healthy customers into the exchanges, and perhaps to make it a bit harder for insurers to raise rates. In some states, insurers have to file preliminary rate increases in May. And thanks to this latest extension, they won't have final data to back up any requests for a premium hike.
Those are the explanations I can think of for the administration's somewhat inexplicable move. Which is the most likely?
On that, your guess is as good as mine. Eventually, the data will be released and we'll know more. But to really understand what they were thinking, we may have to wait until some enterprising journalist writes the definitive history of Obamacare.
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Megan McArdle at firstname.lastname@example.org.
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