We were off for Good Friday, so you missed my thoughts on the health exchange enrollment numbers that the White House released last week. They were surprising numbers, in both good ways and bad. I'd hoped that over the weekend, I'd be able to tease out threads that made them more understandable, in an "obvious in retrospect" kind of way. But it's three days later, and, well, I'm still surprised.
First, the rundown. This is what the Barack Obama administration's release says:
- 8 million people signed up for private insurance in the Health Insurance Marketplace. For states that have Federally-Facilitated Marketplaces, 35 percent of those who signed up are under 35 years old and 28 percent are between 18 and 34 years old, virtually the same youth percentage that signed up in Massachusetts in their first year of health reform.
- 3 million young adults gained coverage thanks to the Affordable Care Act by being able to stay on their parents plan.
- 3 million more people were enrolled in Medicaid and CHIP as of February, compared to before the Marketplaces opened. Medicaid and CHIP enrollment continues year-round.
- 5 million people are enrolled in plans that meet ACA standards outside the Marketplace, according to a CBO estimate. When insurers set premiums for next year, they are required to look at everyone who enrolled in plans that meet ACA standards, both on and off the Marketplace.
The enrollment number wasn't a surprise by the time it dropped -- that morning, I guessed it would come in at between 7.8 million and 8 million. But it was certainly a surprise compared with a month earlier. I think it's safe to say that on March 1, few people, on the left or the right, had considered that nearly 50 percent of total signups would occur in the last month and a half. That's a rate much higher than we saw in Massachusetts and is, as I recently noted, a stunning testimonial to the American powers of procrastination.
And whatever others might have thought, I certainly didn't expect it to be that high; until relatively late in the month, I thought it would squeak in at around, or even under, 6 million. I was expecting a surge like in December, not the immense tsunami of applications we actually got.
The demographics were also a surprise to me, and a nasty one at that. You may recall that the administration originally forecast that almost 40 percent of exchange signups needed to be young adults in order to keep the insurance pool stable. A pool with too many old and sick people would drive up the price of insurance, perhaps driving more young and sick people out of the pool, leading to a price spiral.
By March, the percentage of young adults in the pool was hovering at around 25 percent. As I wrote back then, to get to the 38.5 percent that the administration was originally targeting, they needed for there to be a huge surge in enrollment -- and for that surge to be much, much younger than the previous waves of enrollees.
They certainly got the surge. And the surge was indeed somewhat younger than previous waves ... but not nearly sufficient to bring the demographics in line.
A month ago, assuming a much smaller surge than we got, I also assumed that the demographics would stay bad. I assumed that if we did get a big surge, we would also get much better demographics. The one thing I didn't assume was that we'd get a huge influx of enrollees -- and that we'd still only be at 28 percent young adults. I'm still at a loss to explain it. Did every early retiree in America cancel their employer-based retirement benefits and jump onto the exchanges?
Jonathan Cohn argues that this is actually great news, because what matters is what insurers expected, not what the administration expected:
But insurance companies didn't expect young people to sign up in proportion to their numbers in the population. They knew participation would be a bit lower and they set premiums accordingly. Only company officials know exactly what they were projecting -- that's proprietary information -- but one good metric is the signup rate in Massachusetts, in 2007, when that state had open enrollment for its version of the same reforms. According to information provided by Jonathan Gruber, the MIT economist and reform architect, 28.3 percent of Massachusetts enrollees were ages 19 to 34, a comparable age group.
Yes, that's right: The overall age mix for the Affordable Care Act is virtually the same as the age mix was in Massachusetts. More important, it vindicates the predictions of experts like Gruber who said, all along, that young people would be among the last to sign up. "To get to 28 percent overall, there had to be a lot of young people among the late enrollees," says Larry Levitt, senior vice president at the Kaiser Family Foundation. "That also bodes well for who is likely to sign up next year."
But it's worth noting a few caveats to that. The first is that even prior to Romneycare, young adults in Massachusetts were much less likely to be uninsured than they are nationwide -- this study shows 21 percent uninsured for those 19 to 26, and 15 percent for those 27 to 33. The figure for the entire U.S. is 27 percent.
Of course, Americans in all age groups are much more likely to be uninsured than folks were in Massachusetts in 2006, so that by itself doesn't tell us what percentage of the pool young people should make up.
However, there's also the fact that Massachusetts skews somewhat older than the rest of the country:
It's not as old as Maine or New Hampshire. But it's pretty old compared with most of the rest of the country.
We also know that employer-based insurance increaseddramatically in Massachusetts after Romneycare was implemented: More employers offered it, and more employees signed up for it. I don't think we can count on this happening nationwide. One survey, from RAND Corp., does suggest that most of the uninsured signed up for employer-sponsored insurance rather than exchange policies. But it also found that by March 28, only 1.4 million previously uninsured people had bought policies on the exchanges, which seems implausibly low given the enrollment surge we know took place. So I don't put much faith in their other findings.
No one else has reported a massive surge in employer-sponsored insurance signups, much less a substantial increase in the number of employers offering brand-new health insurance benefits. And I'd be very surprised indeed to find out that this was happening, because the administration keeps delaying the employer mandate for exactly the kind of small companies that are most likely to offer no benefits.
If a lot of young workers suddenly got access to employer health benefits, then the Massachusetts exchange might have ended up extra-heavy with early retirees, displaced workers and the like. Or it might not -- it's hard to say, because I can also spin stories in which young people are still in school, or finding themselves, and they're less likely to have employer-based insurance than a stable 45-year-old roofer is.
The point is, I don't think we can confidently assume that most insurers expected their insurance pool to look like Massachusetts', because most insurance pools don't look like Massachusetts': They're younger, poorer and more likely to have been going without insurance. According to the study I cited above, the percentage of uninsured people ages 19 to 33 dropped to 8 percent from double digits. Young people may not have bought as many exchange policies as their elders did. But they were getting insurance somewhere.
The good news is that pretty soon, we'll find out what the insurers are thinking; they'll start filing some of their preliminary rate increases in a couple of weeks. My guess would be that those increases will be modest in places such as New York, which had a lot of signups -- and had also nearly destroyed its private insurance market, so that almost any reform would have been an improvement. My guess would be that in other places, where the signups are too old or too few, premiums will jump sharply. I'd also guess that the backdoor bailouts the administration has been arranging through the risk corridors will be enough to keep existing insurers in the market, though maybe not enough to lure many new ones.
But those are just guesses, based on too little data -- right now, all we know about their thinking comes from investor conferences and earnings calls, which tend to be a rather artificially cheery format. All I know right now is that whatever the insurers were expecting, I sure wasn't expecting the demographics to settle down at 28 percent. And I don't remember hearing numbers that low from any of the law's boosters, either.
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