ObamaCare Inflates Enrollment—And Premiums
By Sally C. Pipes
HealthCare.gov has officially closed and, despite months of technical hiccups, enrollment appears to have finished strong.
The Obama Administration estimates that 8 million people have signed up for coverage through the marketplaces. The president cited the figure as proof that “this law has made our health care system a lot better.”
Hardly. His enrollment numbers are artificially inflated. And the real rate of coverage may decline even further once consumers find out how much they’ll have to pay for insurance thanks to ObamaCare.
For starters, the administration’s 8 million enrollees include everyone who picked a plan—not just those who have actually paid for their coverage.
Insurers are reporting that 15% to 20% of those who have signed up haven’t paid their first premium. In other words, about 1.5 million people that the Administration counts as “enrolled” may still be uninsured.
Just because a consumer pays his first premium doesn’t mean he’ll make his second payment.
Insurance industry consultant Bob Laszewski has reported that 2% to 5% of enrollees haven’t paid their second month’s premium. If that sort of attrition continues, thousands of “enrollees” could end up uninsured before summer.
Further, many of ObamaCare’s 8 million enrollees previously had insurance—they just swapped out their existing policies for ones issued through the exchanges.
A recent RAND Corp. survey found that only one-third of exchange enrollees were previously uninsured.
The Congressional Budget Office reports that ObamaCare will spend $17 billion on exchange subsidies this year. A big chunk of that money will no doubt go to the two-thirds of exchange customers who previously secured coverage on their own.
Not exactly the wisest stewardship of taxpayer dollars.
Meanwhile, about a million of the 5 million people whose policies were canceled because they did not meet ObamaCare’s new rules remain uninsured.
The demographic composition of the exchange population also presents a problem.
Because the law forbids insurance companies from charging the old and sick more than three times what they charge the young and healthy, insurers must attract enough young, low-cost people to keep premiums down.
That hasn’t happened. Just 28% are between the ages of 18 and 34—well below the 40% the Administration said would be needed to keep ObamaCare’s exchange pools financially stable. It’s already clear that the exchange population is sicker than average.
According to a report from pharmacy benefit manager Express Scripts, exchange enrollees use 47% more specialty medications than the general insured population.
Demand for HIV meds is four times higher in the ObamaCare pool than in the existing commercial pool. Anti-seizure medication prescription rates are 27% higher.
Those drugs are more expensive. As Express Scripts puts it, “Increased volume for higher cost specialty drugs can have a significant impact on the cost burden for both plan sponsors and patients.”
Insurers will adjust to this reality by raising premiums. WellPoint predicts “double-digit-plus” rate increases across the country. In some areas premiums could go up 100%.
Cigna CEO David Cordani says his company has already brought up the coming “rate shock” with the Administration—and is pushing for changes to mitigate it.
ObamaCare’s exchanges appear to have survived their first enrollment period. But the government health-insurance platforms are far less healthy than the administration claims—and may crumble when they next open for business this fall.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute in San Francisco. She is a guest contributor for Cascade Policy Institute. A version of this article was originally published by Investors Business Daily.