Obamacare and the Young Invincibles

The Obama administration is poised to launch an extensive ad campaign during the Winter Olympics aimed at enticing young, healthy uninsured consumers to enroll in a state or federal exchange to purchase health insurance. It’s clear that administration officials agree with many outside observers that the long-term financial viability and political success of the Affordable Care Act (ACA) hinges on “young invincibles” enrolling in sufficient numbers to offset the high costs brought on by greater number of sicker patients applying for coverage.

Department of Health and Human Services (HHS) spokespeople say the ad campaign is part of administration efforts at “ramping up education and outreach efforts to drive enrollment in the Health Insurance Marketplace as part of a sustained, aggressive campaign for the duration of open enrollment.” HHS says the targeted ads are part of “a mix of grassroots activities and stakeholder engagement to raise awareness, as well as targeted television, radio, and digital advertising with an emphasis on reaching young and healthy audiences in particular.”

The real impetus behind this promotional blitz is the ACA woefully underperforming its enrollment goals. According to “The Hill,” a little over 2 million people enrolled for coverage on one of the exchanges during the first three months of open enrollment, more than 1 million fewer than the administration’s stated goal for that time period.

Administration advisors and officials on multiple occasions last year also said the goal was to have at least 7 million people signed up through the exchanges by the end of the enrollment period on March 31, 2014. With that number now in jeopardy, officials have been attempting to walk back those estimates, saying now that the goal all along has been to enroll as many as people as possible and that the administration is really focusing on achieving “a good health mix” of enrollees in each risk pool in order to control costs.

PolitiFact provides a valid criticism of the administration’s revised definition of early ACA success. The key point is that the “Obama administration considers someone to be ‘enrolled’ if they merely select a plan, not necessarily if they paid for it. Data is not yet available for people who paid a first month’s premium to their insurers.” Basically, the plan is in their “cart,” but they have not “checked out.” I would love to see “paid” data on those who have enrolled through the exchanges. I wonder how many of those people will turn out to be workers who lost their coverage because of the ACA and needed to find new coverage.

Consider the small business owners who have always provided health care insurance for their employees. With double-digit rate increases this year (and predicted for the next several years at least), many have opted instead to provide money for health care spending accounts for their employees, allowing them to shop for their own insurance. These people were never counted as uninsured before, but are now under the ACA.

More so than the total number of enrollees, it is the percentage of young and healthy consumers who enroll that is “being closely watched because it is seen as predictive of the quality of the risk pools for insurers’ plans sold on Obamacare marketplaces including federally run HealthCare.gov,” according to CNBC.

The numbers look even worse when you realize that, according to CNBC, “Young adults make up just 24 percent of the 2.2 million people who have enrolled in private Obamacare insurance plans nationally so far, a rate that not only lags the 40 percent target originally set by federal officials, but also slightly trails their share of the total eligible population.”

The question remains: What will young, healthy people pay for‑‑the newest smartphone, the daily latte, or health care insurance each month?

Whatever the final number of consumers who sign up through the exchanges this year, the economic stability of the system requires that “young invincibles” make up 40 percent or more of total enrollees, otherwise “the insurance pools might be filled with a disproportionate number of sicker and older people — known as “adverse selection” — who are in greater need of health coverage, but more expensive for insurers to cover, forcing companies to aggressively hike premiums across the board. That would then further discourage younger people from enrolling in coverage and lead to a vicious cycle that policy experts refer to as the insurance ‘death spiral.’”

The Kaiser Family Foundation summed up the dilemma thusly: “If enrollment among young adults falls short, then the total amount of premiums collected by insurers will be less than the total health care expenses of enrollees plus administrative overhead and profit. And, if insurers believe that those enrollment patterns will continue into 2015, then they may raise premiums higher to compensate for the loss.”

I really wonder where the 20-30 million uninsured that made passing the ACA an urgent priority are hiding; they should be running to enroll in the program. Perhaps they just don’t care or just don’t want health care insurance since they can already get it by walking into an ER. Regardless, it is a shame that the entire health care system is being turned upside down to meet the needs of those “not served” at the expense of those “served.” It’s telling that the “not served” are reluctant to become “served” within the system.

What happens over the next several months will be very telling when it comes to the long-term success or failure of the ACA. Savvy observers should watch for continued efforts by the Obama administration to define success down by attempting to shift the focus away from total enrollment numbers. Also, watch to see how long it takes the administration to release complete data on how many people have actually paid for their insurance premiums. My guess is that the focus will remain on the number of “sign ups.”

Another thing to watch for is whether the Obama administration finally releases information about the number of exchange enrollees who come from the ranks of the uninsured (as opposed to currently insured consumers shopping for better insurance bargains). What are the odds that if these numbers are released the administration will also indentify how many people had to sign up on the exchanges because they lost their insurance because of the ACA?

I predict 2014 will be another difficult year for the president and supporters of his signature legislative achievement, marked by disappointing enrollment data for the exchanges, large numbers of people losing their current employer-provided insurance, and more insurance companies opting to forego participation in the exchanges.

These grim facts, coupled with high premiums and deductibles for too many enrollees, and a minimal penalty for opting out of coverage, mean that many Americans will see the ACA for the losing proposition it truly is.