Obama Administration Predicts ACA Enrollment to Grow by 1.1 Million in 2017; Question is How?

The US Health and Human Services Department estimates that more than 1 million additional people will sign up for health insurance on the Obamacare exchanges for 2017 compared with 2016, a department official told reporters last Wednesday (October 19, 2016). President Barack Obama’s Affordable Care Act (ACA) created online exchanges where consumers can shop for individual health insurance and receive income-based subsidies.

@HHSgov - at least 1 million more people will get #healthinsurance on #Obamacare exchanges Click To Tweet

The exchanges opened in 2014 with insurance for sale by major companies including Aetna Inc. (Hartford CT) and Anthem Inc. (Indianapolis INN). But enrollment has been about half of what was initially expected and some large insurers this year have said they were losing too much money on the exchanges because of that and the fact that enrollees are older and sicker than expected. Aetna and UnitedHealth Group Inc. (Minnetonka MN) have largely pulled out of the exchanges for 2017, according to Reuters.

“This is essentially a status quo projection, with expected growth in enrollment matching what happened this year. That strikes me as reasonable, not too pessimistic, not too optimistic,” Kaiser Family Foundation (Menlo Park CA) healthcare researcher Larry Levitt said.

There is upheaval now as exchanges head into enrollment, he said, referring to bigger premium increases than in previous years and insurers exiting the market. Any enrollment growth would be a good signal to insurers, Levitt added.

The health department said it expects 2017 sign-ups of 13.8 million people versus 12.7 million for 2016. Average monthly enrollment in 2017 is estimated at 11.4 million people, up from 10.5 million people in 2016, the official said.

Separately, Health and Human Services Secretary Sylvia Burwell told reporters there are 10.7 million uninsured people who are eligible for the exchanges but un-enrolled, and about 40% of those are young, she said. More enrollees in that group, aged 18 to 34, could help balance out insurer costs because they typically have lower health costs.

To boost enrollment, the government will use television ads, direct mail and other targeted outreach efforts to potential enrollees, particularly young people, according to The Wall Street Journal.

But the enrollment period, which starts Nov. 1 and runs through Jan. 31, 2017, also coincides with political turbulence brought about by the campaigns, the election and the transition to a new president and Congress in January.

Both advocates and opponents of the law have made it an issue in their campaigns, with Democrats pointing to its successes in reducing the number of uninsured Americans and Republicans describing the ACA’s individual market as a morass.

Republican Rep. Kevin Brady of Texas, chairman of the House Ways and Means Committee, said Wednesday the Democrats are trying to spin the law’s shortcomings as successes.

“The Administration’s glowing predictions pale in comparison to the millions of Americans who have been kicked off of their healthcare plan, cannot afford their monthly premiums, and cannot visit the doctor they’ve seen for years,” he said.

Secretary Burwell said repeal efforts are misplaced, according to The Wall Street Journal. “These efforts would turn back the clock to the world that existed before,” she said, noting that the uninsured rate in the US is at its lowest point in history.

Unlike for 2016, HHS isn’t setting a projection estimate for enrollment at the end of next year. “We’re not moving the goal posts,” said Kathryn Martin, HHS acting assistant secretary for planning and evaluation. “We’re just using what we believe is a more meaningful estimate.”

Analysts are concerned that lukewarm enrollment in 2017 could cause insurers to raise premiums in the future, which may prompt more consumers to forgo coverage and create a cycle known as a “death spiral” in the broader individual market.

That occurs when coverage gets so expensive that it is attractive only to people who are sick and thus likely to incur larger medical claims–which in turn drives premiums up further, making it unaffordable.

For 2016, less than 30% of the nearly 13 million people who obtained coverage on the ACA exchanges were between the ages of 18 and 34. Analysts have said 40% of the enrollment pool should be young adults.

The Congressional Budget Office (CBO), which estimates the costs of programs and legislation for lawmakers, initially projected this year that 15 million people under age 65 would have exchange coverage in 2017.

In March, it estimated that in any month an average of about 12 million people will be covered. The CBO expects average enrollment to continue to increase to 15 million people in 2017 and then to between 18 million and 19 million people each year from 2018 to 2026.

The majority of Americans get coverage through their employers; one reason the CBO has lowered its estimate of exchange sign-ups is that more companies than expected continued to offer employee-coverage in the wake of the ACA.

President Obama defended his signature healthcare law in a speech Thursday that described his pride in the achievements of Obamacare and acknowledged significant challenges his successor will face.

Early in the sweeping 50-minute speech in Miami, Mr. Obama described the 2010 Affordable Care Act as a “starter home,” in one of the clearest signs yet of scaled-back ambitions for a law once envisaged as overhauling the U.S. health system once and for all.

Steve’s Take: As far as the future Obamacare exchange enrollment is concerned, we have projections from HHS, predictions from the CBO, forecasts from Wall Street, prognostications from both political camps, and what do they all have in common? They’re all guesstimates. That’s right; they’re everyone’s best stab at it, so to speak. That’s all they are.

Last week, HHS projected that Obamacare exchange enrollment would reach 10 million by the end of 2016. That’s not much higher than the 9.1 million who are expected to be enrolled at the end of 2015. Has Obamacare enrollment petered out?

Perhaps, but this is probably a lowball figure. HHS would rather set a low bar and beat it than set a higher bar and have to explain why they missed it. When I was with the IRS National Office decades ago, we always set our sights low on projected tax revenues for the exact same reason.

Charles Gaba, who has a pretty good track record with this guesstimate exercise, predicts that 14.7 million people will sign up and 12.2 million will remain by the end of the year (according to Mother Jones).

He’s not a professional statistician, heathcare expert or political operative. He’s a self-described “numbers geek” who just wants to know how the new healthcare law is doing.

But policy wonks, campaign managers and health-care journalists just can’t get enough of this stuff and keep clamoring for more information about Obamacare enrollment. He’s been tracking the most up-to-date enrollment information and offering his own projections on his blog, ACAsignups.net.

If Gaba is correct, that’s an increase of about one-third from 2015. Not too shabby. But it’s significantly less than the CBO’s original estimate (pdf) of 21 million enrollees by 2016. The CBO figure is for “average annual enrollment.” Since people drop out as the year progresses, this is probably equivalent to about 19 million by year-end.

CBO had estimated a drop of 8 million people from employer and other insurance plans. However, those numbers appear to have turned out lower than CBO’s estimates. Certainly it’s preferable that people stay on their current coverage instead of being booted off–but it obviously reduces the market for Obamacare enrollment. Gaba believes CBO’s estimate should probably be reduced by 3 million or so to account for this.

In other words, on a commensurable comparison, a best guesstimate suggests that enrollment will end up 2016 at 12 million compared to a CBO projection of 16 million. It’s still lower than CBO’s original estimates, but not by a massive amount.

This could be due to a vast array of reasons–much discussed the last eight months since the primaries started–which include the simple underestimation of how fast Obamacare ramps up and what needs to be done to speed it up.

As I’ve said in the past, some of my conservative friends and relatives are basking in the supposedly well-recognized fact that Obamacare is in a death spiral. After all, big private insurance companies bailing out of a government-sponsored healthcare program, complaining about huge financial losses. Hundreds of thousands of customers lose their health plans. Terminations are especially severe in rural counties, leaving virtually no competition. Total enrollment drops.

This is Obamacare, 2016, right? Wrong; actually Medicare, 1998-2002. (For more about the remarkable parallels between the evolution of Obamacare and Medicare, go to my post “Medicare’s Forgotten History Shows How to Rescue Obamacare,” dated September 12, 2016.)

Because of all this, a more reliable metric of success is to skip all the details of who’s insured via what method, and simply count the total number of uninsured, says Mother JonesCBO originally estimated (pdf) that the uninsured population would drop to 8% by 2016.

That estimate changed after the Supreme Court made Medicaid expansion voluntary, and CBO now figures (pdf) that in 2016 the total number of uninsured will come to about 11%. The Centers for Disease Control and Prevention estimates (pdf) that in the most recent quarter the number of uninsured dropped to 10.7%. If Gaba’s numbers are correct, that will decline to about 10% by the end of 2016.

The ACA is not perfect, but it gives the framework to address these problems and test new ways of delivering care that did not occur in the past. Repealing the ACA would eliminate the gains that have been achieved without fixing the problems that exist.

It seems obvious to me that, short term, one approach almost guaranteed to address the death-spiral metaphor is to increase the federal subsidies for the working–and most-likely healthier–poor, so that more of them can afford coverage. That could raise the percentage of healthy people in the coverage mix enough that insurers are attracted back to the exchanges.

Steve's Take: #Obamacare appears to be meeting or exceeding most of its objectives Click To Tweet

Once you back away from the trees and look at the forest, it appears as though Obamacare is meeting or exceeding most of its objectives. Some of this might be due to an improving economy. But if the economy is doing well enough that more people are getting employer coverage and fewer are being forced onto the exchanges, that’s something to applaud while it lasts, not trample on.