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As if the Obama team needed more proof that Obamacare was challenged, the state market that they’ve flagged as a beacon of success is itself showing signs of faltering.
Last night, California released enrollment and demographic data for the health plans being offered in its state Obamacare exchange. It shows that the enrollment, so far, is heavily skewed to older (and presumably sicker) people aged 45-64. Wall Street firm Deutsche Bank circulated a thoughtful analysis of the numbers.
It follows similar data releases from Connecticut and New York in recent days, two other states being offered as models where the rollout of Obamacare has relatively smooth compared to other markets.
Worse still, California’s enrollment figures don’t seem to be improving in November.
The standard refrain is that once the federal Obamacare web site gets fixed and matriculation gets on track nationally, things will improve.
But things are already supposed to be running smoothly in states like California. So the other possibility is that once healthcare.gov gets back on track, perhaps the broader enrollment trends could well mirror this state’s troubling experiences.
The problem, of course, is adverse selection. If only older, and by inference sicker individuals sign up for Obamacare, it will force the program’s costs – and in turn premiums – to rise. This will further discourage the younger, healthier members that the administration need’s to enroll into Obamacare to make the scheme viable.
The data released by Covered California (the California exchange) shows that, so far, 34% of total enrollment is comprised of people aged 55-64, the highest mix among age brackets. Another 22% of enrollees were aged 45-54. Therefore, 56% of California’s total exchange enrollment in October was people aged 45-64.
Yet California’s total population of residents that are aged 45-64 is only 25%. This means that a dramatically skewed percentage of older individuals (relative to the state’s total eligible pool) are the ones – so far — signing up for Obamacare.
Individuals aged 34 or under comprised just 28% of October exchange enrollment, well below the 49% of the total California population in this age range. The data includes enrollment in different Obamacare plans through October 31.
This could be especially bad news for the plans operating in California, particularly WellPoint, Kaiser, and Blue Shield & Health Net. They collectively account for 96.2% of the enrollment so far. Wellpoint is by far the most exposed, with a 28.1% share of the enrollment. Kaiser has 26.8% and Blue Cross Blue Shield at 25.6%.
The vast majority of people who are enrolling in the plans are not eligible for premium subsidies. So they are paying hefty fees for the coverage. The younger people fall into income bands where they would be eligible for subsidies in higher proportions. But they aren’t the ones enrolling. This should also be worrisome.
How could this be interpreted? It would seem to suggest that the older folks who have enrolled so far have concluded that they are especially likely to tap the healthcare services offered by the plans, making it worth the high cost.
In total, only 16% of the people who enrolled in Covered California in October were eligible for premium and cost-sharing subsidies. The figures break down this way: 4,852 of the people enrolling in plans got subsidies, versus 25,978 that did not.
For November, things don’t look much better. Covered California said that 79,891 residents had selected a plan though November 19. This suggests that 20,000 people have signed up over the last week. While enrollment is picking up, the pace is still far to slow to enable the state to hit its target of 300,000 enrollees by January.
Supporters of Obamacare contend that most of the people who intend to sign up will come out in the final days of the enrollment period. But with the tax penalty uncertain (and weak) and the enrollment periods being extended, it’s not clear that Americans perceive that there is a date certain for getting enrolled into Obamacare, or that one even exists.
This is increasingly an open-ended, rolling process in the minds of most Americans.
More likely, the enrollment into Obamcare won’t peak at some artificial deadline, but continue to trickle in as various slices of the population decide that the benefits offered by the new coverage outweigh its costs. Trouble is, there’s an increasingly narrow band of people who will be left better off by Obamacare. As consumers gain more familiarity with the plans, and their prices, fewer may decide it’s a good offer.
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