The coming collapse of health care exchanges
Two federal agencies just released some new research that probably isn’t going over too well in the White House.
In its most recent baseline projections, the Congressional Budget Office estimated that 18 million people would have coverage through the Affordable Care Act’s exchanges in 2025. That’s 4 million fewer than it projected just last year.
The Centers for Medicare and Medicaid Services, meanwhile, recently revealed that 1 in 4 people who signed up for coverage at the beginning of 2015 dropped it by year’s end.
The White House has tried to stay positive. This year’s open enrollment period, which closed on January 31, yielded 12 million enrollees, up 2.6 percent from last year. That prompted Kevin Counihan, the CEO of the federal exchange HeathCare.gov, to boast, “We knocked the lights out this year.”
His celebration may be premature. If last year’s 25 percent attrition rate holds true again this year, total enrollment at the end of 2016 could be just 9.5 million — barely 700,000 people more than the final 2015 figure.
And there’s good reason to believe that this year’s attrition rate will be even higher.
Premiums have climbed significantly this year. Exchange shoppers in 17 states are facing average premium increases of 20 percent or more in 2016. According to Health and Human Services, the average premium for all plans purchased on HealthCare.gov is $408 — a 9 percent increase over last year.
Deductibles have also climbed steadily. According to the online insurance marketplace HealthPocket, the average deductible for a silver plan — the most popular option on the exchanges — was $3,117 for individuals and $6,480 for families. Bronze plans, which often come with the lowest premiums, saw average deductibles reach $5,731 and $11,601 for the same groups.
The data seem to show that many young people are making just that calculation. Americans aged 18 to 34 comprised just 28 percent of enrollees this year — well below the administration’s goal of 38 percent.
The reluctance of young Americans to enroll in exchange plans is a problem. The law needs premiums from young, generally healthy Americans to subsidize coverage for older patients, who generally need more care and are thus costlier to insure.
The Affordable Care Act’s individual mandate was supposed to make sure that the exchange pool had plenty of young people. Under the law, Americans who fail to sign up this year face fines of $695 or 2.5 percent of their income, whichever is greater but still much lower than the cost of coverage.
The lack of young people in the exchanges is even more problematic because the rest of the exchange pool has turned out to be sicker than insurers expected.
Blue Cross Blue Shield recently analyzed its members’ claims data over the last two years. Those who enrolled in exchange plans had higher rates of illnesses like hypertension, diabetes, and Hepatitis C than folks with coverage pre-Obamacare did.
To compensate, insurers may be forced to hike premiums even higher — or to leave the exchanges because of unsustainable losses.
This year’s exchange enrollment figures are nothing to brag about. If the Obama administration disagrees, they can take it up with their colleagues elsewhere in the federal government.