Written by Christian Stellakis, GEI Associate
Updated 01 April 2014
As the final deadline for the Affordable Care Act draws near, recent enrollment projections, as well as analysis from the Congressional Budget Office have called into question the law's future prospects. For the Patient Protection and Affordable Care Act, also known as Obamacare, March 31 represents the final day individuals will be able to sign up for healthcare. Those who fail to do so will be subject to a penalty of $95 or 1% of their annual income, whichever is greater. These looming fines have done little to spur enrollment, though. Estimates for both general and youth enrollment have significantly fallen below the administration's predictions and goals, flagging potentially serious complications within the healthcare system.
Missing the Mark
Over 5 million individuals have enrolled in the market for healthcare since open enrollment began, and while the nonpartisan Congressional Budget Office has projected that a total of 6 million people will be enrolled by March 31, these numbers fall far short of the White House's goals. In light of the recent healthcare estimates, the Obama Administration has distanced itself from its previously stated target of 7 million enrollees. In a statement to the press, a White House official stated, "From now on, the ultimate goal is to get as many people insured as possible."
Missing the mark by approximately 1 million people is potentially harmful to a system like the healthcare marketplace, which relies on ample enrollment to spread risk over a greater pool of individuals. This lower-than-expected result places additional strain on the insurance companies' ability to contain costs; the smaller the number of contributors, the higher the cost each individual must bear to maintain quality healthcare coverage.
Of the projected 6 million enrollees, approximately 24% of them are classified as "young adults." This percentage is nearly half of the Administration's goal of 40% young adult enrollment, and represents another potential setback for the Affordable Care Act. The relative absence of youth enrollment within the marketplace is compounded by the provision within the healthcare law which states that children can remain on their parents' health insurance plan until the age of 26. These young adults, who are between the ages of 18 and 34, constitute an integral component of the healthcare system. They contribute regular premiums, yet are least likely to require medical treatment, making them the ideal recipients of health insurance. Their enrollment into the healthcare system is essential for cost containment, since their presence acts as a buffer against the frequent health complications of the older population.
Recognizing the deficit of young adults, the Obama Administration has been out in force trying to persuade these individuals to sign up for health insurance. The President recently addressed the problem during an interview with comedian Zach Galifianakis,
"Most young Americans, right now, they're not covered, and the truth is they can get coverage for what it costs you to pay your cell phone bill."
Another area of uncertainty is what happens after the open enrollment period ends March 31. From April 1 though November 14 there will still enrollments accepted. The ACA (Affordable Care Act) allows for changes in insurance any time there are major life changes (change of employer, loss of job, marriage, death of a covered family member, birth of a child, or any financial change that could qualify for a hardship exemption. Industry sources say that enrollments outside the open periods may be as many as half of the number within those periods.
If these industry estimates prove out in 2014, 5 million enrollees at the end of March could expand up to 7 million (or more) before the next open enrollment period starts in the middle of November.
Update 01 April 2014: Now that the final enrollment numbers have risen to over over 6 million, the calculation in the preceeding paragraph would yield up to 9 million enrollees including open enrollment additions.
Rising Premiums are Possible
A consequence of lower than expected enrollments in the younger age groups may force up premiums for renewals and new enrollees in the future. Last week The Hill reported that insurance company executives and an unnamed "insurance official, who hails from a populous swing state" were predicting major premium increases for 2015.
However, a new complication with how this will play out is the new discovery that an unusually large number of 18-34 year olds have been buying ACA-compliant health insurance from private sources. Whether purchased through public exchanges or private the added younger insureds will move the balance closer to the expected risk/benefit profile assumed.
Thus, the projections from some sources for higher premiums may or may not be born out.
Optimism, Dire Predictions and Rhetoric Await Data
Despite the recent logistical setbacks and the low public support for the Affordable Care Act, many supporters remain optimistic about the future of the legislation. Speaking about the ACA during a press conference, House Minority Leader Nancy Pelosi made her opinion clear: "I believe it's a winner."
Rhetoric alone will not sustain the President's signature legislation. As the deadline draws near, individual enrollment, particularly of the young and healthy, will be the key determinant of the ACA's long-term viability. And it remains to be seen if special enrollments will change the dynamics of the program before the 2015 open enrollment period arrives.
- CNN Poll: Health care law support drops to an all time low (Paul Steinhauser, CNN Politics, 23 December 2013)
- White House Moves Obamacare Goalposts Again (Sam Baker, National Journal, 15 January 2014)
- Will Young People Buy Health Care From Obama and Zach Galifianakis? (Dean Obeidallah, The Daily Beast, 11 March 2014)
- 7 Things You Need to Know About the Obamacare Deadline (Liz Neporent, ABC News, 17 March 2014)
- Nancy Pelosi Defends Obamacare, Calls It 'A Winner' For Democrats In 2014 (Samantha Lachman, Huffington Post, 20 March 2014)
- 'Special medical market could be big (Allison Bell, Life health Pro, 24 March 2014)
- Young adults signing up at higher rates off Obamacare exchanges (Jason Millman, The Washington Post, 25 March 2014)
- O-Care premiums to skyrocket (Elise Viebeck, The Hill, 19 March 2014)