The government has released the latest numbers on enrollment in the health insurance marketplace, and the news is mixed. As of December 28th, there were roughly 2.2 million Americans enrolled in private insurance through the new system of exchanges created by the Affordable Care Act. That’s a decent number, especially when you consider that the marketplace only opened on October 1, and was beset with enormous technical problems for more than a month. In fact, the government data indicate that approximately 1.8 million enrollees (nearly 82% of the total to date) took action in the month of December.
The complete report is here. Among some of the other interesting numbers contained in the report, the marketplace websites have received some 53.2 million visits since October 1, and marketplace call centers have fielded nearly 11.3 million phone calls. More than 4.3 million applications have been completed, so the nearly 2.2 million who have selected a plan is likely to continue going up. That’s the good news.
The bad news is that young adults represent a smaller proportion of new enrollees than many had hoped to see. The concern here is that if healthy young adults do not enroll in the marketplace, then premiums may be higher than expected, since the risk pool will be based largely on older, less healthy individuals. In part, this could be linked to the provision that allows children to stay on their parents’ policy until age 26. If you look at the numbers, only 15% of enrollees are under age 26, while another 15% are between the ages of 26 and 34. The largest group, though, is those ages 55 to 64, just shy of the Medicare eligibility age. According to The New Republic’s Jonathan Cohn, there’s encouraging evidence from Massachusetts that shows that young people may just procrastinate a bit, waiting longer to obtain coverage. If that holds true here, we may see the biggest spike in young adult enrollment in February and March as the deadline for avoiding the IRS tax penalty looms.
Most individuals (60%) have signed up for a 70/30 “silver” plan, while 20% have enrolled in less expensive 60/40 “bronze” plans, and a combined 20% have enrolled in more expensive 80/20 “gold” or 90/10 “platinum” plans. A very small number–just less than 1%–have purchased catastrophic coverage. What is notably absent from the report is a breakdown of plans by actuarial value and age group. We know that, by law, only individuals under 30 are able to purchase catastrophic coverage, but that’s a mere sliver of total enrollment. What types of plans the young and healthy sign up for matters. In the same way that the young and healthy are needed in the marketplace in general to keep premiums affordable, if they tend to gravitate to certain plan tiers, that may have adverse effects on premiums.
For example, if the young and healthy decide to comply with the mandate, but purchase the least expensive coverage they can obtain, they are likely to gravitate towards the bronze plans. Consequently, the bronze plans will have lower premiums both because they offer less coverage, and because they are covering a healthier risk pool. By contrast, if the young avoid the more expensive gold and premium plans, those plans will have higher premiums over time both because they offer more coverage, and because they are covering a less healthy risk pool. That type of activity is not entirely unexpected. After all, those who anticipate using more health care are more likely to spring for one of the more expensive plans with better benefits. The real question, though, is the extent to which this type of selection happens, and whether the more expensive plans will remain affordable over time.