Sunday, December 22, 2013

ACA is Reaching Solid Ground


Accelerating progress. If you go to, you can click back to prior forecasts, so you can get a sense of the acceleration factor. With 43.4% of the time between October 1 and March 31 elapsed, some states (with their own Exchanges and reporting systems) are just behind, right on, or ahead of pace for private insurance enrollments:
  • California - 397K enrollments, 29% of 1.3MM target
  • Colorado - 25K enrollments, 25% of target
  • Connecticut - 23K enrollments, 71% of target
  • Kentucky - 25K enrollments, 11% of target
  • Minnesota - 30K enrollments, 44% of target
  • New York - 117K enrollments, 54% of target
  • Vermont - 23K enrollments, 41% of target
  • Washington - 93K enrollments, 27% of target
My forecast has been: 5MM private, 7.5MM Medicaid. If the current pace continues, I could be low on both.

So what enrollment numbers would be generally acceptable to a broad range of the media? My guess is that any number below the 7MM private enrollment CBO forecast will be flagged as a miss by many in the media; though it's possible a "big win" in the Medicaid number would offset the miss narrative for all but the most conservative media. 9MM was the original Medicaid target, but that included all states: the 25 states not accepting the Medicaid expansion accounted for about half that forecast. So if Medicaid hits 8MM, which it might, that might offset a private forecast miss. Minimum private enrollment needed to record ACA a success in most major media? My guess: 5MM. And I think we'll hit that.

And how about the possibility of a premium "death spiral", caused by too few "young invincibles" signing up? This is the core conservative argument as to why Obamacare will "collapse of its own weight": the ACA, according to this argument, is based on a faulty model - the mandate penalties are too low to compel performance by the young, so they will not sign up and the program will eventually break down. The "death spiral" argument is, I am certain, groundless:
  • Larry Levitt et al., from the Kaiser Foundation, recently published a paper showing that very significant drops in the rate of under-35 signups, below the 40% target, would affect premiums only modestly.
  • Almost all analysts have missed the point (covered in Levitt's paper) that the risk pool combines Exchange signups with those continuing to buy non-group coverage off the Exchange, as long as those policies are ACA-compliant. All ACA-compliant policies sold on or off the Exchange form a single risk pool. In other words, every canceled policy that is converted to an ACA policy counts in the risk pool. I called Levitt last Friday to discuss this. He said that the off-Exchange, ACA-compliant policies could be 2MM early in 2014 and 4MM by year end. Since these folks most likely were reasonably recent entrants into the non group insurance market, and since they have been carefully screened to weed out health risks in the original application process, this 2-4MM group most likely represents a clear strengthening of the overall risk pool. 
  • There isn't much demographic data yet, but it looks like California and Kentucky are getting under-35 year old turnout that is reflective of this group's share of the state population as a whole.
And finally, what about the employer-sponsored insurance market? Any chance of a wholesale dumping of people into the Exchanges to avoid ACA-related problems? The Right is pushing this meme big time, saying we will see this as we approach the July 1 date when the delayed employer mandate kicks in. My response: Quite simply, it won't happen. Providing quality benefits is too important to employers to just give it up.

The ACA is reaching solid ground. It will not be derailed. Will the strengths of the program emerge before the November, 2014 elections? They might, and they might not. To some extent it will depend on how effectively Democratic candidates present the evidence. By 2016, I am confident the benefits of this bill will be understood and this will contribute to what I am certain will be a Republican shellacking.

1 comment:

  1. I heard consultants from a health benefit consulting company on a local radio program talking about employer offered insurance plans vis a vis ACA requirements. Their take was that large companies' plans would be on board with the ACA requirements. These consultants were focused on working with smaller businesses. The discussion was fascinating: