Health-care exchange sign-ups fall far short of forecasts
By Carolyn Y. Johnson
August 27 at 8:10 PM - The Washington Post
Enrollment in the insurance exchanges for President Obamafs signature
health-care law is at less than half the initial forecast, pushing several major
insurance companies to stop offering health plans in certain markets because of
significant financial losses.
As a result, the administrationfs promise of a menu of health-plan choices
has been replaced by a grim, though preliminary, forecast: Next year, more than
1 in 4 counties are at risk of having a single insurer on its exchange, said
Cynthia Cox, who studies health reform for the Kaiser Family Foundation.
Debate over how perilous the predicament is for the Affordable Care Act,
commonly called Obamacare, is nearly as partisan as the divide over the law
itself. But at the root of the problem is this: The success of the law depends
fundamentally on the exchanges being profitable for insurers — and that requires
more people to sign up.
In February 2013, the Congressional Budget Office predicted that 24 million
people would buy health coverage through the federally and state-operated online
exchanges by this year. Just 11.1 million people were signed up as of late
March.
Exchanges are marketplaces where people who do not receive health benefits
through a job can buy private insurance, often with government subsidies.
gEnrollment is key, first and foremost,h said Sara R. Collins, a vice
president at the Commonwealth Fund, a nonpartisan foundation that funds
health-care research. gThey have to have this critical mass of people so that,
by the law of averages, youfre going to get a mix of healthy and less healthy
people.h
A big reason the CBO projections were so far off is that the agency
overestimated how many people would lose insurance through their employers,
which would force them into the exchanges. But there have been challenges
getting the uninsured to sign up, too.
The law requires every American to get health coverage or pay a penalty, but
the penalty hasnft been high enough to persuade many Americans to buy into the
health plans. Even those who qualify for subsidized premiums sometimes balk at
the high deductibles on some plans.
And people who do outreach to the uninsured say the enrollment process itself
has been more complex and confusing than Obamafs initial comparison to buying a
plane ticket.
gThis exchange will allow you to one-stop shop for a health-care plan,
compare benefits and prices, and choose a plan thatfs best for you and your
family,h Obama said in a speech in 2009. gYou will have your choice of a number of
plans that offer a few different packages, but every plan would offer an
affordable, basic package.h
In some markets, a shortfall in enrollment is testing insurersf ability to
balance the medical claims they pay out with income from premiums. In an
announcement curtailing its involvement in the exchanges this month, Aetna cited
financial losses traced to too many sick people signing up for care and not
enough healthy ones.
The health-care law has been a political lightning rod from the beginning,
and Republican legislators have used insurance companiesf withdrawals from the
exchanges to reignite calls for the lawfs repeal.
Kaiser tracks public data on insurer participation in the exchanges to
project how many options counties will have, but the numbers are not final. This
year, exchanges in about 7 percent of counties had just one insurer.
Earlier this month, Aetna announced that it will pull out of 11 of the 15 states
where it offers coverage on the health-care exchanges. Humana made a similar
decision weeks earlier, planning to exit several states. And last spring,
UnitedHealth Group said it would remain in three or fewer exchanges next
year.
Obama has used the health-care lawfs challenges to issue a new call for a
public insurance option.
gCongress should revisit a public plan to compete alongside private insurers
in areas of the country where competition is limited,h he wrote in an essay
published in the Journal of the American Medical Association. gAdding a public
plan in such areas would strengthen the Marketplace approach, giving consumers
more affordable options while also creating savings for the federal
government.h
Chicago resident Eva Saur, 32, is exactly the kind of healthy person insurers
would like to have on their rolls. Saur hasnft had coverage in nearly a decade,
but she takes good care of her health. For the handful of times shefs been sick,
a walk-in clinic at a pharmacy has been sufficient.
gI was raised — not against the system — but we had a doctor who would
prescribe us herbs before a prescriptionh medication, Saur said. gFor me,
monetarily, it makes way more sense to do this.h
Saurfs tax penalty for being uninsured was a bit more than $600 last year,
while the cheapest health plan she examined cost about as much for three months
in premiums — and came with a $7,000 deductible.
The penalty for not signing up is increasing. Still, some policy experts
insist it is not enough motivation to buy insurance.
gIt was basically no stick at all. This is the classic case of where Johnny
marked crayon on the wall, his mother said, eDonft do that,f and then slapped
his hand a day later,h said Joseph Antos, a resident fellow at the American
Enterprise Institute. gThe connection between the offense and the penalty is a
little remote.h
The health-care law has had unequivocal successes. In some areas, lots of
insurers compete on the exchanges, which helps keep premiums low. In Cleveland and Los Angeles, the average premium for a benchmark
health plan actually declined in 2016. The number of uninsured Americans
continues to shrink, hitting 9.1 percent last year — the lowest level ever.
The average premium for the people who receive tax credits – 85 percent of
the people signed up through the exchanges — is just $106 per month. People who qualify for the income-based tax
credits are largely sheltered from premium increases.
The first people to sign up for insurance through the exchanges were expected
to be those with chronic diseases and high medical costs. Because insurers could
no longer discriminate against those people, the law built in three mechanisms
for the government to redistribute money from plans with healthier patients to
those with sicker ones. Two of those programs expire at the end of the year. The
third, called the grisk adjustmenth program, transferred $4.6 billion between
insurers in 2014.
Critics say therefs a fundamental problem with the system, and the
risk-adjustment program needs to be fixed. But supporters of the law argue that
the problem is temporary, the natural evolution of a nascent free-market system.
Some of the first companies to enter the market made bad bets on how healthy
customers would be, resulting in unprofitable health plans. Proponents say itfs
natural for new entrants to replace them, with better information and more
competitive plans.
Cigna, for example, has said it has filed to enter exchanges in three new
states next year.
gTherefs no bottleneck, this is just the natural growth pains of a new
market,h said Jonathan Gruber, an economist at the Massachusetts Institute of
Technology. gWhat happened is they set up this new market where insurers didnft
have experience; insurers made an estimate as to what people would cost and
their estimate turned out to be too low.h
Supporters point to a recent government analysis that suggests the grisk poolh — the
number of high-cost sick customers relative to healthy ones — is not worsening
and could even be improving. Medical costs per enrollee in the marketplaces fell
by 0.1 percent in 2015, while medical costs for people in the broader
health-insurance market grew by at least 3 percent. In states with strong
enrollment growth, there were greater reductions in membersf costs.
Everyone agrees that more healthy people need to sign up.
In June, the Obama administration unveiled its plan to target younger and
healthier adults, including direct outreach to individuals and families who paid
the penalty. It also released new guidance, encouraging insurance companies to
communicate more with young adults being kicked off their familyfs plan when
they turn 26 years old.
Even older adults are taking their chances without health-care coverage.
Donte Fitzhugh, 55, of Charlotte was laid off last year from a job as a
call-center operations manager. COBRA, which allows former workers to extend
their employer-provided health insurance if they pay the full premium, was
expensive, and Fitzhugh didnft sign up for the exchanges for very human reasons:
He figured hefd find a job faster than he did. He thought every penny counted
when he was unemployed. He didnft have major health problems, and he got a
coupon to help cover the costs of his hypertension medicine.
As the window to sign up for health insurance passed without a new job, he
kept procrastinating. Although health insurance from a new job will begin in
October, he faces a penalty that will cost him hundreds of dollars.
gI believe in Obamacare. As an American, itfs my responsibility to have
health insurance,h Fitzhugh said. gSince I didnft have it, itfs going to impact
me financially.h
Such are the barriers to insurance: Remaining uninsured can be more
attractive or just easier than signing up to pay hundreds of dollars a month for
something that many people donft think they need.
Judy Robinson, a health insurance support specialist at the Charlottesville
Free Clinic, has counseled hundreds of patients who are eligible for subsidized
insurance on the exchanges but ultimately decide not to sign up. She
said the subsidized insurance on the marketplace tends to be a good deal for
those who make between 100 and 150 percent of the poverty level. But those who
make more often are faced with large deductibles that donft seem like a good
deal to many people.
Beyond the sticker price, she said it can require a lot of paperwork to
demonstrate the annual income required to qualify for tax credits if people are
juggling multiple part-time jobs. And sometimes, people are simply
mistrustful.
gTherefs a lot of people that live sort of off the grid, sort of semi-off the
grid and they just donft go to the doctor,h Robinson said. gThe hospital is the
place where you go to die, and doctors are just going to try and make you do
procedures and get money out of you. Thatfs how they think.h
There are also those who want insurance but are struggling — and find
themselves trapped by the high cost of health care.
Donna Privigyi, 49, of Charlottesville has looked into insurance through the
exchanges a few times. But over the past few years, much of her modest
child-care salary and effort went toward trying to help support her adult son,
Mark, who hadnft been the same since the death of his younger brother. Donna was
focused on trying to support her son. Health insurance — even rent — was an
afterthought.
gWith supporting my son, it didnft matter,h Privigyi said. gI was just like,
I can barely get by, just juggling the bills and taking care of him.h
Late last year, Mark died of a drug overdose, and Privigyi — consumed by
grief — wasnft thinking about insurance when the window to sign up opened and
closed.
Then, in June, she got appendicitis. Her bills from two hospitals were
$33,000.
The argument for having health insurance is the pile of bills she has been
collecting — now with late fees added. The obstacle to getting health insurance
is that same stack of bills.
gItfs such a gamble, you know, until I figure out what to do with these
medical bills,h Privigyi said. gTheyfre just adding on late fees. How can I even
afford to sign up?h
Juliet Eilperin contributed to this report.