Obamacare Hits 12.7 Million Enrollments––But Only Grows 8.5%

Today the administration announced that 12.7 million people signed up for coverage in the Affordable Care Act's insurance exchanges.

Said the HealthCare.gov CEO, "We knocked the lights out this year. We did a great job."

Let's take a closer look.
In 2015, the exchange enrollment totaled 11.7 million. By year-end 2015, that had shrunk to 9.1 million––a 22% decrease. The administration has said their goal is to have 10 million insured through the exchanges by the end of 2016.

If all 12.7 million of these enrollments complete their enrollment and pay for their coverage––those who signed up for March 1 effective dates have until the end of February to pay––and the same lapse occurs as occurred in 2015, they would have 9.8 million still covered at year end.

Again presuming all 12.7 million end up completing their enrollments, the Obama administration achieved an 8.5% growth over the 2015 open-enrollment.

According to an October Urban Institute study, by the end of June 2015, only 35% of those eligible for a subsidy in the Obamacare exchanges had enrolled.

If the administration can increase that by 8.5% this year, the Obamacare take-up rate for those subsidy eligible would be about 38%. Historically, insurers want to see a 75% participation rate to ensure they have enough healthy people signed up to pay for the sick.

A couple of observations:

• This 8.5% increase in enrollment took place in the year the fines for not having insurance increased to the maximum under the health care law––obviously not having a big impact.
• Obamacare is a monopoly for the individual health insurance market; if you don't buy it you are subject to fine, yet only a small percentage of those eligible have signed up after three open enrollments.
• Most health insurers are famously losing money in Obamacare. They were hoping for a material improvement in the risk pool with an enrollment that did "knock the lights out." Since that has not happened there is little reason for optimism that the pending 2017 rate increases can be moderated especially in light of the fact that two of the three "3Rs" reinsurance provisions are going away in 2017.

As Carolyn Peterson of Avalere Consulting so diplomatically put it, "While exchange enrollment will meet the administration's modest 10 million goal, it does appear growth in this market has slowed. Efforts to expand participation in the long-term will be important to sustain robust plan participation and support continued improvement in the risk pool."

That is putting it mildly.