The midterm elections are now just six months away. Most pundits agree that the issue most likely to play the most prominent role in the ensuing campaign season is Obamacare. While the law remains consistently unpopular in polls, it has had some high moments as well.
The Obama administration trots out the number of enrollees which, at 8 million, exceeded the estimate of the Congressional Budget Office by a full million people. This was a very big benchmark for the law. CBO’s estimate was that 7 million enrollees were needed for the exchanges to be sustainable. With 1 million to spare, it seems as though the exchanges are here to stay.
“Not so fast,” say the Republicans. In order for the 7 million number to be legitimate, the enrollees have to do more than pick a plan. As is the case with most things, if one does not pay one’s insurance premium, one’s plan will be canceled. So the Republicans asked the administration for the number of people who enrolled and paid their first month’s premium.
The administration stonewalled, claiming they did not have this information. The only ones privy to this, they said, were the insurance companies.
So the House Energy and Commerce Committee sent a questionnaire to insurance companies asking how many of the people from whom they had received applications through the exchanges had signed up and paid the first month’s premium. The report they released was devastating: As of April 15, only 67 percent had signed up and paid the first month’s premium.
If only two thirds of enrollees had made their first premium payment, it would mean that the highly touted 8 million number was, in reality, less than 5 ½ million.
Jay Carney, the press secretary for the Obama administration, argued that the numbers in the committee report were inaccurate, but he offered no data to back that claim up.
He was right.
As it turns out, the number provided to the committee by insurance companies was the number of people who had made payments by April 15. But there were many more people who did not have payments due until the end of April, and they were part of the 33 percent who have not yet made payments cited in the report. As it turns out, a large number of those people did eventually end up making their payments.
Last Wednesday, a group of health insurance executives came back to Capitol Hill to testify before the House Energy and Commerce Committee with updated numbers that included the entire eight million. They clarified that the current paid enrollment number they were working with was somewhere around 80 percent, in part due to the fact that the problems with the website caused many duplicate enrollments which were never paid for.
Democrats, and their reliable allies at media outlets such as The New York Times, jumped on this. The Times ran a story about the 80 percent number under the headline “Insurers Say Most Who Signed Up Under Health Law Have Paid Up.” Congressional Democrat John Dingell said, “I hope everyone will take these companies at their word instead of falling for smoke and mirrors from my friends on the other side of the aisle.” And Senator Chris Murphy of Connecticut said that “Republicans know that public acceptance and approval of this law will continue to grow” when they see how many people actually paid up.
But here is the amazing thing. An 80 percent pay rate is far from good news for Obamacare.
The CBO estimate wasn’t just an arbitrary benchmark. It was the number of people that were needed to participate in the exchanges in order for them to remain solvent. Accepting the 8 million enrollee number as fact, an 80 percent pay rate means that the exchanges are still almost a half million people short of solvency. And even if the pay rate ends up being 87 percent — which would be just about the highest the insurance executives’ data would allow — that would mean that 100 percent of paid enrollees would need to make every payment to keep that number at the “magic” 7 million mark.
And that is a problem.
According to a McKinsey survey of those who enrolled in the exchanges, 80 percent of those who had purchased a plan said that they would “definitely make all payments” throughout the year. If even half of those who think they might not make all their payments were to drop out, that would leave the exchanges with just 6.3 million enrollees — which is 700,000 people shy of solvency. And while that may not be enough to send Obamacare into the “death spiral” of higher prices and worse coverage that conservatives had hoped would bring the law to a quick end, it can definitely nudge it along that path.
The McKinsey survey highlights another disturbing truth for Obamacare. Of those who signed up for coverage on the exchanges, only 22 percent had previously been uninsured. Out of 8 million, that is 1.76 million. And around another 900,000 previously uninsured gained coverage through non-exchange plans.
According to Avik Roy of Forbes, that means the numbers stack up as follows: 930,000 gained coverage because they are under 26 and can stay on their parents’ plans, around 3 million through the expansion of Medicaid. Adding the 2.6 million who are actually newly enrolled in health insurance, the total numbers of previously uninsured that are now covered is around 6.5 million.
In June 2009, at a town hall in Green Bay, Wisconsin, President Obama said that his plan would not affect those who already had coverage. (This was one of the numerous times he said a variation of the “If you like your plan, you can keep your plan” promise that Politifact awarded 2013’s “Lie of the Year.”) It was aimed, he said then, at helping the “46 million people who don’t have health insurance” get covered.
If the 46 million number the president used to sell his plan was accurate (and many have said it is not), it means that less than 14 percent of those Obamacare was designed to help actually benefited from it. And of that number, 46 percent are entirely paid for by the government, and almost all of the 27 percent who bought on the exchanges had their plans subsidized. That means around 73 percent of new enrollees were either fully or partially paid for by the government.
So only 27 percent, or 1.8 million people, gained coverage without having their coverage paid for. That’s less than 4 percent of the 46 million who were previously uninsured. For 2014 and beyond, that’s hardly something Democrats should be able to take a victory lap about.