May 10, 2014:
One of the principal flaws in the coverage of Obamacare’s exchange enrollment numbers to date has been that the press has not made distinctions between those who have “signed up” for Obamacare-based plans, and those who have actually paid for those plans and thereby achieved enrollment in health insurance. A new survey from McKinsey indicates that a large majority of people signing up are now paying for their coverage. This is progress for the health law. But the survey still indicates that three-fourths of enrollees were previously insured.
Two months ago, I wrote about a prior McKinsey survey that found that the vast majority of people signing up for individual-market coverage in 2014 were previously insured, and that of the minority who had been previously uninsured, only 53 percent had paid their first month’s premium.
The upshot of that figure was that of the people shopping for coverage on their own who had actually enrolled in a new plan in 2014, the vast majority had been previously insured. Another way to say that is that for all of the talk about 7-million this and 8-million that, the Obamacare exchanges’ expansion of coverage to the uninsured was far smaller.
New data: 83% of previously uninsured have paid up
The new McKinsey report, authored by Amit Bhardwaj, Erica Coe, Jenny Cordina, and Ruchira Sara, indicates that the proportion of uninsured individuals paying for coverage has shot up, from 53 percent in February to 83 percent in April. For previously insured individuals, the percentage of payers increased from 86 to 89 percent.
The survey data was collected from 2,874 individuals whose incomes made them ineligible for Medicaid: above 100 percent of the Federal Poverty Level in states that haven’t expanded Medicaid, and above 138 percent in states that have. (For a childless adult, this means incomes above $11,670 or $16,105, respectively.) 1,434 of those polled—roughly half of the sample—were previously uninsured, of which 83 percent were eligible for exchange-based subsidies.
53 percent of those who enrolled in 2014 coverage did so by renewing their 2013 plan or enrolling in a plan before the January 1 deadline that made many old plans illegal. The remainder of enrollees “selected a new 2014 ACA plan,” of which nearly two-thirds signed up through an ACA exchange.
Only 22% of Obamacare sign-ups are paid, previously uninsured enrollees
However, the proportion of individuals purchasing ACA plans who had been previously uninsured remained low. In February, McKinsey reported that only 27 percent of those selecting a new 2014 plan were previously uninsured; in April, the proportion was 26 percent.
Combining that with the payment figures: of the people signing up for new ACA plans in 2014, only 22 percent were previously uninsured individuals who have paid for coverage and therefore enrolled in health insurance. That’s a meaningful improvement from February’s 14 percent figure, but it’s still low.
Combining all of this data: of the 8 million sign-ups on the exchange, we can only be confident that around 1.7 million are previously uninsured and enrolled. We can add another 865,000 or so for those purchasing coverage off the exchange, for a total of 2.6 million previously uninsured individual-market enrollees.
McKinsey data consistent with feedback from insurers
Earlier this week, representatives of the insurance industry testified before the House Energy and Commerce Committee regarding enrollment trends in the exchanges. Four of the five witnesses stated that more than 80 percent of their sign-ups had paid for coverage. That’s consistent with what McKinsey found, and also with my own discussions with insurers.
Last week, the E&C Committee published a report indicating that only 67 percent of signer-uppers had paid; however, their data included in the denominator people who have yet to pay because their payments aren’t yet due.
Bottom line: Exchanges are having modest impact on the uninsured
Obamacare is beginning to expand coverage to the uninsured; however, it’s far from clear that the exchanges specifically are a primary engine. At most around 930,000 people have gained coverage from Obamacare’s under-26 “slacker mandate” (not 3 million, as is commonly suggested); another 3 million or so have gained coverage from the law’s expansion of Medicaid. Approximately 2.6 million previously uninsured individuals have obtained coverage through the ACA exchanges and the related off-exchange individual markets; however, the off-exchange purchases are mostly unsubsidized, and therefore can’t necessarily be credited to Obamacare.
What the exchanges appear to be doing is mainly helping people who were previously insured. If you’re 62 years old, say, and your income is $30,000, and you were paying for your own coverage before, you’re now eligible for plans that are much cheaper for you, thanks to taxpayer-funded subsidies and higher premiums for young people.
Of course that means that other people are paying more. “My old plan was canceled under Obamacare,” an exasperated Californian told me last week. “The new Obamacare plan costs twice as much, and the deductibles are higher. And yet Obama is counting me as one of his 8 million people!” But hey—at least he has maternity coverage.
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UPDATE: In the original version of this piece, I described the McKinsey survey as only polling individuals with incomes between 100 and 400 percent of FPL. In a follow-up correspondence, the authors of the study have indicated to me that the survey did include individuals with incomes above 400 percent of FPL. The article has been revised accordingly.