The demographic that was key to holding down health care costs apparently came in well below the level necessary to ensure that:
Just more than a quarter of the eight million people who signed up for health plans under the Affordable Care Act are in the prized demographic of 18 to 34 years old, falling short of the figure considered ideal to keep down policy prices.
The data, released Thursday by the Obama administration, painted a more complete picture of enrollment in the plans. They show that about 28% of people picking plans on the state and federal insurance exchanges by April 19—after most states’ enrollment deadlines passed—were 18 to 34 years old, a generally healthy group. The proportion is higher than previous counts. But it is significantly below the 40% level that some analysts consider important for holding down rates by balancing the greater medical spending generated by older enrollees.
Insurers right now are setting rates for 2015, and the age data will be a key factor in their decisions. Some insurers say that despite seeing a late surge in younger enrollees, their sign-ups still skewed older overall than they had expected.
Because the “healthy” demographic sign-up fell well below expectations, the rates for 2015 are expected to be at a higher rate. And, of course, there’s the further problem that “enrollment” doesn’t necessarily mean that the enrollee has paid for coverage. As noted in an earlier post:
Data provided to the committee by every insurance provider in the health care law’s Federally Facilitated Marketplace (FFM) shows that, as of April 15, 2014, only 67 percent of individuals and families that had selected a health plan in the federally facilitated marketplace had paid their first month’s premium and therefore completed the enrollment process. Nationwide, only 25 percent of paid enrollees are ages 18 to 34…
And finally, the assumption is that the 18 to 34 demographic will be a “healthy demographic” relatively speaking and will carry the cost for the more sickly among us. That too may be an erroneous assumption:
While the 18-34-year-old cohort has been dubbed the “young and healthy,” a more accurate moniker might be “young and somewhat healthy.” 68 percent of 18-34-year-olds on the federal exchanges chose a silver plan. As I’ve written previously:
Why does this matter for the death spiral? Because so many enrollees choosing silver plans suggests that the risk pool may be sicker than is optimal. For enrollees at or below 250 percent of the federal poverty level, silver plans tend to offer the most coverage for the lowest price. For persons under 250 percent FPL, ObamaCare offers help with copays and deductibles, but only if the consumer chooses a silver plan. The actuarial value for a silver plan is 70 percent (that is, a silver plan must, on average, cover 70 percent of a policyholder’s medical claims), but when the subsidies for cost-sharing are included, the actuarial value rises to between 73 and 94 percent. As one writer notes, “Why would someone opt for a silver-level plan over a cheaper bronze or catastrophic-level plan? The most plausible explanation is that the enrollee anticipates incurring significant medical expenses over the coming year, which is to say that he’s not healthy.”
Since income tends to be lower the younger one is, a lot of those 18-34-year-olds are probably in that <250 percent FPL range. The inordinate number of 18-34-year-olds choosing silver plans suggests that the exchanges have attracted young and healthy people that are not that healthy.
Not only may they not be young and healthy, but they’ll most likely be receiving high subsidies which, again, sort of defeats the whole purpose of signing up that demographic, doesn’t it? And it certainly calls into further question whether or not even the 28% that signed up will have any significant effect in helping to lower costs.
Bottom line? Well, to quote a well-known conservative talk show host, we’ve again been treated to a heaping helping of “bovine scatology”. Not that anyone at all familiar with this president and his administration should at all be surprised.