(Updated March 31)
As the “train wreck” called Obamacare pulls into the station it’s becoming clear that some 7 million Americans are signing up to purchase insurance in the Exchanges. Ten days ago I went out on a limb and predicted that we would hit 7 million, if not by March 31, by early summer. Now it appears that we’ll break through that target by midnight.
Seven million was the Congressional Budget Office’s (CBO’s) initial estimate, but when the roll-out proved rocky, the administration lowered its expectations to 6 million. Reform’s opponents groused that this still was too optimistic, and before long the consensus estimate fell to 4 to 5 million. (Conservatives, who had helped lower the consensus, then accused Democrats of moving the goal-post to make it easier to claim success.)
Younger Americans Join the Pool
Who are these last-minute shoppers? According to the Wall Street Journal,carriers are beginning to report that many are under 40. Today, more insurers confirmed the trend. This should come as no surprise.
We always knew that people in their 50s and 60s would join the Exchanges first. Healthy 20-somethings and 30-somethings who rarely see a doctor would be in no rush to sign up. Why begin paying premiums before you have to?
Now, younger Americans are jumping into the pool, and, most importantly, the pace of enrollments is building. Friday, March 28, Charles Gaba, the “numbers Geek” who has correctly predicted earlier enrollment milestones, wrote: “We’re in uncharted territory. . . Things are moving VERY quickly now, and events are quickly overtaking my ability to keep up.” Yesterday (Saturday, March 29), Gaba hiked his March 31 estimate to 6.7 million, up from 6.22 million earlier in the week.
Keep in mind that, in most states, anyone who gets on line before the March 31 deadline, begins an application, and experiences technological difficulties, can complete that application in April. By the time those late entries are tallied,enrollments will top 7 million. How high will they go? All bets are off.
Some in the Media Downplay the News
Inevitably, enterprising journalists are trying to distinguish themselves from their colleagues by finding a new angle on the story: “National Enrollment Looks OK, But States Matter More,” NPR’s Julie Rovner declared.
Newsweek’s Zach Schonfeld was downright snarky:: “Obamacare Reaches Its Target. Can We Stop Pretending That Number Matters Now?” According to Schonfeld, whether 6 million or 7 million people sign up, this is a “minor victory for the president.”
What Schonfeld fails to understand is that what matters is not the number of people who have enrolled in a particular state, but the momentum. The sudden surge suggests that as the number of people who have bought insurance reaches a critical tipping point, the public’s view of Obamacare is changing.
Indeed, a recent Kaiser Foundation study reveals that the public is warming to reform. Over the past two months the share of respondents who supported the ACA rose from 34% to 38%. Tellingly, since February, opposition among the uninsured has dropped 11%, while support had increased by 15%.
A significant majority oppose repealing Obamacare. Fifty-nine percent of those surveyed said they wanted Congress to either “keep the law in place and work to improve it,” or simply “leave the law as is.”
What is happening? Over the past two months, as more Americans bought coverage, they began talking to friends and relatives who, until now, didn’t know who or what to believe about the Affordable Care Act (ACA). Now those friends are learning about premiums and generous government subsidies from people they know and trust. At last, the fog of disinformation is lifting, and the reality of Obamacare is sinking in.
By early summer, we’ll see the effect even in states where enrollments have lagged.Just in the past two days, sign-ups in Red States have surged. Who knows? Maybe the mainstream media will replace anecdotes about “Obamcare’s victims,” with the facts that people need to know..
Today Kaiser’s polling shows that about one-third of the uninsured are not aware that the law includes subsidies that could help them buy insurance. Forty percent to 50% don’t know about the most popular provisions of the law: the guarantee that people cannot be denied coverage–or charged more– because of pre-existing conditions; the expansion of Medicaid ;and the rule eliminating out-of-pocket costs for preventive care.
Perhaps our newspapers and networks will begin tospread the word that, thanks to government subsidies, millions of people who will be able to buy a “zero-premium policy.”
Who Knew That Insurance Could Be Free?
That’s right. What most people don’t know—and what Fox News hasn’t been telling them–is that that roughly 6.5 million Americans will be able to purchase insurance without paying a penny. The insurance will cost them nothing because the tax credit that they receive from the government will cover the entire cost of a bronze plan.
Who will qualify? In the fall Credit Suisse published a table revealing that, in many states:
- an individual earning somewhere between $11,490 and $20,100;
- a family of three with joint income under $34,170;
- · and a family of four earning less than $41,200
will be able to find a $0 premium bronze policy.
McKinsey & Co, a leading global management consulting firm, agrees, and estimates that roughly half of those 6.5 million will be under 39.
Even if a family’s household income is somewhat higher, many will discover that, after applying the government subsidy, health insurance may well cost significantly less than their monthly cable bill.
Based on that analysis, back in September, Credit Suisse’s Ralph Giacobbe predicted that “affordability may not be a roadblock” to achieving the CBO projection that 7 million people will buy insurance in the exchanges in 2014. “Simply put,” he wrote, “we don’t see any logical reason why anyone in this population wouldn’t take free healthcare coverage vs. remaining uninsured.”
But, Giacobbe added, much will depend on “education, outreach and logistics /IT.”
As we all know logistics/IT didn’t work out very well—though as time passes, that matters less and less. (Granted, even today, there were computer glitches, but they were fixed quickly) And it’s clear that his month’s outreach effort worked. Going forward I believe that word-of-mouth will continue to drive “education.”
A “Tipping Point”
Many of us who had read the law knew that once people experienced Obamacare, they would like it. Now I think we have reached that threshold where “an idea, trend, or social behavior crosses a threshold, ‘tips’, and spreads like wildfire.” Just enough people have signed up, and are happy with the policies that they have found, that others are learning the truth about the Affordable Care Act.
In the months ahead it will become harder and harder for reform’s opponents to confuse the public with half-truths and outright lies. People will say, “But that’s not what happened to my brother, or my neighbor next door.”
Little wonder, reform’s opponents are getting desperate. In a last-ditch effort to deny reality, they are claiming that we can’t count someone as enrolled unless they have paid their first month’s premium.
But as Gaba explains, “the percentage of enrollees who haven’t paid that initial premium “is a rolling average. People who enrolled between 2/16 and 3/15 don’t even start coverage until April 1st, while anyone who enrolls between 3/16 – 3/31 won’t start coverage until May 1st.
“In many cases, their first month’s premium won’t even be due until up to 6 weeks or more after they enroll. . . it’s silly to write these people off as deadbeats. The vast majority of these will eventually be paid up; it’s just that we won’t have confirmation of many of them until well into May.”
After all, how many people do you know who pay their bills before they get them? How many pay two or three weeks before they are due?
Finally, as enrollments soar, what will this mean for Exchange premiums in 2015? Will they really “sky-rocket” as so many for-profit insurers want us to believe?
No. Climbing enrollments will mean larger, more diverse pools which, in turn, will attract more carriers vying for market share. Because of the way the Exchanges are designed, they will have to compete on price.
But that’s my next post.