Well, Max Baucus and pretty much everyone else predicted a “train wreck,” but, like the little train that could, Healthcare.gov keeps chanting “I think I can, I think I can.”
Private health plan enrollment topped 3 million last week, nearly halfway to the magic 7 million figure that the administration set as the bar for success during the initial enrollment period. And while critics might argue that the federal and state exchange sites have been open for four months already, so we should be well over halfway there, don’t forget that the first two months were disastrous. Enrollment didn’t really start picking up until sometime around Cyber Monday.
Along with the 3 million individuals who have signed up for private health plans, another 6.3 million people have been found eligible for Medicaid or CHIP, as reported by Reuters. So we’re getting close to 10 million total – not bad considering the very bumpy start.
So could we really hit 7 million people in private plans? Possibly. With a week to go in January, the administration was on track to hit its goal of 1.1 million for the month according to the Washington Post. But it is worth pointing out that, despite all the attention, there really is nothing magical about the 7 million number. What will ultimately determine the success of the program is the mix of individuals who sign up for coverage.
The prevailing wisdom has been that the administration needs a lot of young enrollees – about 37% of the total enrollees – to sign up. But, to date, the percentage is significantly lower than that, with young people accounting for only about 25% of enrollees. But the prevailing wisdom is also starting to change a bit. As the Kaiser Family Foundation points out in a January 24th article entitled The Healthy, Not The Young, May Determine Health Law’s Fate, “people have started to wonder just how critical those young people really are to making the health exchanges operate smoothly.” The truth is, as KFF president Larry Leavitt explains, “the invincible part is actually much more important than the young part.” To keep premiums under control, insurance companies need a lot of people to sign up for coverage but not actually use it.
“An insurer would much rather have a healthy 60-year-old who goes to the gym every day than a sick 25-year-old,” Levitt continues. Plus, a healthy 60 year old is much more profitable for the insurance company than even a healthy 25 year old because of the much higher premiums. With 3 to 1 age bands, a 60 year old pays about 2.7 times as much as a 25 year old – or, in the case of someone receiving a premium tax credit, the 60 year old enrollee and the federal government together pay about 2.7 times as much.
The one figure we haven’t seen yet is how many of the 3 million enrollees have signed up through a public exchange, possibly with the assistance of a navigator, and how many have signed up through a private exchange, with the help of licensed health insurance professionals. To a large extent, navigators focus on a different market segment than health insurance agents – those who qualify for a government program like Medicaid or CHIP. Yes, there are a lot of people who do qualify for those programs, but there are also a lot who qualify for subsidized private plans, so there’s no shortage of prospects for an agent who wants his or her piece of the pie. The key is for the agent to have a turnkey solution that can help him handle the volume and maximize his time so he can help the most people possible in the two months we have left.