If This Poll Is Any Indication, Obamacare May Struggle From the Start

The long-anticipated day has finally arrived: State- and federally run health insurance exchanges are officially open for business as mandated by the Patient Protection and Affordable Care Act, which you probably know better as Obamacare.

It's certainly an ominous start for Obamacare as Republicans and Democrats battle over the program in negotiating the next federal budget -- forcing the first government shutdown in nearly two decades.

Republicans want to completely defund Obamacare or delay it for a year while Democrats will have none of it. All the while, 51 state- and federally run exchanges are signing the first batches of individuals up for health insurance.

Yesterday I proposed my theory of what we as investors and citizens really need to watch out for to determine the long-term success or failure of this transformative bill. Namely, to keep an eye on the resolve of young adults on whether to become part of the system or stay on the outside. Young adults hold the key to success for Obamacare since their participation will help offset the burdensome costs of taking care of the elderly and terminally ill. If young adults don't join in, the effect of the PPACA could be limited and premium costs probably won't stay below the Congressional Budget Office's projections for too long.

So, how do we get a good idea of whether young adults are poised to sign up for health insurance? We turn to research source extraordinaire Gallup, which conducted and released a poll yesterday asking 5,099 adults varying questions about Obamacare including whether they planned to purchase health insurance or pay the penalty, and what their general knowledge was of the bill.

Here were some of the responses:

Are you more likely to get health insurance or pay a fine? (Note: This question was specifically asked only to uninsured individuals.)

I'll get health insurance

65%

I'll pay the fine

25%

I have no opinion

11%

Source: Gallup. Figures may not add up to 100% due to rounding.

Do you plan on getting health insurance through a state- or federally run health exchange in 2014? (Note: This is a follow-up question for those uninsured respondents.)

Yes, I plan to

48%

No, I don't plan to

36%

I have no opinion or have not decided yet

17%

Source: Gallup. Figures may not add up to 100% due to rounding.

What does this mean?
On the surface, we have some mixed but promising news. Although the initial question in Gallup's poll didn't break down the age range of the respondents (that's yet to come), nearly two-thirds appear willing to purchase insurance. That's great news for insurers like UnitedHealth Group (NYSE: UNH  ) and Aetna (NYSE: AET  ) that are counting on healthy adults to purchase insurance to offset adverse selection (i.e., the negative impact that insurers will face when the sickest people sign up for health insurance first) within the first couple of months.

Both companies are diversified, so Aetna should still see strong corporate health insurance enrollment and UnitedHealth Group should see enrollment in Medicare Advantage plans rise. But insurers of all forms need healthier individuals to jump on board if they want Obamacare to be successful and their bottom line to improve.

We heard, but we didn't really listen
However, Gallup's poll didn't stop there. It took a closer look at respondents' understanding of the law. Here's how the responses looked when Gallup edged a bit below the surface:

According to the Affordable Care Act, starting January 2014 most Americans will be required to have health insurance or pay a fine. Were you aware of this before now?

Group

% Yes

% No

National adults

83%

17%

     

Insured

86%

13%

Uninsured

68%

31%

     

18-29 years old

69%

31%

30-49 years old

83%

16%

50-64 years old

91%

9%

65 years and older

87%

13%

Source: Gallup. Figures may not add up to 100% due to rounding.

Now we're starting to see a bit of a problem. I certainly didn't go into this poll with the expectation that younger people would be more aware than the 50-and-up crowd, because the older you get the more likely you are to need medical attention (and thus are more likely to pay attention to what's going on with your health insurance). However, the gigantic discrepancy between the 18-29 age group and the 30-49 age group is undeniably concerning since young adults comprise such a big question mark with the start of Obamacare.

Even more worrisome might be the variance of awareness between the insured and the uninsured. Make no mistake about it, Obamacare is targeting uninsured young adults and attempting to bring them into the system. According to this poll, nearly one-in-three people with no insurance had no clue this was the law of the land, even with the incredible amount of education and press leading up to today's kick-off. I almost have to wonder, based on these figures, if the government is using the wrong type of media to reach younger adults.

And it gets worse...
But it got even worse when Gallup tore past the surface and really dug in to determine whether survey respondents not only knew that the PPACA was the law of the land, but if they felt comfortable in their understanding of the new law. Here's what that same group of respondents above had to say:

Group

Very Familiar

Somewhat Familiar

Not Too Familiar

Not At All Familiar

National adults

8%

29%

27%

35%

         

Insured

9%

32%

28%

31%

Uninsured

5%

20%

21%

51%

         

18-29 years old

5%

22%

32%

40%

30-49 years old

8%

33%

24%

35%

50-64 years old

10%

30%

27%

33%

65 years and older

10%

31%

25%

33%

Source: Gallup. Figures may not add up to 100% due to rounding.

There is no sugar-coating it -- these figures are awful! Despite the best efforts of the U.S. government and Obamacare's top promoters -- at least when this poll was conducted in mid-to-late September -- most people had very little understanding of the PPACA and what it could mean for them.

These figures come despite the joint effort of Walgreen (NYSE: WAG  ) and Blue Cross/Blue Shield operator WellPoint (NYSE: ANTM  ) to spread knowledge of the bill. In addition to Walgreen handing out brochures explaining what Obamacare is and how it could affect its customers, the two companies partnered to create LearnAboutReform.com -- a one-stop shop that explains the ins and outs of Obamacare.

What stands out to me as particularly troublesome are two figures: the 62% of cumulative adults who are "not too familiar" or "not familiar at all" with the PPACA and the whopping 51% of uninsured individuals who are "not at all familiar" with the bill.

On the bright side (if you could call it that), the national average of people not too familiar and not at all familiar with Obamacare is shrinking. Even though 62% is still exceptionally high, this figure was a lot closer to 80% just five months ago. So we're starting to see progress in educating consumers about the PPACA, but we also have a long way to go.

On the downside, the bill is reaching a constituency that's pretty much already taken care of. As I've noted time and time again, the point of the PPACA is to encourage uninsured young adults to sign up to balance the high costs of caring for the elderly and terminally ill patients. What group is the most out of the loop according to the above poll? Uninsured young adults!

How the government could change its game plan
One major flaw that seems evident based on the above data is that the government and its promoters aren't reaching young adults on their medium. With this being a generation based on technology, I'm banging my head as to why we haven't seen an absolute advertising blitz on Facebook (NASDAQ: FB  ) or Twitter about the PPACA and its ramifications for citizens.

According to TechCrunch, based on Facebook's June 2013 daily active user data, 179 million people (a bit more than 55% of the population) are using Facebook on a monthly basis with 128 million of those people active daily. Think about the missed opportunity here for the government to presumably get about half of the U.S. population's attention by blitzing Facebook with Obamacare promotions. In turn, Facebook could benefit from higher PC and mobile ad revenue. Why this isn't happening is beyond me.

Ultimately, it's going to be a long road to determining whether Obamacare is a success, and it's certainly not going to happen overnight. However, the government is going to need to change its game plan for getting the message out because these initial figures of PPACA awareness aren't going to cut the mustard.

Still have questions about Obamacare? We've got answers!
Still in the dark about how Obamacare might affect you and your portfolio? Don't worry -- you're not alone. To help prepare investors for the massive changes coming to the American health care system, The Motley Fool created a special free report that makes this complex topic easily understandable. Download "Everything You Need to Know About Obamacare" and discover how the law may impact your taxes, health insurance, and investments. Click here for your free copy today.


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