Obamacare Enrollment: A Closer Look at This Week's Numbers

If you thought the criticisms of the Patient Protection and Affordable Care Act, affably known as Obamacare, were in the forefront before, the calls of the opposition are practically deafening after the release of federal and state health insurance enrollment figures earlier this week by the Department of Health and Human Services.

No one was particularly expecting fantastic results, considering that the federally run website, Healthcare.gov, has been non-functional for a vast majority of people since it went live on Oct. 1 while numerous other state-run exchanges have yet to fully come online (Oregon and Vermont) or found their start delayed by technical snafus (Hawaii). The actual results, though, were a bit worse than most people fathomed.

No-bamacare
Overall, just 106,185 Americans were able to complete their enrollment for a health insurance plan between Oct. 1 and Nov. 2. To put that into some context, Secretary of Health and Human Services Kathleen Sebelius is targeting 7 million new uninsured enrollees before the coverage cutoff period for 2014 expires amid HHS and Urban Institute data that shows that approximately 50,252,000 people are currently uninsured in this country. In other words, Obamacare is less than 2% to its target goal for sign-ups and managed to enroll just 0.21% of the existing 50.252 million currently uninsured people.

As you might have also expected, some regions and exchanges performed better than others. With technical problems being easier to take care of on individual state-run exchanges which often have separate contractors, state-run exchanges ran circles around Healthcare.gov in terms of total enrollment.

What I'd like to do today -- rather than measuring a state's success as a cumulative enrollment figure -- is to see what percentage of currently uninsured Americans completed enrollment on their states' health exchange, note any similarities that pop up between these states, and point out how this could affect you and your investments.

Five states showing America how it's done
Here are the five states where Obamacare enrollment proved strongest as a percentage of existing uninsured individuals:

State

% of Uninsured That Enrolled

Vermont

2.17%

Connecticut

1.13%

Rhode Island

0.98%

Washington

0.87%

Kentucky

0.77%

Sources: Department of Health and Human Services, Urban Institute, author's calculations.

Now keep in mind, from a purely cumulative basis, that California and New York accounted for 48.8% of all new enrollments by themselves. However, because they boast such large uninsured populations in their respective states, they weren't anywhere near the aforementioned five states when it comes to signing up uninsured individuals as a percentage of total uninsured within a given state.

The first thing that stands out here, with the notable exception of Kentucky, is that these are states which typically lean in favor of the Democratic Party's ideology. That's meaningful, since Democrats are more likely to support Obamacare, whereas Republicans usually oppose it. In other words, we shouldn't be too surprised to see the states that support Obamacare are signing up the greatest percentage of uninsured people.

Another subtlety, yet again with the exception of Kentucky, is that states with higher median household income levels have seen enrollment figures do better than lower-income states. Vermont, Connecticut, Rhode Island, and Washington are all within the top 20 states when it comes to median household income over the past three years, according to the U.S. Census Bureau. This is important, because higher median income levels can help remediate the extra costs associated with premium payments for obtaining health insurance. This is one reason we've seen the Northeast perform so well with regard to health insurance enrollments thus far relative to the South, which has some of the lowest median household income states.

A final observation that had me doing a double-take is that Vermont is leading the pack with a "conversion" rate of better than 2%. I find this remarkable, given that I dubbed Vermont's Health Connect as the biggest health exchange disaster in the country. Earlier this month, Vermont Gov. Peter Shumlin noted that residents would be allowed to keep their existing health plans longer without penalty and that it was very possible Vermont Health Connect won't be online by the time 2014 rolls around. Yet Vermont must be doing something right, as its phone and paper applications are driving enrollments within the state. It also helps that Vermont boasts the second-lowest uninsured rate in the country, so health insurance appears to be a product that Vermont residents tend to seek out on their own. 

What does this mean to you?
Clearly, these enrollment figures have to be worrying insurers that spent big money to make acquisitions ahead of the start of Obamacare. I would specifically be talking about WellPoint (NYSE: WLP  ) , Aetna (NYSE: AET  ) , and CIGNA (NYSE: CI  ) here, which all spent billions in corporate buyouts to get their hands on newly eligible Medicaid members, as well as a larger percentage of the individual insurance market. Thus far that's looked like a sucker's bet for all three, with roughly half of the U.S. states choosing not to expand their Medicaid coverage even though the federal government is offering funds to help these states do so, and with initial health insurance enrollment figures tracking well below expectations.

If I owned shares in any of these insurers I would certainly be displeased, but I also would suggest making sure not to overreact to the HHS's enrollment figure release. Ultimately, it's not as if these insurers are losing customers -- they just aren't gaining them at the lofty pace that most investors and analysts had predicted they would. The health insurance business remains as strong as ever for WellPoint, Aetna, and CIGNA in terms of pricing power, so I wouldn't be too concerned -- at least not yet.

The same would hold true for hospital operators such as HCA Holdings (NYSE: HCA  ) . Investors have been valuing HCA according to a doubtful revenue collection rate of anywhere from 8% to 10% for years, so if they continue to do so they'll probably come up with a fair valuation for the company that's similar to where it's trading now. In essence, slower Obamacare enrollment isn't the end of the world for HCA, and it will find other ways to grow its bottom line, such as cost-cutting and operational efficiency improvements.

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  • Report this Comment On November 16, 2013, at 5:30 PM, peckbill wrote:

    We need to begin putting out reliable and correct information on the federal medical care act. First, the name of the program is not ObamaCare; Obamacare is a political name given the program so the GOP and Democrats could remember what they were arguing about. President Obama should have nipped this in the butt right away, but something with his name on it got the best of him. The correct name is “The Patient Protection and Affordable Care Act”, best known as the “ACA”. People do no not like nicknames for important programs and the less educated people do not understand the term. Second, there is no specific exemption for Muslims in the ACA; there are some allowable waivers for some church groups but each must be approved individually. Third, I support the ACA as it affords those without medical insurance the opportunity to seek and get much needed medical care. You folks that are rich and buy any medical insurance program you want, those of you with free medical insurance and those of you who are provided medical insurance through your employment help get medical care to everyone that need care. It is not Socialism; it is the American way. Fourth, the data input problems are usual problems associated with new computer monitored programs. Remember garbage in garbage out; you only get the quality you pay for or relative to the overall management of the program. In conclusion, let’s get behind the program and help Americans that need medical help. We will catch some of the crooks; some will figure to make big profits, i.e., politicians, hospitals, doctors, insurance companies and groups (like AIG whom we, the people, had to bail out because of bad investments), just everyday people who are looking to beat the system and make a little money and let us not forget the scam artists; but nothing is ever perfect. Individual cost for the medical coverage is misunderstood and the option of being allowed to keep your current medical insurance are problem items at this time, but things will change as impact items are sorted and changes or waivers are applied properly. You should not listen to rumors or assumptions about what an ACA plan will cost you; you need to go to the ACA site and compare costs with what you currently pay. Whether or not you may keep your current insurance appears to be one of the most problematic items at this time; the GOP has zeroed in on this area for another attempt to repeal the ACA There is a lot of negative advertisement out on the ACA as it will apply to individuals and families; get the facts; go to the experts and get the truth. There still appears to be some unknown cost factors associated with age and current health insurance coverage. A delay until these items are resolved might be appropriate, but what about those who expecting health care coverage because they have none and need it to survive. The ACA will provide medical care for pre-existing conditions for thousands of Americans and it will provide medical insurance to 15 million Americans that do not have medical insurance. The GOP/Tea Party members and lovers have resorted to outright lies and twisted truths concerning ACA; do not listen to them; talk to your friends and other people and tell them the advantage and truth about the ACA. Maybe implementation of the Medicaid portion might be appropriate for people with annual income at or below the poverty levels established by the Federal Government people or those that cannot afford the cost at this time. It is apparent that some adjustments are needed, but the ACA intent and purpose is still a sound way to take care of America. The ACA cost may be less than you expected or it could cost more; the cost depends on the amount of greed that is inbreed of insurance carriers. Remember the GOP is still trying to take funds away from the Patient Protection and Affordable Care Act and the GOP is really pushing negative ads and incomplete information with the intent of bringing the ACA down; a lot of the GOP rationale is that Obama is black and the racists in the GOP resents will do anything to discredit Obama. Their actions and apparent agendas is very must in line with those of the KKK. They use the “N: word behind his back and among themselves because they fear reprisals for the racists and bigots they really are. God help the GOP if and when a woman starts kicking their asses in 2016 to get things done; they will literally cry for their Mothers to help.

  • Report this Comment On November 16, 2013, at 8:16 PM, curmudgeon wrote:

    Socialism - political system of communal ownership: a political theory or system in which the means of production and distribution are controlled by the people and operated according to equity and fairness rather than market principles

    Isn't that what we are being forced to do, I mean either get insurance or get fined. We are sharing in the cost of benefits so the sickest of us can get insurance and forcing the heathest to pay for insurance add ons that we will never need. I did comapre costs after my insurance was canceled and "surprise" it is more expensive. Anyone with half a brain can tell whats going on. My wife and I are 53 and do not need maternaty insurance but we would be forced to get it. Absurd. As Reagun said the 9 most feared words "We are with the government and here to help" This thing is getting more expensive every day and it will be a burden on our children. The funny thing about a nickname as in Obamacare,is they seem to stick especially when the people think there is something fishy going on. Also the exemptions don't NEED to say Muslims it just needs to make so that Muslims qualify under one of the 9 that are listed. Your arguements don't hold up to the facts, just the facts you want to make up..boring!

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