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A Promising and Troubling Trend in Obamacare's First Days

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The past three months have been nothing short of organized chaos when it comes to the ongoing reform of our health-care system.

Obamacare, which has been a widely polarizing law based on your political views, has had quite a few setbacks and triumphs within the first three months since its state and federally run health exchanges went live on Oct. 1.

On one hand, IT-architecture and server-based glitches rendered the federally run Obamacare website,, practically useless throughout the first two months. In that time a mere 137,204 people managed to fully enroll for health insurance -- a paltry figure, considering that the Department of Health and Human Services is targeting 7 million cumulative new paying members before the March 31 coverage cutoff date.

Then again, enrollments absolutely surged in December as the Jan. 1 coverage cutoff date came and went, encouraging both Medicaid-eligible and individual payees to enroll. Through the end of December, enrollments spiked from a state and federally combined 365,000 to more than 2 million. In other words, the ideal that a more universal health system is still alive and well.

With the calendar ticking over to a new year, the guessing game has finally given way to some concrete results, whether we're ready for them or not. Early on, however, there are two interesting observations which bode as both extremely positive and considerably worrisome for Obamacare's long-term prospects.

This is a huge positive for Obamacare
According to research statistics from ZocDoc, an Internet-based company that allows consumers to search for a primary physician and log other medical queries, and as reported by Reuters, the vast majority of patients visiting their doctors within the first few days of the New Year were there for preventative care reasons and not because of a pre-existing illness.

One of the biggest concerns heading into the New Year for insurers was that adverse selection -- the expected process whereby the sickest and most in-need of care consumers would sign up first -- would drive up medical costs. It would certainly make sense that those who were previously uncovered would jump at the chance to obtain health insurance now that insurance companies can no longer deny people expressly because of pre-existing conditions. The great news, early on, is that this doesn't appear to be the case.

ZocDoc notes that just 7% of all searches on its website indicated that people had a pre-existing condition. That's welcome news for national insurers such as WellPoint (NYSE: ANTM  ) and UnitedHealth Group (NYSE: UNH  ) , whose shareholders had to be concerned that weaker-than-expected enrollments coupled with adverse selection could wreak havoc on these insurers' bottom lines, at least in the interim.

But you should also be worried about this ...
While investors are certain to be championing the fact that medical costs are unlikely to spike based on this early action, which could be instrumental in keeping premiums somewhat similar in 2015, they should also be somewhat concerned by the lack of a surge in doctor visits during the first few days.

I know what you're thinking, and yes, this a double-edged sword. One of my primary concerns that I voiced more than a year ago was that our health-care system would be overwhelmed by a surge in new patients waiting to get preventative care. With the number of doctor's licenses in this country growing at less than 1% per year, coupled with the fact that some physicians are simply choosing to opt out of accepting Obamacare-purchased insurance policies, the potential for a quagmire was readily apparent. ZocDoc's data would suggest that the lack of a surge in visits is a positive in that we won't see our primary care physicians get overwhelmed.

Source: U.S. Navy, Wikimedia Commons.

On the other hand, hospitals such as HCA Holdings (NYSE: HCA  ) , and drugstores such as Walgreen (NASDAQ: WBA  ) and CVS Caremark (NYSE: CVS  ) are counting on more insured patients to visit their doctor for preventative care visits and for those patients to be written drug prescriptions.

HCA, for example, wrote off $3.77 billion in revenue from treated patients as uncollectable in fiscal 2012 because they were either uninsured or underinsured. Obamacare was supposed to help rectify this problem with the help of the individual mandate -- the actionable portion of the Patient Protection and Affordable Care Act that requires individuals to purchase health insurance or face a penalty that in 2014 is the greater of $95 or 1% of their annual income -- but that may not be the case. If doctor visits don't increase, then it's unlikely that HCA will see a measurable increase in collectible revenue.

Similarly, Walgreen and CVS are counting on their pharmacies to drive big top- and bottom-line growth in the coming years, with front-end store sales struggling under the weight of increasing competition and loyalty reward promotions. Walgreen spokesperson Markeisha Marshall told Reuters over the weekend, "At this time, activity is fairly typical of what we experience each year when insurance changes take effect." Marshall did, however, reiterate her belief that prescriptions written are expected to soar, perhaps beginning as early as next week. As it stands now, though, pharmacy sales have disappointed in the early going.

The next three months will be telling
Since we're but five days into the beginnings of Obamacare, there's still a lot that can, and will, change. In essence, placing too much credence in these early results would be a foolish thing to do.

However, this early data also gives us a general sense of how consumers are reacting to the new law. There are a few key factors we'll want to keep our eyes on over the next three months as we rapidly approach what I consider to be the very crucial March 31 coverage cutoff deadline to obtain health insurance in 2014.

The primary piece of data we need to be aware of, above all else, is whether young adults are signing up. Regardless of how many government-sponsored and individual enrollees join under Obamacare, insurers are going to have a next to impossible time keeping premiums down in 2015 if healthier young adults don't sign up to help counteract the higher costs of treating sick and elderly patients. By the beginning of April we should, hopefully, have a better gauge of how effective the campaign was to sign up these young adults.

The other thing worth watching is that aforementioned March 31 deadline. Although enrollments spiked in December, I don't consider it to be a particular important deadline for Obamacare. With most Americans waiting until the last minute to pay their bills (and an insurance premium is still nothing more than a bill), I wouldn't be surprised to see the majority of paying citizens wait as long as possible to fully enroll without violating the provisions set forth by the individual mandate in the PPACA.

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Read/Post Comments (22) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 05, 2014, at 5:00 PM, jmgconsultants wrote:

    Obama is continuing to hurt Americans, now we find out that the volunteer fireman and paramedics are considered full time employment and must be put under Obamacare rules which will eliminate the volunteers position. Also Medicare records are being tampered with. Plus healthcare decisions are now made by a panel not your doctor. Plus of course all those who were cancelled and all those that are projected to be cancelled by Obamacare. What a disaster.

  • Report this Comment On January 05, 2014, at 5:02 PM, coultek wrote:

    The Politics of Dancing: Fooling the Younger Generation to Win an Election

  • Report this Comment On January 05, 2014, at 5:02 PM, coultek wrote:

    The Politics of Dancing: Fooling the Younger Generation to Win an Election

    The Constitutionality of Obamacare

  • Report this Comment On January 05, 2014, at 5:12 PM, live2redline wrote:

    The young who voted for Obozo are going to be pissed at him and all liberal demarats....IF YOU WANT REAL CHANGE GOOD FOR EVERYONE, THEN VOTE OUT ALL LIBERAL DEMARTAS IN 2014

  • Report this Comment On January 05, 2014, at 5:14 PM, Lovesmusic wrote:

    Give me a break! Your crystal ball is so clear, you can tell us these Obamacare "facts" after four days of 2014?? And "organized chaos" is an oxymoron, if I ever saw one. Good journalism?? In the next three months, the dynamics of even getting a healthcare claim filed and paid for Obamacare recipients will be a disaster. Most people have not even paid premiums yet as they have not receive statements. Yet, they will need healthcare. Physicians/ hospitals, etc. will be caught up in the Obamacare "organized chaos" resulting in no payments. March, 2014 should be the beginning of the true Obamacare story. Stay tuned..

  • Report this Comment On January 05, 2014, at 5:29 PM, CrazyDocAl wrote:

    I fail to see what the author is seeing? Of course preventative care visits are up. If you knew that waiting until January to get a physical would cost you nothing wouldn't you wait?

    Also the April 1st deadline is not some giant mile marker. That's just the date at which those who don't have insurance will be forced to change their W2 so they don't have to pay a fine. Anyone who was going to sign up either has or will this week. They want coverage now. The only ones who will sign up after this point are those who get sick or injured and need insurance.

  • Report this Comment On January 05, 2014, at 5:33 PM, DaSky wrote:

    "Promising"? Seriously Fool?

  • Report this Comment On January 05, 2014, at 6:35 PM, ronbear wrote:


  • Report this Comment On January 05, 2014, at 7:10 PM, ub1fool wrote:

    Ridiculous article, waste of time to read and for the idiot to have written...says nothing....there is no trend here....all bs...another irresponsible journalist...early prediction is the program is a guess is that most Americans will try to do the right thing hoping that the deadheads in Congress will take action to fix the clusteryuck....should that not happen then there will be a real crisis in American healthcare, worse than what the boneheads were trying to fix. If this program is so friggin good why has Congress gotten an exemption along with the rest of the Obama cronies...IF IT'S NOT GOOD ENOUGH FOR THEM IT ISN'T GOOD ENOUGH FOR THE AMERICAN PEOPLE. Congress is supposed to be Government for the people by the people...not elitist who think they are better than the people. Time for change!!! Wake up're being fleeced and too stupid to notice or do anything about it.

  • Report this Comment On January 05, 2014, at 7:13 PM, Snork wrote:

    Useless spin...of course enrollments are going up because the several million who have lost their insurance (you know, the plans they thought they could keep) have been forced to enroll in ACA. This point is 'conveniently' left out of the article.

  • Report this Comment On January 05, 2014, at 8:04 PM, bigfoot wrote:

    Too many of the yahoo commenters are over here turning this into the type of threads you find on Yahoo. I guess that is to be expected with all the articles from the Motley Fool now on Yahoo.

  • Report this Comment On January 05, 2014, at 8:04 PM, nagitava wrote:

    I looked into it. I can save thousands per year.

    I will be signing in this week. Gotta get paperwork but yes, it will save you all lot's of money and you won't ever go broke because you got ill.

    The doctors do what they have to do and the insurance companies can no longer cancel you half way through an illness. Thank god for Obama.

    Oh yeah, no, no subsidies for me but it still saves me big money.

  • Report this Comment On January 05, 2014, at 8:09 PM, nagitava wrote:

    Only reason you can't keep certain plans is because they are beneath the requirements for your well being. You don't want and Edsel when everybody is in an Accura. The plans that are being canceled are being canceled by the insurance companies because they can't scam you anymore.

  • Report this Comment On January 05, 2014, at 8:39 PM, Pakirk53 wrote:

    Obamacare is of course dead on arrival! It was instituted by the party that preaches that a 36 dollar cut back in a family of four's food stamps will reak devastation failure to add 12 more months onto 2 years of unemployment benefits will result in starvation and homelessness yet simply passing a law and everyone will gladly spend 4 to 6 hundrend dollars monthly for a non essential service.

  • Report this Comment On January 05, 2014, at 9:53 PM, fpl1954 wrote:

    There are approximately 20 million Americans without health care. They all face, or FACED, bankruptcy if they got sick. Obamacare makes medical bankruptcy a thing of the past, so these 20 million people are going to flood that site for months. Google answers about 1 billion questions a day, but that's spread across millions of servers located in 181 countries. So, the task of providing access to 20 million people isn't trivial. They kind of blew it, this sort of demand should have been obvious. They should have divided and said last names starting in A-D can logon on Mondays, last names starting in E-G Tuesdays, etc. Then it would have worked a LOT better.

  • Report this Comment On January 05, 2014, at 9:58 PM, vickieski458 wrote:

    okay i am a single parent and went on this so called website. For the last two years I was hoping on article would at least give me an idea of what i was going to pay. (did see one and promised less than a cell phone bill cost..yea right!)

    btw I am one of the 15% who does not nor had insurance even for my kids.. BUT i am part of the 15% that does not go to the doctor or pays in cash like many others that are uninsured. Plus we are paying 100% of the bill and not 50% write off like the doctors have to do for insurance, they loose on insurance.. I know i work for a doctor and process the claims (the cost alone to process claims is crazy for the medical field).. believe me all of you tooting your horn you are not the cause of rising prices because you have insurance.. think again. no it is Medicaid with no copay's or responsibility, it is In Network's that give half of the cost to the doctor and they have to accept it, plus no control on drugs or supplies or liability insurance because we are a sue happy country.. they are putting out more than getting in due to In Network controlling yet not control over the things they have to buy that are over inflated. OSHA laws HIPPA laws.. find out how much equipment cost for them, over inflated and no control. Not to say you have no idea how many insurances do not pay us due to loop holes.. yep, they too do not pay also.. so the 15% crap is that crap they are feeding you.

    With subsides, it will cost me 400 to 500 a month for his so called insurance, more than my rent i can not afford PLUS the bonus round is a 10,000 ded 40/60 that means with this insurance I cannot afford ANY CARE at all.. wow, nice, see what you get for working 40 years. I can not pay all the medical expense in cash plus high premiums plus for everyone else to get it free.. i am way lower middle class.. i just want to give up and see no hope.. too old to be dealing with this.

  • Report this Comment On January 05, 2014, at 10:02 PM, vickieski458 wrote:

    The website has no reason for not working. Family members of mine are in this business and it was a simple site. Low graphics and few questions.. to be honest 2/3 of the questions kept asking me my race.. what does that have to do with it? there are sites much more active, higher flow and run a number of high security programs with no problem.. it was not as high as sites like Ebay, Amazon, Facebook on a daily bases.. no excuses.. i worry more about the security and one would be a fool to put their debit card in there.. problems with that has already started with the minor few who have paid. CRAZY

  • Report this Comment On January 05, 2014, at 10:38 PM, pilotdan1 wrote:

    To date Obamacare has had around 2 million sign up but has also cause over 6 million people to lose their existing affordable health care plans, thus an

    4 million increase in the uninsured. THIS is not an improvement. Additionally Obamacare only approves 2 or 3 hospitals per state not even 15% of the hospitals. Nor does Obamacare approve very many specialists so for those with heart problems, Cancer or other specialized needs good luck. Meanwhile Obama and every Congressman has the VIP Plan on the taxpayers dime with not one cent out of their pocket. Thus if a so called law does not apply uniformly to all then it is both immoral and illegal in my mind. So vote the bums who imposed this monstrosity on us ....out of officein 2014 and 2016.

  • Report this Comment On January 05, 2014, at 10:53 PM, trubolt wrote:

    this article is nothing more than continued damage control for the Obama administration. liberals rarely, if ever, accept responsibility for their mistakes ... directly, only indirectly, if that. when backed into a corner, knowing full well they made a mistake, they desperately attempt to divert the focus away from it just to save face, often blaming someone or something else, spewing all sorts of meaningless, sometimes technical garble, in hopes no one notices the truth. the truth being ... they were dead wrong.

  • Report this Comment On January 05, 2014, at 10:56 PM, trubolt wrote:

    Contrary to popular belief, fueled by propaganda and disinformation, the rise in the cost for healthcare and health insurance is NOT because of the insurance companies paying for the uninsured or just to stuff their pockets. That is a very convenient fallacy created by the powers that be to mask their agenda.

    To set the record straight, health insurance costs rise because of the insurance companies having to cover the costs of paying catastrophic claims by those insured as well as the yearly rise in the cost of healthcare in general, aka inflation. Health insurance companies only pay claims for the ... insured. Granted, we as healthcare consumers, do end up paying for the uninsured in the end, but it is the doctors, hospitals and other healthcare "providers" who are at the head of the line in raising the costs overall. It is they, the ones who actually perform the healthcare service, who are the ones who pay for the uninsured when they treat them for free, then pass that cost along to the consumer afterwards. Think about it. Health insurance is secondary in cost to the consumer and always has been.

    Simply put, the majority of the rising healthcare costs start at the head of the line ..... with the healthcare providers, such as the clinics, hospitals, as well as the pharmaceutical companies, artificial hip and knee replacement companies, etc, etc and yes, the doctors themselves. Think of them as the top of the healthcare food chain. That, my friends, is where absorbing the costs of the uninsured incur, not with the insurance companies. Every year doctors, hospitals, etc raise their rates because of inflation (and or greed) and to make up for absorbing the cost of the uninsured. So, in turn, when the doctors and hospitals raise their rates, everyone else down the line, including health insurance companies, raise theirs to compete and or survive. That's just the way it is.

    Indeed, it is a vicious circle considering in the end it is the consumer who ultimately pays, but health insurance companies are not the initial cause for the rise in healthcare costs. Look at the facts and do the math. They only follow suit from those who actually "provide" the healthcare performing the service. Unless of course you'd rather pay the entire cost for healthcare out of your own pocket, health insurance is still a good deal. There have been several affordable healthcare alternatives to Obamacare, but Obama, Reid and the liberals refuses to even consider them, nor will the mainstream media (besides FOX) report on it. Obamacare has never been, about healthcare per say. It's about control and wealth redistributing. And the blind loyalists are falling for it, hook, line and sinker.

  • Report this Comment On January 06, 2014, at 9:36 AM, skat5 wrote:

    A recent study in Oregon indicates that emergency room visits increase rather than decrease, contrary to the official expectation. It is too soon to tell what will happen once the noveau-insured find their way out to doctor's offices, but it seems very likely that the usual market principles will apply: if it gets a subsidy to make the price lower to the buyer, the demand will respond, and if the supply does not adjust upward, the price will then rise unless it is restricted from doing so, in which case the supply will become rationed (e.g. wait 30 days to get an appointment or go to the emergency room). Cost savings are a fantasy with such a system

  • Report this Comment On January 06, 2014, at 6:37 PM, TakingUpSpace wrote:

    Re: "The primary piece of data we need to be aware of, above all else, is whether young adults are signing up."

    A lot of young men may opt out once they learn this:

    Young, healthy men will see higher premium increases than their female counterparts. This is true despite these facts:

    Young men go to the doctor far less and cost their insurers far less than do young women, even factoring out women's reproductive-related visits.

    Young women will have more nonreproductive-related preventive services than young men. Check that out at

    In short, men will get fewer benefits than women after being forced to pay a bigger premium increase. That's how Obama will uphold his promise to eliminate "premium discrimination against women."

    The crafters of Obamacare saw real discrimination against men as the safest way (because "men don't protest and they don't matter anyway") to largely pay for their healthcare program. See

    If a law required women to pay the same as men for auto insurance, the streets would be over-run with angry protesters of both sexes.

    Democrats always know which gender of the ox to gore.

    "Two takes on Obamacare’s discrimination against men"

    "Men Likely to Put Off the Doctor (Male Matters: Or: why men are charged less for health insurance)"

    "Who will pay more? Gender discrimination in health insurance costs"

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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