4 Million Enrollees Later, Has Obamacare Succeeded?

Obamacare has made real progress since its stumbles in the opening days of October. Since its much-maligned launch, the Affordable Care Act has picked up millions of sign-ups for private health care insurance to this point, and President Obama's signature act racked up another milestone this week. Tuesday, the administration announced that Obamacare sign-ups have surpassed the four million mark, no mean feat considering how slowly the program grew during the first two months of its life.

For UnitedHealth Group (NYSE: UNH  ) , Humana (NYSE: HUM  ) , and other major health insurers, however, it's hard to say whether Obamacare is a big success. Between cuts to Medicare Advantage still on the way for next year and ongoing sluggish numbers of young people signing up, can America's leading medical insurance firms thrive behind the ACA's performance in the coming months?

Is Obamacare's 2014 as good as it looks?
First, it's important to look at that four million sign-ups mark in context. 

Source: White House on Flickr.

The ACA is still far behind the White House's initial goal of seven million enrollees during its first six-month launch window, which closes with the end of March, and while the administration still has a little more than a month to reach that goal, it will be a challenge to gain 3 million new sign-ups. While there's still a week left in the month, February's numbers actually trail January's sign-ups so far: The administration announced more than 1.1 million new Obamacare enrollees in January to bring the grand total to 3.3 million, so this week's 4 million-strong mark represents growth of just 700,000 through February thus far. It will be challenging for Obamacare to round up another three million in the next five weeks.

More significantly for leading insurers like UnitedHealth, young adult enrollment remains far weaker than necessary to keep costs down. The Obama administration aimed for a goal of around 40% of total sign-ups to come from the youth pool; that mark stood around just 25% as of Feb. 1. While some analysts have pointed out that a gulf between 25% and 40% might only result in limited premium hikes for enrollees, other companies around the industry have been less bullish.

Aetna's (NYSE: AET  ) CEO took a particularly hard stance earlier this month, pointing out that the new law's lean toward older, less-healthy patients likely will mean Aetna will lose money on Obamacare sign-ups in 2014. Aetna reportedly signing up 135,000 new enrollees through the exchanges by the end of January, but the company hasn't indicated whether future years under Obamacare could lead to gains. Still, with only around 3% of Aetna's business coming from the individual market, the company has limited exposure to the exchanges and Obamacare isn't exactly killing the company's outlook.

Questions remain for 2014 and beyond
While Aetna and other companies may feel the pressure in 2014 from Obamacare, these early warnings make one thing all the more clear: The Affordable Care Act's ultimate fate as a success or failure will require far more than one year to decide for leading health insurers, despite the increased enrollment numbers the administration has touted lately.

Take the Medicare Advantage cuts scheduled to arrive in 2015. UnitedHealth and Humana, both large players in the Medicare arena, face 3.5% to 4% cuts to Medicare Advantage payments in 2015, although those numbers aren't final. Both companies have a lot on the line: UnitedHealth's Medicare Advantage segment was its fastest-growing member pool in 2013, with 17% subscriber growth, and cuts will increase the company's medical cost ratio, which is the percentage of premiums paid out for medical costs.

While rival Humana's management sighed in relief that cuts didn't come in as high as the 6% to 7% previously feared, Medicare Advantage revenue still makes up the majority of the company's total sales, according to its latest 10-K filing. Cuts, even less than expected, will hurt.

Then there's the question of Obamacare's technical foundation. Tech glitches plagued the Affordable Care Act's federal exchanges early on, and smoothing over some of the worst no doubt has helped the law's progress in the last two months. With Accenture (NYSE: ACN  ) now stepping in to operate Obamacare's web site operations, will further technical issues be ironed out by the time 2015 rolls around? If so, that will help promote better sign-up figures the for law's second year -- and in turn, help insurance companies succeed through Obamacare in the long run. Accenture is well-liked in the corporate world, but it will take time to see whether or not the firm can keep technical problems on the exchanges to a minimum.

Despite these lingering questions, however, Obamacare has certainly outpaced its early sluggishness, even if it is still behind the pace to meet the administration's initial guidance. Keep a close eye on March's growth, even as the initial launch window comes to a close.

Will March bring new momentum?
Obamacare has implemented huge changes to the health insurance landscape for sure, and it's understandable for many health insurance giants to experience some frustration with the rocky start the new law has experienced. For investors, however, 2014 is only a stepping stone toward the ACA's ultimate impact on the insurance landscape. If Obamacare can post respectable growth through March and end its first six-month enrollment period on a high note, the law will be poised to carry momentum forward for what could be a big year ahead for both customers and investors -- even if it doesn't meet that 7 million sign-up figure.

Will Obamacare help or hurt your financial future?
President Obama's Affordable Care Act has swept the health insurance industry-and the nation-with huge changes, but are you prepared for how this could impact your finances? Obamacare seems complex, but it doesn't have to be. In only minutes, you can learn the critical facts you need to know in a special free report called "Everything You Need to Know About Obamacare." This FREE guide contains the key information and money-making advice that every American must know. Please click here to access your free copy.

Read/Post Comments (21) | Recommend This Article (5)

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 February 26, 2014, at 11:12 AM, lucyr wrote:

    All well and good but have all these people PAYED? That is the big question.

  • Report this Comment On February 26, 2014, at 1:09 PM, mediaidiocy wrote:

    Let's take an objective look for once at this picture. "Obamacare" has abruptly monopolized the health care industry, requiring that all existing plans follow its totalitarian scheme. Since most existing plans don't carry maternity care for men and other preposterous provisions, those who previously carried health insurance and need to retain a policy have no choice but to sign up for this atrocity, enabling the media to spuriously boast "progress".

  • Report this Comment On February 26, 2014, at 1:20 PM, tlc83862 wrote:

    The objectives look is what is the CEO from these insurance companies going to be able to pay themselves now that everyone is looking at them. Can they pay themselves as once before 100 million a year ask Atena's CEO that question. And United Health care once huge pay back in 2005 Bill McQuire can they still take home a billion in pay and stocks?With the new CEO's can they still make that kind of money and charge us more.

  • Report this Comment On February 26, 2014, at 1:31 PM, mtracy9 wrote:

    Our dictatorial health insurance industry has been in charge of America's health care for years now -- deciding what benefits they will pay, and who they will insure and who they wont. Meanwhile, the rich CEOs of these companies have found every way imaginable to scam the system so that they can pay themselves multimillion dollar salaries. Obamacare will get rid of some of the most egregious abuses of our current private health care racket but, until we get to single-payer, much of the waste is bound to remain.

  • Report this Comment On February 26, 2014, at 1:37 PM, jetool77 wrote:

    On what planet, where 5 million LOSE their coverage and 2 months later 4 million are "signed up", can this thing POSSIBLY be considered a success? What is wrong with people in print and media? They have an attention span of about 5 minutes and look about as far into the future.

  • Report this Comment On February 26, 2014, at 1:37 PM, entitled wrote:

    "Since its much-maligned launch"- Much deserved for sure! So let me see....6meg lost insurance and 4meg 'signed up', whatever that means, leaves a net loss of 2 million folks that may, or may not have insurance coverage. One needs to ask the question as to what exactly was the point to all this craziness and disruption?

  • Report this Comment On February 26, 2014, at 1:57 PM, JuanGatos wrote:

    What's going to happen when all those people learn their deductable will be in the $1000s every year? Most will stop paying altogether.

  • Report this Comment On February 26, 2014, at 2:05 PM, judysway wrote:

    Hopefully you are joking! Anything that is founded in so much secrecy, "You have to pass it to see what's in it", is bound to be a horror show! For all of us who do pay taxes, and are not on a government subsidy program, this ACA is a dark nightmare! Huge increases in payments and co-pays. Huge deductibles before insurance kicks in.

    Millions have LOST the insurance they wanted and their doctors! The now sky high premiums will make it almost impossible for young families to even think of owning a home! The taxes that are written into this law on the capital gains on the sale of a home! 2,00 pages of the biggest power grab in the history of the USA. REPEAL THE ACA! Fire all those responsible!

  • Report this Comment On February 26, 2014, at 3:07 PM, Mathman6577 wrote:

    No matter how is it spinned the ACA will never be a "good" policy for the country.

  • Report this Comment On February 26, 2014, at 3:44 PM, PJSolarz wrote:

    Can I see the data? Show us the numbers. How many are paying for those plans and how many are Medicare enrolee's?

  • Report this Comment On February 26, 2014, at 3:50 PM, kommensense wrote:

    The bigger question is how many enrollees are Medicaid or highly subsidized? This PONZI SCHEME makes Bernie Madoff look like a Saint.

  • Report this Comment On February 26, 2014, at 3:50 PM, david579 wrote:

    The big question will be ... is it affordable? People are going to have a huge wake up call when they realize that how painful the deductibles are going to be ... and then then cannot deduct much of the premiums on their taxes.

    For you insurance exec haters ... doe you think instituting a huge govt. bureaucracy on top of everything else is going to make health care less expensive?

  • Report this Comment On February 26, 2014, at 4:04 PM, Mathman6577 wrote:

    The insurance industry will soon come crying to Congress for a bailout.

  • Report this Comment On February 26, 2014, at 5:10 PM, Schneidku40 wrote:

    I'm afraid enrollment numbers by themselves cannot determine whether the ACA has succeeded. It's basically a mandatory issue. That would be akin to when income tax was first mandated. Success, 133 million americans now pay income taxes! We have no choice, so now we pay income taxes.

    It will be at least 5 years before we can even give a preliminary judgment on whether the ACA has actually done anything positive.

  • Report this Comment On February 26, 2014, at 5:55 PM, Brinkley1 wrote:

    Motley Fool is an objective fact based service....please provide the facts. Lets present the whole picture including those who have lost insurance as well as other information which seems to be missing from the article ..otherwise credibility comes into question.

  • Report this Comment On February 26, 2014, at 10:31 PM, EatMorChikn wrote:

    How can you ever measure the success of the ACA as long as they keep changing, modifying, or (re)writing the rules?? (i.e. exemptions for the unions, delays for small business and the one where you can keep your (crappy) plan for one more year! I hope that somewhere out of all this confusion there evolves some sanity! (But, I'm fairly certain with 49% (and probably growing) of the population with some type of Government connection (paycheck/subsidy) it's going to remain insane!) There is a point where society at least as a Democray becomes ungovernable! Guess what follows?????????

  • Report this Comment On February 26, 2014, at 10:35 PM, malclave wrote:

    The Affordable Care Act is, objectively, a failure.

    Despite shutting down the government rather than accepting a one-year delay in implementation, President Obama's administration has repeatedly delayed some aspects and ignored others.

    Unfortunately, Democrat operatives in the media (including, apparently, the Motley Fool) refuse to report on the facts the way they would if a Republican was in office.

    Now, is "Obamacare" (separate from the ACA) a failure? I don't know. Nobody knows what Obamacare is supposed to do.

  • Report this Comment On February 27, 2014, at 9:23 AM, Mathman6577 wrote:


    Obamacare itself is a failure already (there is always the chance that things will get better). Example: a number of people have had their insurance policies cancelled forcing them to scamble to get new coverage. Many people have had medical care postponed (or cancelled). So the law (ACA) that was designed to "help" people is actually "hurting" people. Sometimes good intentions turn out bad.

    I agree with you regrading the media. There seems to be an effort in the "MSM" to gloss over the failures and spin the law positively.

  • Report this Comment On February 27, 2014, at 8:47 PM, motley0518 wrote:

    4 Million is a lie! Not only do we not know how many have paid, BUT we also do not know how many NEW PEOPLE WHO NEVER HAD INSURANCE BEFORE ARE SIGNED UP??? I thought this law was going to help the so-called uninsured??? HAHA This is about establishing Obama's attempt at setting a government controlled system.

    For those of $#@&?! idiots who voted for a guy who would bankrupt a Popsicle stand in the middle of the summer, you should not be allowed to vote again on the basis that you too stupid to think without help!

  • Report this Comment On February 28, 2014, at 12:40 AM, malclave wrote:


    You're assuming that the goal is to help people. I don't know if we can make that assumption.

    If the goal was to make the previous system even worse in order to make people willing to accept a direct government takeover (aka "single payer"), then maybe it's on track.

  • Report this Comment On February 28, 2014, at 7:18 AM, Mathman6577 wrote:

    At least as long as the GOP controls the House we won't have to worry about single-payer.

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Dan Carroll

Dan began writing for the Motley Fool in 2012. He is a health care specialist who also follows the defense industry along with tracking the broader U.S. and international markets.

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