Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Most Important Week for Obamacare

Americans have seven days left to sign up for Obamacare. Open enrollment ends on March 31 and won't reopen until Nov. 15. Excluding special circumstances, such as losing coverage at work, Americans won't be able to sign up for insurance on the exchanges until then.

The open enrollment period is there to protect insurers, such as UnitedHealth Group (NYSE: UNH  ) , Humana (NYSE: HUM  ) , and WellPoint (NYSE: ANTM  ) , which would be adversely affected if people could enroll anytime. The insurers can't deny coverage for pre-existing conditions, so Americans could just wait until they had a medical issue and then sign up. That's not the way insurance is supposed to work.

The limited enrollment also protects hospitals that -- with the government's help -- would still have to cover unpaid bills for uninsured emergencies by people scheming the system, something Obamacare was designed to alleviate.

The end of the first open enrollment period also marks the deadline to get signed up or face a penalty on your 2014 taxes of 1% of your yearly income or $95 per person, whichever is higher.

Capturing the procrastinators
This week is critical to the success of Obamacare, since late signups are likely to be the kind of people who don't think they need health insurance; otherwise they would have signed up before Jan. 1, when insurance could have kicked in. They've waited this long to save a few months' worth of premiums.

People who don't think they need insurance, presumably because they don't have any pre-existing conditions will, on average, pay more in premiums than they will cost the insurance companies in medical expenses. Without getting those people to sign up, the system doesn't work, and insurers have to raise premium prices to reflect the increased average medical expense per member.

Enrollment slowed in February, with 942,000 enrolling in plans, down from more than 1.1 million in January. Even factoring in the short month, February still had fewer enrollees per day than January. The hope and expectation is that March should pick up pace, with the deadline looming.

The key demographic to look at is 18- to 34-year-olds, who should be healthier on average. In February, the group made up 27% of enrollees, up from 24% during the first three months the exchanges were open.

Not a make-or-break week
This week is clearly the most important week of open enrollment as the government makes a final push to persuade people to sign up for something that won't benefit them financially. (Many healthy people would be better off financially if they pay the penalty rather than pay for insurance.)


But this week is far from a make-or-break week for Obamacare. Earlier this month, President Obama said the program was on track to be viable even though enrollment will fall well short of initial expectations. Any extra enrollees will help lower costs, but they're not needed to keep the system alive.

There have been reports that premiums might jump next year, but those are likely to be regional issues. Insurance is priced on a regional level based on regional enrollees. Insurers determined 2014 pricing based on assumptions without any experience on who might actually enroll. It's not surprising that they might have guessed wrong in some of the markets.

WellPoint, at least, doesn't seem to be having issues with making money in the new environment. Last week the insurer raised its forecast for 2014 from greater than $8.00 per share to greater than $8.20 per share. WellPoint cited the addition of 1 million to 1.3 million new members, which will drive increases in operating revenue and profits.

Don't procrastinate reading this free report
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 (0) | Recommend This Article (0)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2888377, ~/Articles/ArticleHandler.aspx, 9/3/2015 11:37:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Orelli

Dr. Orelli is a Senior Biotech Specialist. He has written about biotech, pharmaceutical, and medical device companies for The Motley Fool since 2007.

Today's Market

updated Moments ago Sponsored by:
DOW 16,508.32 156.94 0.96%
S&P 500 1,969.02 20.16 1.03%
NASD 4,786.76 36.78 0.77%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/3/2015 11:22 AM
ANTM $143.36 Up +2.89 +2.06%
Anthem CAPS Rating: ****
HUM $183.98 Up +2.28 +1.25%
Humana, Inc. CAPS Rating: ****
UNH $115.60 Up +1.37 +1.20%
UnitedHealth Group CAPS Rating: ****