The 3 Most Important Obamacare Questions Yet to Be Answered

With the Obamacare enrollment deadline less than 48 hours away, here are the three most pressing questions that should be on the minds of investors.

Mar 30, 2014 at 2:05PM

Don't look now, but we're less than 48 hours away from Obamacare's health insurance coverage deadline for 2014. With the exception of extension for special circumstances that don't allow currently uninsured citizens from completing their enrollment by tomorrow, Obamacare's state and federally run marketplaces will close to new members until Nov. 15 when enrollment for 2015 kicks off.

A lifetime's worth of opinions have been thrown around over the past year as to whether or not the Patient Protection and Affordable Care Act, known better as Obamacare, would end with success or disaster. To that end, both optimists and pessimists have been given a bevy of ammo to support their side of the argument.

When all is said and done, however, and enrollment for 2014 closes on Monday night when the clock strikes midnight, there are only three Obamacare enrollment figures that will be of importance. These are figures we don't yet have the final tally on, but they're by far the most crucial figures of all.

What percentage of enrollees were considered young adults (18-34 years old)?
Back in late September I opined that the true success or failure of Obamacare over the long-term would be determined by its ability to attract young adults – those aged 18-34 years of age – to enroll. Young adults are often healthy, so their premiums are needed by insurers to help offset the higher costs associated with treating terminally ill and elderly patients. Because insurers can no longer deny coverage to people with preexisting conditions, the importance of young adults is now that much more important.

Obama Audience Hc

Source: White House on Flickr.

As of the latest update in mid-March which spanned enrollment data through March 1, just 25% of  enrollees were classified as young adults. By comparison, the Department of Health and Human Services had been targeting a figure closer to 38%. One assumption being tossed around is that if the number of young adults signing up doesn't improve dramatically in March it could lead to much higher premiums in 2015. Conversely, a surge in young adult enrollment in March could greatly quell those concerns.

There are a lot of factors working in favor of increased young adult enrollment this month including the urgency to sign up with the deadline now less than 48 hours away. Although I personally signed up back in October through my state-run exchange in Washington, I can speak for other 18-34 year-olds in that we generally wait till the last possible moment to pay our bills. This latest surge in enrollment figures very well could be headed by young adults, but the mid-April update on the final figures will certainly tell the tale.

How many people fully enrolled?
Another critical figure, but perhaps of slightly less importance than young adult enrollment, is the total enrollment figure for Obamacare.

Originally, the Centers for Medicare and Medicaid Services had, prior to the opening of Obamacare's health exchanges on Oct. 1, projected a total of 7 million enrollees. Following the first two months of unsuccessful signups caused by server malfunctions and glitches in IT software for federally run Healthcare.gov and a handful of state-run exchanges, it appeared that this figure was beyond a longshot.

G
Source: Centers for Medicare & Medicaid Services.

Earlier this week, however, we learned from the HHS that total Obamacare enrollment had hit 6 million, meaning more than 1.7 million people had signed up in less than four weeks since the last update. This figure is also important as it meets the lowered estimate of 6 million enrollees from the Congressional Budget Office following the October and November software meltdown. The administration estimates that 6 million enrollees are required to ensure that the insurance system remains sustainable -- and that number was clearly hit. 

The big question now is exactly how many people signed up in total. Although a cumulative figure is no longer as important, more enrollees are just icing on the cake to insurers' top-line. WellPoint (NYSE:ANTM), for instance, is already profitable from the more than 500,000 enrollees it's signed up, and any major surge in total enrollment is likely to boost its own figures higher. It could also translate into positive news for national insurers such as CIGNA (NYSE:CI) and Aetna (NYSE:AET) which are known better for their corporate insurance policies, but who've thus far been losing money in the individual market under Obamacare. A surge beyond the estimated 6 million by the CBO could help stem those losses and relieve some of the perhaps unwarranted pessimism surrounding these two insurers.

How many newly insured citizens did the Medicaid expansion add?
Lastly, an often overlooked point of Obamacare is that it helped expand Medicaid coverage in 26 states, plus D.C., bringing millions of previously uninsured individuals who did not qualify for Medicaid into the system.

Images

Source: Vic, Flickr.

On the surface this figure may seem like a drag as it's made up entirely of people who receive assistance from the government to pay their health care needs.

However, having more lower-income Americans insured through the government should bode well for both acute care hospital providers and pharmacies in general which could help lower long-term costs in these areas.

Theoretically, hospitals such as HCA Holdings (NYSE:HCA) should benefit from more insured people walking through their doors to receive treatment. As long as citizens meet their end of the bargain and cover their maximum-out-of-pocket costs then everyone wins. With Medicaid patients that's not even a concern since the government is covering all out-of-pocket expenses. HCA wrote off $3.86 billion, or roughly 10% of its revenue last year, as doubtful, therefore any reduction in doubtful revenue through a lower rate of uninsured patients could go a long way to boosting its margins.

Similarly, pharmacies like Walgreen (NASDAQ:WBA) are liable to see an uptick in business and profitability if Medicaid enrollment surges. Medicaid is going to give low-income individuals and families a chance to get preventative care at the doctor's office that previously wasn't available to them, which is likely to result in more preventative care prescriptions written than in year's past. Since Walgreen and its pharmacy peers are struggling with front-end sales as discounting and competition heats up, they're counting on strong pharmacy growth, be it from generics or branded drugs, to drive their bottom-line higher.

I'm very eager to see what the final Medicaid enrollment tally will be, and so should you!

Even with the coverage deadline rapidly approaching you can still learn the ins and outs of Obamacare in just minutes
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.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends WellPoint. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers