I Bet You Didn't See This Obamacare Twist Coming

By most marks the Affordable Care Act, known better as Obamacare, was proven a success in its first year. What began as a disaster with the federally run Healthcare.gov experiencing many months of technical glitches gave way to an end-of-March surge in enrollment from procrastinators and young adults who didn't want to face a penalty when filing their 2014 taxes.

Source: White House on Flickr.

Overall, Obamacare netted 8.1 million enrollees, a full 1.1 million more than the Department of Health and Human Services had forecast in September prior to the beginning of the open enrollment period. As more people purchase insurance the ability to spread medical care costs over a greater swath of the population should become easier for health-benefits providers and lessen the rate of health-care inflation, which is one of the primary goals of Obamacare.

But, just because Obamacare's enrollment figures topped estimates doesn't mean that premium pricing is necessarily going to work in consumers' favor.

On the surface things look healthy
A Gallup poll released this week offered some encouraging data on the demographics of Obamacare enrollees, but it also offered a twist that you probably didn't see coming, and which could adversely affect your premium in 2015.

According to Gallup, 5% of more than 31,000 adults surveyed between April 15 and June 17 responded in the affirmative that they were newly insured in 2014. Specifically, Gallup notes that 56% of those new enrollees signed up through their state-run exchange or via Healthcare.gov, while an additional 44% signed up for health insurance but not through an exchange. By Gallup's estimates, the uninsured rate is now less than 14%.

What was more intriguing about Gallup's survey was the age breakdown of respondents:

Source: Gallup. 

As you can see above, a majority of newly insured individuals that signed up using an exchange tended to be younger, which bodes well for the success of Obamacare and insurers. Younger individuals are crucial to Obamacare's success since young adults tend to be healthier and require less costly hospitalizations. In other words, insurers are counting on premium dollars from young adults to help counteract the higher costs associated with caring for elderly and terminally ill patients. In total, 18 to 29 year-old persons that signed up were a full eight percentage points higher than the age distribution of the national adult population.

By now this data must be looking great for insurers who are looking to spread their costs across a younger population, and for consumers who are hoping for a negligible rise in premium pricing in 2015, or perhaps even a premium drop.

Source: White House on Flickr.

Here comes the twist
Gallup also asked the 56% of enrollees that signed up using the health exchange how they would describe their own personal health. The assumption here would be that a higher percentage of younger individuals signing up should lead to a disproportionately high number of "excellent" or "very good" responses which eclipses the national average.

Here's how the responses actually shook out:

Source: Gallup.

You are indeed reading that correctly! Whereas 50% of the national adult population describes themselves as being in "excellent" or "very good" health, just 38% of new enrollees described themselves as being in these two categories. Unfortunately there's no age breakdown as to how respondents viewed their own personal health, so there's no way to know if older enrollees are skewing this scale far below the national average. However, I would opine that to some extent the health profile of younger adults that insurers were looking for is actually lower than expected.

This could obviously have some negative ramifications for national insurers such as UnitedHealth Group (UNH -0.58%) and Aetna (AET) which are struggling to get their Obamacare enrollment operations to profitability. While most insurers haven't been too forthcoming with demographics data, this initial look from Gallup could imply that less-healthy young adults were among the first to sign up in 2014. While this could mean plenty of potential for insurers such as UnitedHealth, which recently offered to expand into Connecticut and Washington state, and Aetna to gain healthy individuals in 2015 and beyond, it could set consumers and insurers up for larger than expected premium hikes in the coming year.

These question are still unanswered
Of course, there are still a number of unknowns to consider, even with Gallup's poll in mind.

Source: Robert Couse-Baker, Flickr.

For instance, even if the perceived health of those signing up is below the national average, what really matters is how often these individuals seek medical care. Younger adults are often less likely to seek preventative care than older adults or the elderly, so how the eventual medical utilization rate shakes out will go a long way to determining if sicker people signing up actually proves detrimental to insurers' bottom line. As of now we don't have enough data to accurately make that call.

Also, don't discount the bias that we are our own worst critics. While we may describe our health as merely "good" or "poor," a trained physician may disagree. Of course, this could work in the opposite direction and consumer's health perceptions of themselves could also be overstated. Put simply, we aren't doctors (at least most of us anyway), so take self-reported health statuses with a grain of salt.

We're likely a few more weeks away from getting a better idea of where premium proposals will stand in 2015 for most states, but this poll is definitely food for thought as we head into another telling year for Obamacare.