As has become tradition, every year Merriam-Webster selects a "word of the year" to encapsulate the trend of the times. If I were selecting a word of the year for the launch of Obamacare's health exchange marketplaces, I believe I might suggest "delays."
The state- and federally run exchanges were all launched simultaneously on October 1, but "failure to launch" has been an ongoing theme for much of the past two-plus months.
The federally run Obamacare website, Healthcare.gov, was practically unusable for a majority of the 36 states it services throughout much of October and November. In total, Healthcare.gov completely enrolled just 137,204 people through November, or roughly 38% of all enrollees, despite having nearly three-quarters of all U.S. states in its network.
State exchanges have been a smidge better, with California and New York helping to pick up the slack for states like Oregon, whose exchange may actually be the exchange in the worst shape of all. In sum, 227,478 people have fully enrolled for health insurance through the end of November on state-run health exchanges.
Source: White House on Flickr.
Delays, delays, delays!
The theme, though, is all about delays.
The employer mandate -- the actionable part of the Patient Protection and Affordable Care Act which requires employers with 50 or more full-time employees to provide health insurance options for those employees, and requires them to pay a portion of their employees' health insurance costs if they were to exceed a preset level relative to income -- was pushed back a full year in July.
Also, Healthcare.gov's ability to function for a majority of Americans was pushed back nearly two months to an early December relaunch to accommodate the need to fix what may have been millions of poorly written lines of code.
Last week, the Centers for Medicare and Medicaid Services announced that it would allow what may amount to up to 6 million people who are at risk of having their health insurance policies cancelled by insurers on Jan. 1 to claim a hardship and purchase catastrophic health insurance instead, which may exempt them from the individual mandate in 2014.
Finally -- in fact, just yesterday -- the White House announced an extension of the coverage cutoff date to obtain health insurance and still be covered by Jan. 1 by one day to Dec. 24. The news of the extra day to obtain health insurance (the previous cutoff coverage date was Dec. 23, and Dec. 15 before that!) comes on the heels of record traffic volume according to the White House, with some 1.2 million visitors hitting the Obamacare website over the weekend and another 850,000 visiting by 2pm ET on Monday.
Is this deadline meaningless?
With delays becoming sort of the norm with Obamacare, you might be asking yourself whether or not this new coverage cutoff deadline, which is merely 24-hours further down the road, is meaningless. I would actually say "Yes," but probably not for the reason you're thinking.
Most people would likely point to Obamacare's inconsistent and fluid deadlines and surmise that there's little substance to the coverage cutoff date if the administration doesn't stand firm to any of its deadlines.
As for me, I consider today's coverage cutoff date to be relatively meaningless because the individual mandate allows for individuals to be uncovered for up to three months in a calendar year without being penalized by the individual mandate.
Think about it this way. Auto insurance is mandatory in the U.S. if you drive, but you likely aren't going to prepay that bill if you don't have to. The same goes for Obamacare. While some sick and in-need Americans, as well as those who qualify for Medicaid, are more than eager to enroll now, the bulk of enrollees are simply trying to put the upcoming monthly premium bill off for as long as possible without invoking the individual mandate penalty -- which means signing up by the mid-March coverage cutoff date. That's the important date that we should all really be watching, and it's the date that'll really help determine just how successful Obamacare is at shrinking the number of uninsured people in this country.
What now for insurers?
For health insurers, it's really becoming a tale of two horizons -- the short-term and long-term. If you purchased insurers with the expectation that they would rapidly see enrollments soar, you're probably going to be sorely disappointed until insurers reports their second-quarter results next year. Both UnitedHealth Group (UNH 0.67%) and Aetna (AET +0.00%), for example, have dropped out of some of the few top-performing state-run markets, exposing them to the possibility of actually seeing their membership shrink because of policy cancellations on Jan. 1 that don't meet the PPACA's beefed up minimum benefit guidelines.
If, however, you've been purchasing insurers with the expectation that we're working toward a long-term solution to health reform, then I see little reason to be concerned. WellPoint (WLP 0.89%), for instance, is a national insurer that purchased Amerigroup in 2012 to expand its government-sponsored (e.g., Medicaid) presence, but has generally stayed the course in states it was already operating in rather than play chess with the individual markets it chooses to operate in. Not surprisingly, it's in better shape now than many of its peers while still maintaining strong premium pricing power.
What now for Obamacare?
As I've stated previously, the growing number of visits to Healthcare.gov and other state-run websites confirms that the ideal of health care reform is alive and well. It still remains to be seen, though, if these visits will turn into enough enrollments to counteract the number of policies that will be cancelled because they don't meet the more stringent and encompassing standards as set forth in the PPACA. We're certainly getting closer to finding out that answer, but it's simply something that won't be spelled out for investors and Americans until mid-March.
