There are officially less than two weeks left for U.S. consumers who have yet to sign up for health insurance to do so based on the coverage cutoff date of March 31, 2014, mandated by the Patient Protection and Affordable Care Act.
Back in September, when the Centers for Medicare and Medicaid Services, or CMS, released its initial projection for 7.07 million enrollments by March 31, it identified four primary deterrents to reaching this soft target.
First, the benefit lag in the early going (i.e., signing up in October or November but not receiving benefits until the beginning of the new year) served as a reason for consumers to hold off on enrolling. Second, CMS pointed out that consumers waiting until December to sign up would receive insurance at the same time (January 1st) people signing up in October or November would -- thereby potentially incentivizing some delay. Third, CMS labeled procrastination as a problem -- and as an adult bumping up against the upper range of the highly coveted 18 to 34 year-old category I can attest to this. Finally, an ongoing public education plan would be needed to reach the millions of Americans who are without insurance and don't understand how this new law will affect them.
Fast-forwarding six months, the Obama administration has done a good job improving awareness of the Affordable Care Act, known better as Obamacare. The benefit lag has been reduced to just a single month now that we're beyond December. We're also about to face premium payment and procrastination objections head-on, since the enrollment window will close 13 days from now.
Despite this urgency, total enrollments thus far are significantly lagging the end projection of 7,066,000 new members by the end of March. According to the latest update (link opens PDF file) from the Department of Health and Human Services, through March 1 just 4,242,325 people had selected a marketplace plan on either the state-run exchanges or the federally run Healthcare.gov, although more recently the administration announced that enrollments have crossed the 5 million mark.
This state has been surprisingly strong
These final two weeks could dramatically alter these figures, but one thing for certain is that a surprising state has been behind a big portion of Obamacare's enrollment surge since December.
If you're thinking California you're warm because it's the state with the highest cumulative enrollments so far at 868,936 -- but it's not the state that has come on the strongest over the past three months.
That surprising honor belongs to Florida, which had fully signed up only 17,908 people by Nov. 30, but tipped the scales at 442,087 enrollees through March 1. According to CMS estimates in September, Florida was expected to bring in 381,600 participants through Feb. 28 and 477,000 enrollees by March 31. This would mean that it's actually one of the few states that is handily outperforming expectations so far.
However, I personally find two aspects of Florida's success to be particularly interesting. First, Florida is a prime retirement state, and those citizens ages 65 and older can be covered by Medicare rather than having to sign up for health insurance on Healthcare.gov. Second, Florida is among the roughly half of U.S. states that chose not to take federal money and expand their Medicaid program. An expansion could have yielded even more robust enrollment figures (and the door certainly isn't completely closed on expanding its Medicaid program), but for now there could be quite a few low-income citizens who are unable to obtain health insurance.
A moat of opportunity
This surge in enrollments in Florida provides a moat of opportunity -- or should I say an Everglades' worth -- that can be beneficial to both optimistic and pessimistic investors.
When looking at insurers, one of the clear beneficiaries of stronger than anticipated enrollment would be WellPoint (ELV 2.00%). WellPoint is one of the few national insurers that is actually turning a profit off of its Obamacare enrollment which topped 500,000 nationwide as of the end of January. Coupled with its purchase of Amerigroup in 2012, which allowed it to gain a significant chunk of the Medicaid market, strong enrollment in states such as California and Florida may continue to propel WellPoint's bottom line.
On the flip side, as my Foolish health care colleagues Michael Douglass and David Williamson recently opined, Florida's unwillingness to expand its Medicaid program could come back to bite WellCare Group (WCG), which focuses on Medicare and Medicaid enrollees in Florida. It might seem like taking "free" money from the federal government is a no-brainer for states wanting to lower their number of uninsured citizens, but beginning in 2017 that federal assistance will dwindle. Some states have contended that this would significantly increase their costs over the long run and have opted not to expand the program. The future of Medicaid expansion in Florida is still very much undecided, but for now it represents a potentially large missed opportunity for WellCare.
Don't forget about hospitals and surgical centers, either, which could be the real beneficiaries here if more people obtain health insurance. Hospitals are required by law to treat patients with life-threatening injuries and illnesses regardless of whether they can pay. Quite a few are writing off up to, if not more than, 10% of their total revenue each year. HCA Holdings (HCA -0.74%) looks like a hospital and surgical center operator that could be set to benefit in a big way.
HCA has approximately 80 medical facilities to choose from in Florida, meaning lots of potential for the company to lower its uncollected revenue. Last year alone, HCA wrote off $3.86 billion, or 10.1% of its total revenue, as uncollectable. If HCA is soon able to reduce this provision for doubtful accounts meaningfully, it could allow for more robust expansion or perhaps even a dividend for shareholders. Of course, this still requires that people who have chosen lower-tier plans pay their share of out-of-pocket expenses, but I believe it favors a reduction in revenue loss provisions for HCA.