It's been a little more than three weeks since open enrollment kicked off for its second year as mandated by the Affordable Care Act, which is more commonly known as Obamacare, and everything seems to be running smoothly -- at least compared to last year.
Steady as she goes
Based on a report released by the Department of Health and Human Services on Dec. 3, which represents two full weeks of federal exchange enrollment data, more than 765,000 people had selected a healthcare plan. More importantly, 48% of those enrollees were new to Obamacare, meaning the rate of uninsured should be falling, at least based on this data.
Total applications also rose by more than half a million in week two, bringing the cumulative number of applications submitted to 1.55 million. The total number of visitors was also strong, with close to 5.5 million views over all types of media (personal computers, smartphones and tablets).
Like I said, it's a night-and-day difference compared to last year for Healthcare.gov.
Insurers switch their game plan
But year two of Obamacare brings a number of new challenges to the forefront for insurers as well as consumers.
Insurers have to cope with the challenge of reaching new enrollees as well as retaining existing members -- a task that promises not to be easy. Last year saw the majority of "easy" enrollees sign up. The remaining uninsured are expected to either be tougher to reach or simply have more objections to purchasing insurance.
Additionally, sweeping health plan price changes (both up and down) have the potential to create an enrollee shuffle in 2015. I continue to believe insurers like UnitedHealth Group (NYSE:UNH), which will be operating out of two dozen states in 2015 (up from just four last year), is poised to benefit, as its absence in 20 of 24 states last year doesn't allow for direct price increase comparisons. In other words, its "newness" to a number of marketplace exchanges in 2015 may allow it to gain a lot of members by default.
How consumers could be leaving $2 billion on the table
However, it's an even more critical year for the consumer.
According to the HHS, close to 80% of all consumers can purchase health insurance for $100 or less per month when tax credits (also known as subsidies) are factored in. Last year 85% of Obamacare enrollees received some form of subsidy, so we know now just how much of a dangling carrot these subsidies are toward getting low- and middle-income consumers to sign up for health insurance.
In more states than not Obamacare premiums rose in 2015, though arguably by a modest percentage. What might be even more noticeable to consumers -- especially bronze plan consumers like myself -- is that the lowest-priced plan in each state last year is most likely not the lowest-priced plan this year. This is true for each metal tier: bronze, silver, gold, and platinum. What this means is that consumers need to be more diligent than ever about shopping around for the best possible value within their metal tier.
HHS statistics show that more than 70% of existing Obamacare members who are returning in 2015 could save money by taking the time to shop around for the best value. If everyone did this -- remember, there were 6.7 million paying customers as of mid-October -- and purchased the lowest-priced plan in the tier they purchased last year, the cumulative savings in premiums would be more than $2 billion!
The lesson here is simple: consumers need to be willing to be actively engaged with their health insurance plan search in 2015, as it could mean $300 or more in annual premium savings per person.
Premiums are only half the battle
Of course, we also need to understand that premium pricing is only half the battle for consumers. Low premiums and subsidies can make monthly health insurance affordable for some lower- and middle-income Americans, but their access to medical care may still be low because the copays and deductibles (known as out-of-pocket expenses) might simply be too much for consumers to bear.
I'm fortunate enough to be able to afford my health insurance deductibles should something arise, but to give you some idea of what the typical individual might be looking at, let's take a closer look at my 2014 plan.
Over the past year I've paid $198.37 per month for the lowest-price bronze plan. Why did I choose a bronze plan? I consider myself to still be in the "invincible" state of my life, and I essentially have to be hogtied in order to get me to see a doctor. Multiply that monthly premium by 12 and I paid $2,380 in premiums in 2014. My annual out-of-pocket deductible on my bronze plan was $6,000, meaning that 40% of total medical costs would come out of my pocket until I hit my annual cap of $6,000. Combined, I could have spent $8,380 on my medical care this year.
For someone earning just beyond four times the federal poverty limit ($46,200 in 2014), this would potentially be an almost astronomical sum of money. Even for consumers who are receiving subsidies and a reduction in their deductible, the ability to afford their portion of medical care simply may not be there.
Gallup demonstrated this in a recent study which showed that one-in-three respondents had purposely put off medical treatment due to cost. The plain truth is that Obamacare will only be successful if it finds a way to bridge this gap and encourages those with insurance to visit their doctor more often. More doctor visits should lead to healthier consumers with potentially far fewer long-term health complications.
As you can see, there's quite a lot going on with Obamacare in year two. It pays for both investors and consumers to keep abreast of the latest news -- doing so could mean the difference between making, or saving, a lot of money... and not.