Obamacare's 2014-2015 enrollment period has been a night-and-day difference compared to last year. In just four weeks, Obamacare's cumulative federal and state-run exchange enrollment hit levels that took four months to reach last year.
However, according to our top analysts, it may not be a great idea to break out the champagne just yet. We asked our analysts for their single biggest concern which still has the potential to derail Obamacare, and here's what they had to say.
Selena Maranjian: President Obama's appearances on "The Colbert Report" in December and Zach Galifianakis' show "Between Two Ferns" in March weren't just for his own amusement or to boost his likability ratings. He was there to promote Obamacare to young people. Getting young people to enroll in the new health insurance plans isn't just good for their own health -- it's also critical to the health of Obamacare.
For the program to best work as it's designed to do, it needs to cast a wide net and capture a large range of enrollees -- sick and healthy, old and young. After all, that's how insurance works, and why we can pay $1,000 per year to protect our $200,000 house against fire and other catastrophes. Insurance providers pool large numbers of customers and collect premiums from each. Most will not see their house destroyed, but with everyone paying up just in case, there will be money available to cover the unfortunate few. Health insurance is similar; a pool that includes lots of young, healthy folks who are light users of the system compensates for the older or sicker heavier users. With Obamacare and other health coverage, premiums take age into account and cost much less for younger folks. But the young still subsidize the old -- and, in turn, are subsidized themselves when they grow old and fall ill.
The problem for Obamacare, though, is human nature: Many young people, feeling a bit invincible, don't see the need for health insurance or don't want to pay even the reduced rates for it. Thus, the campaigning. The annual enrollment period is under way now, with no final numbers available yet. But in the last enrollment period, those aged 18 to 34 made up about 28% of all enrollees, short of the 40% goal. Stay tuned to see how effective this year's campaigning was.
Dan Caplinger: The biggest concern among many following Obamacare is the rapid escalation of penalties under the individual mandate provisions of the Affordable Care Act. In 2014, penalties took effect that cost Americans who didn't have qualifying coverage the greater of $95 per adult family member plus $47.50 per child, or 1% of income above the filing limit. Although the $95 and $47.50 figures were capped at a total of $285 per family, the 1% of income provision could still result in higher penalties for higher-income families.
In 2015, those penalties will jump to 2% of income over the filing limit, or $325 per adult and $162.50 per child subject to a $975 family maximum. For those with modest incomes, the fact that the per-person penalties will more than triple in 2015 will draw even more criticism. Further increases in 2016 to $695 per adult and $347.50 per child with a $2,085 family maximum will make the debate even more heated.
Advocates argue that higher penalties are necessary to give people the economic incentive to get Obamacare coverage. Yet the slow phase-in of penalties will come as a major shock to many Americans, and that in itself could pose a huge threat to the long-term success of the program.
Sean Williams: Compared to the 2013-2014 enrollment period, Obamacare's first couple of weeks have been nearly flawless, but that doesn't mean Obamacare is out of the woods just yet.
In addition to what my Foolish colleagues Selena and Dan pointed out, I'd opine Obamacare's biggest concern is the ability of consumers to make their copay and deductible payments beyond just their premium payment.
Last year 81% of consumers opted to purchase a silver- or bronze-tiered health plan, with the remaining 19% opting for a gold or platinum plan. Platinum and gold plans cover 90% and 80% of out-of-pocket expenses and also have significantly lower copays and deductibles in exchange for higher monthly premium costs. Silver and bronze plans cover 70% and 60% of consumers' out-of-pocket expenses, meaning consumers will have higher annual deductibles and copays, but they come with lower monthly premium costs.
The concern I have is that most consumers are choosing these lower-priced bronze and silver plans because they simply don't have the disposable income to afford a gold or platinum plan which would dramatically reduce their annual out-of-pocket medical expenses (beyond their premium costs). For example, a recently released study from Gallup showed that the percentage of Americans putting off medical treatment because of cost jumped to a record high of 33% (for context, Gallup has polled consumers since 2001).
"Why's this disconcerting?" you ask? If consumers are paying their premiums but can't afford the copays and deductibles associated with actually receiving medical care (as I suspect Gallup's study implies) then they will be reluctant to head to the doctor. Having more people get preventative care visits is an important component to Obamacare's success, as these visits should help catch potentially serious diseases earlier and improve people's quality of life. If this doesn't occur, it could be difficult to control medical cost inflation, and it would be a huge disappointment for drugmakers, device makers, and hospitals which expected an uptick in demand from Obamacare.