The Affordable Care Act, which you likely know as Obamacare, recently completed what can only be described as its most important week of the third year of open enrollment.
Open enrollment figures surge in Obamacare's third year
Every year, there are two events that are critical for driving Obamacare's enrollment higher -- especially in the federally run marketplace, HealthCare.gov. First, we have the auto-enrollment deadline, which typically falls on Dec. 15 (although it was pushed back to Dec. 17 for the current open-enrollment period). Auto-enrollment works by re-enrolling consumers in their prior-year plan if they don't take any action to select a new plan by the deadline.
The other is the January coverage deadline, which also falls on Dec. 15. Insurers typically need two weeks to fully process the surge in enrollment from mid-December, thus the urgency placed on meeting the Dec. 15 deadline to get coverage by Jan. 1, 2016. Both the auto-renewal and January coverage deadlines provide a strong impetus for consumers to stop procrastinating and choose a plan.
According to data released by the Centers for Medicare and Medicaid Services on Dec. 22, 2015, enrollment practically doubled during the week of Dec. 13 through Dec. 19, as 4.08 million plan selections pushed the cumulative number of selections to 8.25 million since enrollment opened on Nov. 1, 2015. For added context, during 2014's open enrollment period, only 6.39 million plans had been selected by Dec. 20. However, the data isn't exactly a perfect comparison, because open enrollment started 15 days later that year.
Three states dominating this year's enrollment
What's most notable about this year's open-enrollment period is just how critical a handful of states have been in pushing cumulative enrollment higher. Keep in mind that when discussing cumulative enrollment totals, and the totals mentioned above that are released by the CMS, we're only including enrollment from the 38 states where the exchanges are run by HealthCare.gov. The dozen states operating their own exchanges aren't included in these statistics, and they may or may not have recently released enrollment data.
Of the 8.25 million plan selections made through the first seven weeks, three states account for nearly 3.1 million enrollees, or 37.5% of total HealthCare.gov enrollment. These states are:
- Florida: 1.51 million plan selections
- Texas: 1.04 million
- North Carolina: 544,950
If you want to extend the list a bit further, Georgia (498,901) and Pennsylvania (394,302) would bring the total to 48.3%.
Why these states are enrollment hot spots
Why are these states such standouts? In the cases of Florida and Texas, look no further than the Supreme Court ruling this past summer that struck down a suit from those looking to halt subsidy payments to lower-income individuals.
Under Obamacare, individuals and households earning between 100% and 400% of the federal poverty level per year typically qualify for some form of health insurance subsidy. However, the plaintiffs in King vs. Burwell focused on a single instance of language of the ACA, which they read as implying that only states could divvy out subsidy payments to eligible individuals. Since HealthCare.gov is operated by the federal government, the complainants alleged that subsidy payments to eligible enrollees in the 38 states covered by HealthCare.gov were illegal. The Supreme Court ruled 6-to-3 against the plaintiffs, saying that the ACA as a whole was clearly written with the intention to allow the federal subsidies, thus preserving the ability for qualifying HealthCare.gov enrollees to receive them.
This was great news for Florida, the HealthCare.gov state with the largest number of people getting subsidized health insurance in 2015. Consumers eligible for a subsidy have an added incentive to enroll, since some or all of their bill will be covered by federal funds. This helps to explain why we're seeing such strong numbers out of Florida. The high enrollment in Texas also makes sense, as it boasts the second-most enrollees receiving subsidized insurance under HealthCare.gov.
The strong enrollment figures in North Carolina are likely a reflection of an effective marketing push. Last year's strong enrollment in North Carolina, according to The Charlotte Observer, was due to partnerships among state and national advocacy groups, private donors, hospitals, and insurance companies that got the word out about the program. We're probably witnessing the effects of similar cooperation on reaching consumers in this year's numbers.
Two Obamacare wild cards
Yet two Obamacare wild cards will ultimately determine whether or not total enrollment meets or beats expectations.
First, this year's higher penalties for failing to be insured may or may not induce more people to enroll. Early data suggests that more young people under the age of 35 enrolled before the January coverage deadline than in the prior-year period, which is a good sign. What's unclear is whether these young adults simply decided they wanted health coverage or whether the penalty, which is the greater of $695 or 2.5% of their modified adjusted gross income in 2016, compelled them to buy insurance.
The other wild card involves what sort of attrition factor we'll be looking at, say, six months from now. The final enrollment tally on Jan. 31, 2016 isn't a complete indicator of Obamacare enrollment, because the program will lose enrollees throughout the year for a variety of reasons -- some may fail to prove citizenship status, fail to make their payments, or change jobs throughout the year and gain insurance through their employers. In each of the past two years, more than 1 million people on the initial tally left the program, and there's no reason to suspect 2016 will be any different. The big question is how steep of a drop-off will we see.
The initial enrollment data looks encouraging thus far, but it remains to be seen whether insurers as a whole can turn a big enough profit to continue participating in the exchanges. UnitedHealth Group has struggled, while Anthem has thrived, so it's really anyone's guess at this point where Obamacare heads from here.