The deadline to enroll for health insurance on your state's marketplace exchange via Obamacare (also known as the Affordable Care Act) has officially passed. It's not impossible for someone who's still uninsured to get health insurance -- buying directly from private insurers or enrolling through an employer are still possibilities -- but the opportunity to qualify for subsidies as outlined by Obamacare is now in the past.
Obamacare enrollment in 2016
With the deadline past, the Centers for Medicare and Medicaid Services on Thursday released its final snapshot of the Obamacare enrollment period, including the 38 states covered by the federally run HealthCare.gov and the one dozen individually operated state marketplaces.
Following three months of open enrollment from Nov. 1, 2015 to Jan. 31, 2016, Obamacare enrollment totaled "about 12.7 million" per the CMS. You'll note that the data is through Feb. 1, 2016, likely taking into account persons who were in the middle of the enrollment process on Jan. 31, 2016 but did not finish.
As broken down by the following snapshot which just references HealthCare.gov, more than 9.6 million people selected a plan using HealthCare.gov, including nearly 687,000 people during the final week. On top of this, approximately 3.1 million consumers enrolled in exchanges operated by the states.
Let's take a look at some of the critical data that was released, as well as touch upon the one important figure CMS hasn't made known yet.
More refined enrollment data points
First of all, it's worth pointing out that the final tally of 12.7 million enrollees has already accounted for some degree of plan selection attrition. In previous years we've seen consumers drop out for failing to pay their bills. Likewise, we've also seen insurers cutting off coverage because of possible data gaps, such as being unable to verify citizenship tied to advanced premium tax credits. In instances where consumers were unable to obtain a premium subsidy, most have wound up dropping coverage due to it being unaffordable.
However, CMS notes that improvements in the automation process between states and insurers have allowed it to make a more accurate diagnosis of attrition ahead of the fact, rather than after as in prior years. We could still see quite a few consumers dropping out for non-payment, but this 12.7 million figure has already taken into account insurer-initiated cancellations. The result? This 12.7 million figure should wind up being a lot closer to where we end the year in terms of still-paying enrollees than in the previous two enrollment periods.
It's also worth noting that the Congressional Budget Office projected 10 million paying enrollees by the end of 2016. The current 12.7 million number gives the program a healthy buffer zone, and it at least appears on the surface as if enrollment will wind up handily topping the CBO's previously reduced and conservative enrollment estimate.
This was a surprise
In terms of enrollment, you might be surprised to learn that 4 million of the 9.6 million enrollees via HealthCare.gov were new to Obamacare. The remaining 5.6 million were returning customers, including 3.9 million who actively selected a plan via HealthCare.gov, and 1.7 million who were automatically reenrolled in last year's plan.
The above numbers are surprising in a few respects. For starters, seeing that 1.7 million people allowed themselves to be reenrolled is a bit disappointing. The reason? About 70% of the cheapest plans in 2014 were no longer the cheapest plans within their respective metal tiers in 2015. Although we don't have this correlative data for 2016, we can only assume that jockeying among premium prices means the cheapest plans last year may not be the cheapest this year. In other words, 1.7 million people chose not to do their homework, and could have unknowingly reenrolled in a plan that's costing more than it should for comparable coverage.
Another interesting point here is that a pretty high percentage of consumers, 42% by the numbers, were new to Obamacare in 2016. Why such a surge in new enrollment? It's possible that the dramatic jump in the shared responsibility payment, or SRP, could be the culprit.
In 2014, this penalty for not purchasing health insurance was the greater of $95 or 1% of an individuals' modified adjusted gross income (MAGI). According to H&R Block, the average penalty worked out to $190. The first year Obamacare was in effect wasn't meant to punish people with hefty fines so much as educate them about the new law.
By 2015 and 2016 the penalty had soared. Last year it was the greater of $325 or 2% of MAGI, and the penalty in 2016 for not having health insurance is the greater of $695 or 2.5% of MAGI. Kaiser Family Foundation recently estimated the 2016 average penalty to be $969 for those who remain uninsured, more than quintupling since 2014. Not wanting to pay the SRP may have driven steady new customer enrollment in 2016.
The most important number we still don't know
However, there's one important number that the CMS release didn't divulge: the number of young adults who enrolled over the past three months.
Young adults are a critical component to making Obamacare successful and sustainable over the long-term because they're often healthy, they buy cheaper-tier plans with high deductibles, and they don't head to the doctor often. Premium payments from young adults are what insurers use to counteract the high costs of treating older and terminally ill patients.
We did get a snapshot look at young adult enrollment between Nov. 1, 2015 and Dec. 17, 2015 (the January coverage deadline) from CMS, which ultimately showed that young adult plan selections had nearly doubled at that specific point in time on a year-over-year basis. But there were still six-plus weeks to go after the CMS data release that we're in the dark about as of now. If insurers are expected to make money on marketplace exchanges, and prices are to be competitive, we'll need to see a substantial improvement in cumulative young adult enrollment since calendar year 2015.
In the coming weeks it's likely that we'll get this more detailed information.
The future of Obamacare
Looking ahead, I'd suggest focusing your attention on two potentially big events that could dictate the future of Obamacare.
First, we have the national election on Nov. 7, 2016. Depending on who winds up in the oval office and what party is dominant within Congress, we could see Obamacare altered or repealed in its entirety. It's tough to tell whether it'll be a long-term success when there are no guarantees that it'll even be in existence come February 2017.
Secondly, assuming Obamacare survives in its current form, we should pay close attention to what UnitedHealth Group (NYSE:UNH) does in the next enrollment period (Oct. 1, 2016 - Dec. 15, 2016) for calendar year 2017. UnitedHealth Group has projected cumulative losses totaling close to $1 billion from Obamacare individual marketplace plans for 2015 and 2016, and it's threatened to completely leave the exchanges by as early as 2017. As the largest insurer in the country, if it left the marketplace exchanges it could be a devastating blow to competitive pricing and the overall feeling of long-term sustainability of the program.
We'll certainly have plenty to keep our eyes on in 2016.