HHS released the enrollment numbers for the federally run health-care exchange and most of the state-run exchanges today, the first comprehensive set of data that had been released so far. Bearing in mind that it’s the first month of enrollment, and we still don’t know much about the customers, here are a few thoughts on what they show us:
80 percent (or more) of the people who’ve gotten insurance so far have done so through Medicaid: About 400,000 people who’ve entered the exchanges have been determined eligible for Medicaid, while about 100,000 have selected an insurance plan for which they’re eligible (obviously these two statistics are not strictly comparable, but HHS juxtaposed them and Nancy Pelosi added them together). Hundreds of thousands of more people are set to enroll in Medicaid beyond the 400,000 group, too, because a number of states are rolling the beneficiaries of their existing free or heavily subsidized insurance programs for low-income individuals onto the Medicaid-expansion rolls — meaning the proportion is, currently, much higher even than 80 percent. This matters because, in short, Medicaid is a poorly run single-payer plan that does very little to improve health-care outcomes, but does lots of damage to government budgets. There’s a reason why House Democrats didn’t propose expanding it to much higher income levels than the law eventually did, and it looks like much more of Obamacare will be the Medicaid expansion than we thought.
120,000 of those determined eligible for Medicaid come from states that haven’t agreed to help run the ACA expansion of the program; rather, they were already eligible under the existing federal system, and for some reason didn’t enroll until the current push for people to sign up. This is called the “woodwork problem,” referring to enrollees “coming out of the woodwork” — it’s a problem because, unlike the Medicaid expansion, which (for now) the federal government will pay for almost entirely, somewhere between 30 and 50 percent of the cost of these new enrollees will fall on the states, who are compensated at normal Medicaid rates, not the juiced expansion rates. Medicaid is now one of the two biggest problems on almost every state’s budget (along with pensions); even a few thousand more enrollees in Medicaid can be quite costly.
Three in ten people were eligible for subsidies, out of the 1.08 million who filled out enough information on an exchange to see what plans they can get and at what price were eligible for. Just 23 percent of people on the state-run exchanges have been found eligible for subsidies, while 34 percent of people in states using the federal exchange were. After one caveat — some people, by HHS’s definition, have been determined eligible for marketplace plans but their subsidy eligibility is pending — this is interesting: The CBO predicted that just 1 million out of the 7 million people who would enroll on the exchanges would be ineligible for subsidies. That’s one-seventh, when five-sevenths of those who’ve currently checked out plans, if they all sign up, will be unsubsidized. This can only be because the incomes of those who’ve applied are much higher than the CBO expected the eventual makeup of the risk pool to be — why might that be?
Half of Americans make low-enough incomes to qualify for subsidies, and low-income Americans are, of course, disproportionately uninsured, which is why the CBO predicted so many of the enrollees will be subsidized. This means the program may not be doing a very good job reaching out to the poor (an issue Representative Bill Cassidy, a doctor from Louisiana, raised when he visited NR a couple weeks ago — Obamacare isn’t well designed to reach the uninsured), though that could get better as time passes. It also may mean the pool is older than expected — older people make a lot more money than young people. Neither would be great for Obamacare: The former means it’s not substantially reducing the ranks of the uninsured, but simply absorbing existing individual-insurance market customers (or people who could afford insurance but couldn’t get it because of preexisting conditions), and the latter means the pool will be older and sicker than expected, so the rates haven’t been set high enough.
That said, higher-income people, holding the age distribution constant, do tend to be healthier, which means the exchanges will work better. And if the CBO’s subsidized-unsubsidized estimate turns out to be off, the law will actually cost a lot less than expected. People also could be generally overstating their income — either because they’re making a mistake, or because they want to avoid being undercharged for insurance (if your income ends up higher than you tell the exchange, you’ll owe the IRS the undeserved subsidies, on your tax bill at the end of the year).