A new study of the first two months of health-insurance coverage by plans on Obamacare’s exchanges finds that they seem to be quite unhealthy, judging by the prescription drugs for which they’re filing claims. The analysis by ExpressScripts, reported on by Kaiser Health News, found the following:
The new enrollees are more likely to use expensive specialty drugs to treat conditions like HIV/AIDS and hepatitis C than those with job-based insurance.
The sample of claims data — considered a preliminary look at whether new enrollees are sicker-than-average – also found that prescriptions for treating pain, seizures and depression are also proportionally higher in exchange plans, according to Express Scripts, one of the nation’s largest pharmacy benefit management companies.
The numerical gap is relatively small: 1.1 percent of drugs claims in the exchange plans were for “specialty drugs,” versus 0.75 in other commercial health plans. That may not sound like much, but specialty drugs account for a quarter of what America spends on pharmaceuticals every year, ExpressScipts says, which means it’s a big expense, even before we consider the other treatment costs involved for conditions that require the specialty drugs.
This more or less makes sense: The Affordable Care Act has hugely raised the (pre-subsidy) cost of insurance on the individual market and made it much more attractive for very sick people than very healthy people (as in, much more so than any health-insurance market already is).
An important caveat, though: Looking at just the first two months of spending (which is all ExpressScripts could do) doesn’t give a full picture of the Obamacare risk pool. Only about 2 or 3 million people were eligible for coverage in January and February under exchange plans, while ultimately the number will be more like 6 million; more important, we can expect the early enrollees to be sicker than the later ones, so perhaps this gap will shrink or disappear entirely. Nonetheless, as Kaiser Foundation VP told (. . .) Kaiser Health News, this is one piece of the puzzle and it’s not too encouraging.
It’s, to my knowledge, the only data we have so far on how sick the exchange enrollees are. As I explained a couple months ago, the actuarial viability of Obamacare’s exchanges — whether various insurance programs will be a drain on taxpayers, for instance — rests much more on how sick enrollees are than on the number of overall enrollees (which seems to have been fine) or even their relative ages. Insurers are therefore scrambling to gather this data, which they don’t have any of until they get it from patients on their own. Health-insurance companies used to gather detailed information about their enrollees before letting them enroll, because they used it (in almost all states) to set premiums for each applicant. They can’t do that under the ACA, and the exchange applications don’t include any questions on health status.
So they’re surveying their patients about their health and trying to read the claims data to determine how sick they are and whether they’re going to be making or losing money — which determines whether they’re going to need to increase their rates for next year. A variety of changes Obama has made to the law are making that task more difficult, in part because enrollees will be enrolling later this year and in part because people who’ve kept their “canceled” plans who were supposed to be going on the exchanges this year won’t do so until next year or the year after. In the Kaiser piece, insurance consultant Bob Laszewski says insurers are thinking “it will be a year before we know what we’ve got.”
Rates have to be set over the next couple months for open enrollment starting in November of this year, so insurers don’t have much time anyway, especially given some of the delays. None of this will be disastrous, but at the margins, it could mean noticably bigger premium hikes for 2015, which means more political problems for the ACA.
UPDATE: A Washington Post story on this very issue — the “actuarial nightmare” of setting premiums for next year — explains a reason I wasn’t aware of why the above pharmaceutical data is so important: Insurers don’t really have hospital bills yet to show what kind of claims they’ll have to pay, but pharmaceutical bills come in earlier. The story does have some good news for one insurer, though: Pennsylvania’s Independence Blue Cross report that pharmaceutical data shows enrollees are sick, but no more sick than expected.