Now that the first deadline has passed and healthcare.gov is more or less working as it should have been in October, a new problem is beginning to reveal itself. So far, the mix of young, healthy enrollees in the risk pool is less than expected.
Yesterday insurance industry expert Bob Laszewski, who has been giving a unique behind the scenes perspective on the law for months now, gave an interview to Wonkblog’s Ezra Klein. Here’s what he had to say about the mix so far:
EK: I recognize that we won’t really know what the mix of
healthy and sick people is until at least April, once we see the surge
from the individual mandate. But what are insurers seeing in the mix so
far?RL: It’s not positive. I don’t want to say people have given up on
the notion they’ll get a good mix. They know the administration will
make a big push. The insurance companies will spend big on advertising
and outreach. So no one has given up. But it doesn’t look good right
now.
The enrollment deadline which just passed was really a deadline for people who wanted to avoid a gap in their insurance. The uninsured have barely been touched so far according to Laszewski. However, it’s reasonable to expect more of them will respond to the end of March deadline when the individual mandate kicks in, i.e. there’s a penalty for not signing up. That’s the “surge” from the mandate that Klein is asking about.
Over at the New Republic, Jonathan Cohn has a graph prepared by MIT economist Jonathan Gruber showing there was a bump in the number of young people signing up in Massachusetts as the enrollment deadline got closer. So it’s likely the numbers will get better. The question that really remains is: How big a hole is the enrollment mix in now and will a modest increase in younger enrollment be enough to bring it back in balance?
On that point, this morning Reuters reports that Humana’s latest U.S. securities filing says the enrollment mix is “more adverse than previously expected.” Back at Wonkblog, Sarah Kliff highlights an investors report from CitiGroup which says this about Humana’s announcement:
On the third quarter conference call, Humana noted that because of the healthcare.gov website issues , it no longer expected to earn a modest profit margin on its exchange business, and that 2014 guidance assumed exchange enrollment would be unprofitable. With this latest 8-K, it now appears Humana believes it could lose even more money on its exchange business, because the mix of exchange enrollment is less favorable than anticipated…
Still, it’s worth asking the question of whether Humana believes the entire exchange risk pool is worse than anticipated, or if the company’s product positioning (low cost Gold plans in many markets and some regions where it had the only Platinum product available) is at least partly to blame.
In other words, maybe Humana just priced themselves out of the market for the kind of plans that would appeal to young people being forced onto the exchange. That may be the case but it also seems likely that Bob Laszewski was not just talking about Humana when he said “it doesn’t look good right now.” Even if Humana is doing worse than others in the market, that doesn’t necessarily mean anyone is doing well.
As always, probably the best case for the fact that the enrollment mix does not look good right now is the fact that the Obama administration refuses to release any data. They have promised to do so eventually but have yet to specify when that will happen.
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