Death Spiral Watch: Few Younger Enrollees in KY Obamacare Exchanges

Newly available numbers from Kentucky show the majority of people who have enrolled on the state exchange are older than anticipated by the Obama administration. This could spell problems down the road for the Affordable Care Act if the ratios of young to old persist into next year.

The numbers released yesterday by the Kentucky Cabinet for Health and Services show a total of 1,695 people enrolled are between the ages of 18-34. The number enrolled between the ages of 35-64 is 6,336. That means 19 percent of enrollees in Kentucky–where website issues have not significant hindered signing up–are the coveted “young invincibles.”

One of the core concept behind the President’s health reform law is that young and generally healthier individuals are mandated to buy insurance. Because they tend to pay in more than they use in services, insurers are able to offer a better deal to older, sicker individuals. But making this balancing act work requires that enough younger people sign up.

This ratio of younger enrollees to older ones has been called “a key metric for judging whether the health care law is successful” by the Washington Post’s Sarah Kliff. The administration believes it needs 2.7 million of the expected 7 million first year enrollees to be between the ages of 18-35 for the policy to work. However, when it released enrollment figures for the first time last week, the administration did not include a breakdown by age.

If the percentage of young people enrolled is greater than 38 percent, the program will be flush with cash and insurers could wind up sending money to the government and cutting premiums in the future. If, on the other hand, the percentage of “young invincibles” is too low, the government, through provisions already in the law, will be on the hook for the extra expense and premiums would spike next year.

Because Kentucky has been largely a success when it comes to implementing the law it makes a good case study for how things might look if not for the botched website rollout. What we see so far is that the critical ratio of older to younger enrollees is about 4:1 rather than 3:2. Put another way, Kentucky is at 19 percent young and healthy rather than 38 percent.

The spokesperson for the Kentucky Cabinet for Health and Services was eager to point out that 18,848 people have been found eligible for a subsidy so far, though only a portion of them have enrolled in a plan. This may mean there are lots of young folks still sitting on the sidelines thinking about what to do. If so, the ratio could go up as we approach the Dec. 15th deadline for insurance coverage beginning next year.

I asked if there was a breakdown by age available for the large group of people who have been judged eligible for a subsidy but have yet to enroll. I was told Kentucky does not keep those numbers. So for the moment there is no way to know what the numbers (and therefore the percentage of 18-34 year olds) might be in the near future.

There is a common sense argument to be made that young and healthy individuals will be the last to sign up while older and sicker folks would be the first to do so. So it’s reasonable to expect the percentages will go up as people who don’t feel much need for insurance sign up at the last minute. But, again, no one knows how many will do so or if it will be enough. All we can say now, six weeks in, is that a state not significantly hampered by federal website problems is performing well below where it needs to be by March.