About that 67% Obamacare Payment Rate

Yesterday the House Energy and Commerce Committee released a statement about the Obamacare payment rate which got a lot of attention. The committee reached out to individual insurers in states using the federal Obamacare exchange and then collated the response. What they found was “as of April 15, 2014, only 67 percent of individuals and families thathad selected a health plan in the federally facilitated marketplace hadpaid their first month’s premium and therefore completed the enrollmentprocess.”

The 67% claim surprised a lot of people because, for several months, we’ve been hearing that the payment rate was closer to 80-85 percent. Could it really be that much worse than expected? How did this happen?

In order to find out we’d need to know a couple of things. First, how many people have signed up. Second, how many who signed up followed through and paid. In theory the insurers should be able to provide this information. Then we simply divide one by the other and multiply by 100 find out what percentage paid. In this case, the E & C Committee is telling us the answer is 67 percent.

But how exactly did they arrive at this? They give us one of the numbers we need in the press release, “insurers informed the committee that only 2.45 million had paid their first month’s premium for coverage.” Working backwards we find that 2.45 million is 67% of 3.65 million. I contacted the Committee and they confirmed that their data found only 3.65 million people had signed up for Obamacare using the federal exchange.

But there’s a problem with that figure. Today HHS released the signup data for April which gives us totals for the entire enrollment period. They found that 5.4 million people signed up via the federal exchange. That’s about 1.8 million more people than the Committee claims signed up. Obviously, that’s not a minor difference. I sent a followup question to the Committee but they appear to have left for the day.

Is this a situation where we can just assume the payment rate (67%) is right even if the totals are off? Not necessarily. One of the problems we have is that not everyone who signed up at the end of the enrollment period would have passed their individual payment deadline. So, for instance, if 25% of the people being counted as signups still have time to pay, we can’t really consider them as non-paying. Maybe some of them paid at the deadline, which was after the cut-off for the E & C questionnaire sent to insurers.

To be fair, the Committee was pretty clear that this was incomplete data. Their press release states, “Due to the administration’s repeated and unilateral extensions andchanges, as well as the fact that many insurers have reported thatindividuals will still have time to pay their first month’s premium, thecommittee plans to ask the insurers in the federally facilitatedmarketplace to provide an enrollment update by May 20, 2014.” That followup, which will come after everyone’s first premium is due, should provide a much clearer understanding of the payment rate.