With Success, Obamacare Problems Are Quickly Turning Into Meaningless Old Memories

With enrollment picking up under the Affordable Care Act, there is increasing attention being paid to the make up of those newly enrolled in insurance plans. Eugene Robinson at The Washington Post looked at this:

Oh dear. The Republican Party’s worst nightmare is coming true. Obamacare is working.

The news that nearly 1.2 million people signed up last month for insurance through the Affordable Care Act exchanges is highly inconvenient for GOP candidates nationwide. It looks as if the party’s two-word strategy for the fall election — bash Obamacare — will need to be revised.

Wednesday’s status report on the health-insurance reforms was by far the best news for Democrats and the Obama administration since the program’s incompetent launch. January was the first month when new enrollments surpassed expectations, as the balky HealthCare.gov Web site began functioning more or less as intended.

Cumulatively, 3.3 million people had chosen insurance plans through the state and federal exchanges by the end of January. That is fewer than the administration had originally hoped but well above the predictions of critics who believed — or hoped — that the program would never succeed. The Congressional Budget Office projects that 6 million people will have chosen plans through Obamacare when the initial enrollment period ends March 31, down from a pre-launch estimate of 7 million. Not bad at all.

The numbers are even more encouraging when you look more closely. The proportion of young people — from 18 and 34 — who chose insurance plans through the exchanges increased slightly to 27 percent, compared with an average of 24 percent in previous months. This is important because premiums would have to rise if not enough young, healthy people enrolled.

The administration had hoped the percentage of young enrollees would reach about 40 percent. But the January figure — and the rising trend — should put to rest any notion that the whole program could go down the drain in an actuarial “death spiral.” Administration officials are convinced this won’t happen.

According to the January report, about 80 percent of those signing up for Obamacare are eligible for subsidies to help them pay for insurance. The administration believes, but does not have the data to prove, that most of the new enrollees were previously uninsured.

Despite all the good recent good news, Robinson knows that conservatives will continue to attack. After all, that is all they really know how to do:

Bashing Obamacare will always have resonance for the GOP’s conservative base. But if you’re trying to win the votes of independents, it’s more profitable to target a failed program than a successful one.

Critics will doubtless try to blame Obamacare for anything bad that happens to anyone’s health insurance before the November election. But all of this is just noise without the central narrative of a “failed program.”

Attack ads against vulnerable Democratic senators, such as Kay Hagan of North Carolina and Mary Landrieu of Louisiana, are already trying to paint Obamacare as a character defect — the president and his supporters “lied” when they said everyone could keep their insurance. The response from Democrats should be to shift the focus to the actual program and its impact. Imperiled incumbents can point to constituents who are benefiting from the Affordable Care Act in life-changing ways.

If you assume that Affordable Care Act enrollment remains on its current trajectory, the February numbers should look even better. Polls consistently show that even if voters have mixed views about the health-care reforms, most do not want to see them repealed. By the fall, the whole Obamacare-is-a-disaster line of attack could sound stale and irrelevant.

Republicans may even have to take the drastic step of saying what they advocate, rather than harping on what they oppose. Is there a GOP plan to cover those with preexisting conditions? To cover the working poor? Is expanding access to health insurance really such an awful thing?

That’s the problem for conservatives. Knocking government programs in a debating society is one thing. To threaten to repeal the Affordable Care Act is a different matter. Doing so would hurt real people–millions of us. The old individual market for private insurance was a disaster we cannot go back to. Even some Republicans now love Obamacare.

Repealing Obamacare is also bad for the economy and bad for the country when you consider how the Affordable Care Act will help reduce the deficit, reduce unemployment, and promote more entrepreneurs now that people are no longer tied to their employer for health care coverage.

Conservatives will continue to make noise about everything that really is wrong about the Affordable Care Act, along with continuing to make up plenty of lies about things which are not really wrong. Republican might have voted forty-seven times for repeal, but that is not going to happen. That ship has sailed. The Affordable Care Act is the law of the land and it is pointless for Republicans to continue to demand repeal as opposed to working responsibly with Democrats on improving the program.

Bloomberg also looked at enrollment by the young, as well as the continuing debate:

The only debate worth having is how to improve enrollment. If not enough people sign up, or the mix of beneficiaries isn’t quite right, it could lead to higher premiums down the road, pushing people away from buying coverage and making the law less effective.

In other words, what matters now is how to persuade more young people, especially young men, to sign up for health insurance before March 31. What has the administration learned in the first fourth months of open enrollment? What works and what doesn’t? Everything else is beside the point.

The administration is already pushing hard, and its efforts have come in for a fair amount of ridicule: ads featuring cats, for example, to get more women to sign up, and the much-maligned “pajama boy,” whose appeal was to … actually it’s not clear who he was trying to appeal to. At any rate, a little ridicule is a small price to pay if these attempts result in higher enrollment. Republican state officials might also do more to promote the law, futile as it may be to point that out.

Contrary to what you may have read, enrollment numbers for Obamacare aren’t some referendum on the president’s popularity or lack thereof. They’re the best way to tell whether the law is working as planned — and how to adjust if it isn’t.

It looks like the goals will be met for enrolling more young people, but what if we they aren’t?  Kaiser ran the numbers back in December, when meeting the goal was more in doubt.

If enrollment among young adults falls short, then the total amount of premiums collected by insurers will be less than the total health care expenses of enrollees plus administrative overhead and profit. And, if insurers believe that those enrollment patterns will continue into 2015, then they may raise premiums higher to compensate for the loss.

However, because premiums are still allowed to vary substantially based on age, the financial consequences of lower enrollment among young adults are not as great as conventional wisdom might suggest.

We simulated the effects of two scenarios:3

Scenario 1: Young adults age 18-34 enroll at a 25% lower rate than other individuals relative to the potential market. Under this scenario, young adults would represent 33% of individual market enrollees instead of 40% as in the potential market. Taking into account the allowed three-to-one variation in premiums due to age, we find that costs (health care expenses plus overhead and profits) would be about 1.1% higher than premium revenues.

Scenario 2: Young adults age 18-34 enroll at a 50% lower rate than other individuals relative to the potential market. Under this scenario, young adults would represent 25% of enrollees, substantially less than their share of the potential market. It is roughly comparable to what Covered California reported for October and November (the first two months of open enrollment), with 21% of all enrollees who picked a plan in the 18-34 age range. However, this is likely a worst-case scenario, since the expectation is that older and sicker individuals are more likely to buy first and that younger and healthier people will tend to wait until towards the end of the open enrollment period (which concludes March 31, 2014). In fact, our recent survey of people in California who are uninsured found that 58% of young adults said they planned to get coverage in 2014. But, if this more extreme assumption of low enrollment among young adults holds, overall costs in individual market plans would be about 2.4% higher than premium revenues.

Insurers typically set their premiums to achieve a 3-4% profit margin, so a shortfall due to skewed enrollment by age could reduce the profit margin of insurers substantially in 2014. But, even in the worst case, insurers would still be expected to earn profits, and would then likely raise premiums in 2015 to make up the shortfall, However, a one to two percent premium increase would be well below the level that would trigger a “death spiral,” which would occur if insurers needed to increase premiums substantially, in turn further discouraging young and healthy people from enrolling.

There’s no real risk of death spirals and the Affordable Care Act is here to stay. Over the next year or two, the early computer problems will be seen as distant memories, sort of like the Y2K computer problems, while we enjoy the benefits of Obamacare. People will no longer care about letters about cancelled insurance plans when most are in more comprehensive plans at a lower cost. Conservatives will continue to point out every fault but there is only one real point in this: so that we know what to fix next and get it working better. Plus the better we get it working, the harder it will be for conservatives to continue to scare people with all the additional “problems” they have made up.

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