Since last fall, when
Obamacare’s exchanges opened for business, the Obama administration
has been releasing enrollment reports that don’t actually count
enrollments. Instead, they count sign-ups—the number of people who
have “selected a plan” through the law’s health insurance
exchanges. Those people may or may not have paid their first
month’s premium. If they haven’t, and don’t, then they are never
enrolled.
So how many aren’t paying up? Since January, multiple reports
based on insurance industry sources have warned that roughly
one in five, or twenty percent, of people who sign up for plans are
not following through with payment. Health and Human Services
Secretary Kathleen Sebelius has said that somewhere in the range of
80 to 90 percent of sign-ups resulted in an activating payment, but
the Obama administration has not yet provided any official figures.
When asked about payment rates, officials have suggested that the
information was in the hands of insurers, and that interested
parties should direct inquiries toward them.
That’s exactly what Republicans on the House Energy &
Commerce Committee did. In April, the committee surveyed all of the
insurers participating in the federal exchange, which covers 36
states, and last week released a report saying that just 67 percent
of sign-ups had paid for the first month.
As I noted at the time, there were some problems with the
report. It ignored some of the bigger states that are running their
own exchanges, like California and New York, and, more importantly,
it reported a payment figure that was current as of April
15—despite the fact that a big chunk of the sign-ups were not
required to pay until the first week of May, when their coverage
went into effect. Some of those people hadn’t paid, but they hadn’t
blown a deadline either.
Today, the Energy & Commerce Committee is holding a hearing
following up on the non-payment issue featuring testimony from
health insurers. And, based on early testimony and news reports,
most of what insurers will say is essentially what we already know:
that last week’s Energy & Commerce report wasn’t a reliable
guide to how many people will end up paying, and that the actual
non-payment rate is somewhere between 80 and 90 percent, depending
on the plan and the region.
As many as 90 percent of WellPoint customers have paid their
first premium by its due date, according to testimony the company
prepared for a congressional hearing today. For Aetna, the payment
is in the “low to mid-80 percent range,” the company said in its
own testimony. Health Care Service Corp., which operates Blue Cross
Blue Shield plans in five states including Texas, said that number
is at least 83 percent.
That’s two insurers who peg their payment rates in the low 80s,
and another that says it’s as much as 90 percent in some places,
which means that, overall, it’s somewhat less than 90 percent. In
other words, the payment rate, overall, is likely somewhere in the
mid 80s, which more or less matches what Karen Ignani, the head of
America’s Health Insurance Plans (AHIP), the major insurance
industry trade group, has already said. It also fits with the
85-percent paid estimate we’ve heard from officials in
California.
Liberals are already crowing about the industry because it
proves the GOP report wrong. The House GOP botched this one, I
think, but today’s testimonies leave us mostly back where we
started, with a rather significant downward correction on the way.
A fifteen percent reduction from the 8 million sign-ups the
administration reports means cutting total enrollment by 1.2
million people, dropping actual enrollment to about 6.8 million.
That’s pretty close to the Congressional Budget Office’s (CBO)
original projection of 7 million exchange sign-ups, and it’s higher
than the CBO’s revised projection of 6 million sign-ups, but it’s
not a small cut. Even if the reduction is somewhat smaller—say, 12
percent, that’s still nearly a million enrollments chopped off the
administration’s sign-up total.
And, of course, it’s also still possible that the reduction is
somewhat larger, say 15 or 20 percent. The New York Times
report on today’s testimony still puts total payments at around
80 percent in its opening paragraph, which would mean an even
bigger drop.
The Times report also flags
an item from AHIP’s prepared testimony noting “many duplicate
enrollments” in the system. Because of the botched launch of the
exchanges, some shoppers ended up enrolling twice. “As a result,”
the AHIP testimony says, “insurers have many duplicate enrollments
in their system for which they never received any payment. In cases
where an insurer has a new enrollment for a consumer who previously
enrolled, they are not expecting that original policy to be
effectuated—even though that data is still reported.”
How big a problem will the duplicates turn out to be? AHIP
doesn’t offer any guesses. It’s possible that it won’t be a major
issue at all; last fall, when the federal exchange system was
essentially unusable, we heard about Obamacare “orphans” stuck in
the system. This turned out to be a real problem, but not on a
massive scale.
About 13,000 people were affected. On the other hand, the issue
is big enough that AHIP felt it necessary to mention in hot-button
congressional testimony.
So here’s where we’re at on the sign-up issue: The House GOP
report was too early, ignored deadline issues, and problematic as a
result. But based on insurer testimony, the administration’s
much-touted total of 8 million sign-ups is likely to be reduced by
a million or more when converted into paid enrollments. In other
words, the administration’s figures were too rosy by quite a
bit—just not as much as House Republicans suggested.
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