Insurers Say 20 Percent of Obamacare Sign Ups Haven't Paid Yet

There’s an awful lot we still don’t
know about Obamacare.

For example, the federal government can’t yet say what
percentage of the 3.3 million people who have signed up for
coverage through Obamacare have paid their first month’s premium.
Eventually, the government may be able to track that information
directly, but it can’t right now because payment processing is
among the back-end computer systems that have not been built
yet. 

What that means is that we don’t know how many of those 3.3
million sign-ups are actually enrolled in insurance—and how many
remain uninsured. But the total is almost certainly quite a bit
smaller than the administration’s sign-up figure.

The New York Times
reports that roughly 20 percent of sign-ups haven’t paid:

Lindy Wagner, a spokeswoman for Blue Shield of California,
said that 80 percent of those who signed up for its plans had paid
by the due date, Jan. 15. Blue Shield has about 30 percent of the
exchange market in the state.

Matthew N. Wiggin, a spokesman for Aetna, said that about 70
percent of people who signed up for its health plans paid their
premiums. For Aetna policies taking effect on Jan. 1, the deadline
for payment was Jan. 14, and for products sold by Coventry Health
Care, which is now part of Aetna, the deadline was Jan. 17.

Mark T. Bertolini, the chief executive of Aetna, said last week
that the company had 135,000 “paid members,” out of 200,000 who
began to enroll through the exchanges. “I think people are
enrolling in multiple places,” he said in a conference call. “They
are shopping. And what happens is that they never really get back
on HealthCare.gov to disenroll from plans they prior enrolled
in.”

Kristin E. Binns, a vice president of WellPoint, said that 76
percent of people selecting its health plans on an exchange had
paid their share of the first month’s premium by the due date of
Jan. 31. 

Obviously this isn’t a complete picture. But it’s worth noting
that this isn’t the only report to suggest a non-payment rate of
about 20 percent. At the end of January, CNN Money
also reported
a likely attrition rate of 20 percent. And insurance industry
consultant Robert Laszewski has also estimated that non-payment
will likely end up in that range. 

If that’s the case, then the true number of enrollments is
closer to 2.64 million—well below the administration’s target for
this point in the open enrollment period. Based on early state
data, it’s even possible that the final rate of non-payment will be
higher: As Jed Graham of Investor’s Business Daily
recently
noted, Washington state’s payment rate is only about 50
percent, and Nevada’s is just 66 percent. I’d bet that these
percentages rise. But even still, it’s clear that follow-through on
sign-ups has not been particularly robust. 

We also don’t know how many of the people who have enrolled were
previously uninsured, and how many were already covered but are
switching to exchange-based coverage. But there are some signs that
the percentage of people now getting coverage who did not have it
below could be quite low.

Laszewski, a well-connected health insurance consultant,

told CBS News that the percentage of sign-ups who are newly
insured could be in the range of 10 percent:

[Laszewski] says that to calculate a more accurate number, one
must subtract about 20 percent of the enrollees because they
haven’t paid (and so aren’t technically insured); as well as about
two-thirds of the enrollees because they were already insured prior
to signing up for Obamacare.

“Looking at the total of 3.3 million, netting out the non-pays,
and listening to the anecdotal carrier reports, it doesn’t look
like we have more than a fraction–certainly something less than
10%– of the previously uninsured,” said Laszewski.

Again, we can’t be certain here. But Laszewski’s estimate tracks
with other reports and information we’ve seen. A
survey by the McKinsey Center for U.S. Health reform found that
only 11 percent of those buying insurance on the exchanges were
uninsured. Aetna CEO Mark Bertolini told CNBC that his company’s
plans had failed to
attract the previously uninsured.

It may be a while before a more accurate picture of how the law
affected enrollment emerges. But for now, one thing we can be
fairly sure of is that the headline sign-up numbers don’t tell the
whole story.