Low ACA enrollment figures won’t raise rates, but this trend will

The low number of applicants for ACA plans won’t destabilize premiums. The real problem lies with this disturbing trend.

Life & Health


Seven million new Obamacare customers by March—that was the Congressional Budget Office’s projections for the first year of the Affordable Care Act’s implementation. As most are aware, just about 365,000 Americans actually selected a plan through the state and federal insurance exchanges during the first two months of the sites’ operations.

But these low figures aren’t what has insurance carriers and producers so concerned. Instead, an equal mix of the young and old, the healthy and unhealthy—not the participation rate—is going to be the benchmark of a successful and steady market.

“CBO provided the best proof point that this is a three-year ramp up when they estimated 7mn in the first year,” David Simas, a White House deputy senior adviser told Politico. “The CBO first-year estimate, however, did not speak to the viability of the markets. What will is the mix of healthy to unhealthy on a market-by-market, insurer-by-insurer basis.”

The White House estimated that it would need one young and healthy applicant per three older, sicker applicants to ensure health insurance rates remain steady through 2015. While a poll from the Public Policy Institute of California suggest individuals in their 20s and 30s—so-called “young invincibles”—are heading to exchanges despite expectations, it doesn’t seem to tally with the experience of producers.

“In terms of age, we haven’t seen a lot of young people,” said Steven Hurd, president of San Diego-based Pacific Health Brokers. “I did just finish up a call with a couple of 20-somethings, but that was out of the norm.”

Texas-based producer Kelly Fristoe said he is fielding some calls from young invincibles, but that most “always ask the same question: When is the last date I can buy a plan?”

Young peoples’ hesitance to sign up through the Affordable Care Act isn’t surprising, these producers said. The most profitable demographic for health insurers—young males, ages 20 to 24—“never needed health insurance,” said Dan Heffley, special master of legislation with NAHU.

“Their arm has to basically be hanging off before they go to the doctor,” he said. “They’re not going to be in the system unless it’s through their employer.”

Teri Guttierez, a 25-year industry vet, said young people are also turned off by reports of HealthCare.gov’s poor performance. Without a better-functioning site—and a better reputation—the young and healthy won’t sign up for health insurance and the entire market could be destabilized.

“I think if we don’t get things fixed soon, it’s going to create a situation where it turns off our young invincibles because they can’t get in,” Guttierez said. “If it’s not easy for them to do, they’re not going to waste their time. They’re going to try once or twice and then they’ll say, ‘Bag it. I’ll pay the 95 bucks.’”

Guttierez said this may cause coverage to “increase dramatically in price,” making it even less attractive in future years. The rates will especially affect the small group market for the individual, “and even impact small group businesses,” she added.

What has your experience been? Have you signed up many young, healthy people for health plans through ACA exchanges?

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